20th Dec 2016 09:43
LONDON (Alliance News) - Rockhopper Exploration PLC on Tuesday said it expects its net economic production from its oil and gas assets in Egypt and Italy for 2016 to average at around 1,350 barrels of oil per day.
The prior year, the group's production averaged at around 322 barrels of oil equivalent per day, up from 272 barrels in 2014, though solely from natural gas production in Italy.
The oil and gas company said the production from both the Guendalina and Civita fields in Italy was marginally ahead of expectations. In line with the recovery in oil price, the averaged realised gas price in Italy has increased to EUR0.18 per standard cubic metre in November from EUR0.12 per standard cubic metre at the beginning of the year, Rockhopper said.
During the second half of 2016, Rockhopper saw a ramp-up of engineering activity as the Front End Engineering and Design (FEED) process progressed at the Sea Lion project, it said, pointing to the way market engagement with key contractors continued to refine and reduce costs. Rockhopper holds a 40% interest in the project.
Rockhopper said the latest estimate of capital expenditure to first oil for Sea Hopper was USD1.50 billion with the life of field costs estimated at around USD35 per barrel for Phase 1. The Phase 1 project "break-even" oil price remains at around USD45 per barrel.
Rockhopper noted that an environmental impact statement and revised field development plan had been submitted to the Falkland Islands Government for the Sea Hopper project.
Meanwhile at the Abu Sennan project, in which Rockhopper holds a 22% working interest, the group said both the Al Jahraa SE-1X exploration well and the ASH-1X ST2 development wells were brought onto production.
A new lease of 30 square kilometres was awarded around the Al Jahraa SE01X well, and Rockhopper said it expects two firm development wells to be drilled on the Al Jahraa field during the first half of 2017.
In addition to this, Rockhopper said it "imminently expects" to receive final ratification for a five-year extension to the Abu Sennan exploration licence. Once approved, the group said it will undertake to participate in at least two exploration wells over the next three years at a commitment net to Rockhopper of around USD1.3 million.
Rockhopper also holds the entire working interest of the Ombina Mare project, and recently the Ministry of Economic Development in Italy decided not to award it with a production concession covering the field for the project
Since that decision was made, Rockhopper said it had undertaken "significant work" with legal advisers and experts to establish the possibility of receiving compensation and damages from the Republic of Italy by way of arbitration proceedings.
Rockhopper added that, as a group, it had reduced ts headcount in Italy to less than ten, down more than 50% since it bought Mediterranean Oil & Gas PLC in August 2014, and said it has combined its London and Salisbury staff in a single office in London to streamline operations.
The group said settlement has been agreed on the insurance claim relating to costs incurred on the Isobel Deep well during the 2015/16 North Falkland Basin exploration campaign, with the settlement valued at USD90.0 million on a gross basis. Rockhopper's share of the proceeds is around USD49.0 million, of which USD16.0 million had been received before June 30.
Rockhopper said it expects its year-end 2016 cash balance to be around USD80.0 million, before the remaining North Falkland Basin exploration campaign close out costs.
"This has been an important period for Rockhopper with progress made on a range of fronts. With costs on Sea Lion continuing to fall and our balance sheet strength still in place, we remain alert to opportunities to materially grow our Greater Mediterranean business in 2017," said Chief Executive Sam Moody.
Shares in Rockhopper were up 3.8% at 20.50 pence on Tuesday morning.
By Hannah Boland; [email protected]; @Hannaheboland
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