10th May 2016 08:57
LONDON (Alliance News) - Northern Petroleum PLC said on Tuesday once the current work programme is completed at its Canadian assets, it will focus on additional production above the current level, with the potential to process much higher volumes with a limited increase in fixed operating costs.
Northern Petroleum said the net average oil production of its assets, named the Rainbow assets, in April was 449 barrels of oil per day in the period between April 1 and April 18, but the imposition of regional trucking restrictions saw production drop to around 212 barrels of oil per day for the remainder of April.
These restrictions were put in place due to the expected annual spring thaw which can cause wet and difficult road surface conditions, and overall average production for April was 354 barrels of oil per day.
However, Northern Petroleum said the trucking restrictions were lifted on April 29 due to usually dry weather and said its trucked wells were now back in production.
Northern Petroleum said its 9-25 battery was ready for start up once final approvals are obtained from the regulator, which will initially add three more wells.
The company noted that costs incurred to date at the Rainbow redevelopment project indicate that operating costs per barrel are between USD20 and USD25 when measured at an average production rate of 400 barrels of oil per day.
Northern Petroleum said the operating costs per barrel of incremental production over and above 400 barrels of oil per day are forecast to be between USD4 and USD10 per barrel, depending on whether the oil is transferred to the processing facility by pipeline or truck.
As such, the company said following completion of its current work programme, a summer work programme will be developed for the third quarter, in which it will look to achieve further production enhancements.
"Additional production above the current level comes at very low incremental cost and is a key focus once the current work programme is completed. The company has substantial owned infrastructure which can process much higher volumes of production with a limited increase in fixed operating costs. Building production from here will create an asset with very attractive net cashflow and value, even at current oil prices," said Chief Executive Keith Bush.
Shares in Northern Petroleum were up 4.8% at 2.50 pence on Tuesday morning.
By Hannah Boland; [email protected]; @Hannaheboland
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