15th Mar 2016 09:42
LONDON (Alliance News) - Urals Energy PCL Tuesday said production from its two main assets rose by 2% in 2015, but said its operations are only breaking even based on the current environment.
"At current prices for crude and domestic sales, given the rouble exchange rate and the current tax regime, the company is able to operate on a broadly cash neutral basis, including funding our limited drilling programme," said Chairman Andrew Shrager.
"While the oil price seems to be recovering somewhat and the rouble exchange rate remains favourable, we have decided to keep capex spending limited, particularly in terms of drilling expenses which require consumables sourced in US dollars," he added.
The Russian oil producer said total production in 2015 amounted to 675,318 barrels of oil, a 2% rise from 2014 that was driven by the Petrosakh field.
The Petrosakh field produced 253,591 barrels of oil in the year compared to 240,865 barrels in the previous year whilst the other producing field, Arcticneft, reported a smaller rise in production to 421,726 barrels from 421,350 barrels in 2014.
Current daily production at Petrosakh stands at 1,350 barrels a day, which is considerably higher than the 1,120 barrels being produced each day in the same period a year ago. Arcticneft is currently producing 680 barrels per day, which is around the same production rate as a year ago.
Well 109, which is being drilled on the Petrosakh field, is still being tested as the company is struggling to get oil to flow to the surface as high pressured water continues to come to the surface. Urals said further work is being carried out to determine whether the flow of water can be reduced, and allow oil to flow to the surface.
The refinery at the field, Petrosakh Island, has been hampered by recent weather conditions but the company said this has led to increased demand which as pushed up sales volumes and prices.
At Arcticneft, Urals plans to conduct workovers on a further two wells this year, which should enable production levels to be maintained.
In addition, Urals said it plans to establish the reserves at the RK-Oil licence it acquired in November last year.
Urals said it continues to look for acquisition opportunities working with Proxima Capital Group, a Moscow-based advisory firm which is helping the company look for decent opportunities.
Urals shares were down 4.8% to 2.26 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Urals Energy Plc