15th May 2008 07:00
Emerald Energy Plc
15 May 2008
Interim Management Statement
Emerald Energy Plc ("Emerald" or the "Company") is today issuing its first Interim Management Statement, relating to the period from 31 December 2007, as required by the Disclosure and Transparency Rules of the Financial Services Authority.
Current Operations and Outlook
Syria
Approval for commercial development of the Khurbet East Field was granted in February 2008.
The Khurbet East No.3 appraisal well reached a total depth of 2,050 metres and was flow tested in January 2008 at an oil rate of 3,420 barrels per day. The Khurbet East No.4 development well reached a total depth of 1,935 metres in March 2008 and was not flow tested. Khurbet East No.5, the first horizontal production well in the field, was drilled in May 2008 with a horizontal section of 300 metres and was flow tested at an oil rate of 2,041 barrels per day. These wells were suspended, along with the earlier Khurbet East No.2 well, as oil producers available to commence production after the installation of production facilities. At least one further horizontal producer well is planned to be drilled resulting in 3 vertical and 2 horizontal producer wells being operational during the initial phase of production from the field.
An early production facility capable of processing some 10,000 barrels per day is scheduled to commence operation by the fourth quarter of 2008.
The 3D seismic data acquired over the Khurbet East field and a separate area to the south of the field, is currently being interpreted and will assist in locating future development wells in the Khurbet East field and to progress exploration leads that were identified previously on existing 2D seismic data.
At least one exploration well in Block 26 is expected to be drilled in the remainder of 2008. The operator has announced the securing of rig commitments adequate for both the development and exploration requirements.
Colombia
During the period to 12 May, gross production averaged 3,067 bopd and net entitlement averaged 1,683 bopd. Production was lower than planned due to the previously reported replacement of an electrical submersible pump in the Gigante No.1A well during February. Furthermore, the replacement pump has a slightly smaller diameter and thus pumping capacity than the previous pump to reduce the risk of cable damage during installation operations. The Company is evaluating options to increase production from the Gigante No.1A well to the level achieved prior to the pump replacement. Gross production during April 2008 averaged 3,187 bopd.
Emerald has contracted a rig to drill two wells with the option of an additional two wells. The rig has mobilised to commence drilling the Vigia No.5 development well; following this operation, the rig will move to drill the Campo Rico No.5 development well; each well is expected to take approximately 1 month to drill and evaluate.
The Company entered into the second phase of exploration in the Maranta and Jacaranda blocks in March 2008; each with a 12 month duration and a work commitment of one exploration well. In the Ombu block, the initial phase of exploration was extended by six months to allow for the drilling of one exploration well in substitution of the original 2D seismic data acquisition programme.
Emerald has contracted a smaller rig for a period of up to one year. The rig is expected to mobilise to the Ombu block in June 2008 to commence drilling on the Capella prospect. The Capella No.1 well is expected to take approximately one month to drill and evaluate, followed by a period of up to six months of production testing. The Payara No.1 well, drilled on the same structure in 1975, recovered over 200 barrels of oil from the Mirador sands at a depth of less than 4,000 feet. The Company estimates the structure may contain over 30 million barrels of unrisked recoverable resources.
Following operations in the Ombu block, the rig is expected to move to the Jacaranda block in the third quarter of 2008 to commence drilling the Jacinto prospect which has a previously reported unrisked prospective resource potential, estimated by the Company, of over 10 million barrels. This well is expected to have a total depth of approximately 6,000 feet and is expected to take approximately one month to drill and evaluate.
Drilling in the Maranta block is likely to commence in the fourth quarter of 2008 on the Mirto prospect which the Company estimates may contain unrisked recoverable resources in the range 5 to 15 million barrels.
In April 2008, Emerald was awarded the Agerato exploration and production contract area located in the Putumayo Basin, approximately 75 km to the south-east of the Company's Maranta contract area. The Company believes the area may be on geological trend with discoveries to the south in Ecuador and that the prospective depths may be relatively shallow at approximately 7,000 feet. The initial phase of the exploration period is 12 months and the minimum work programme comprises the acquisition of 35 km of new 2D seismic data and the re-processing of 40 km of existing 2D seismic data.
The Company elected In March 2008 not to undertake an exploration well commitment in the Campo Rico block, thus ending the exploration period of the contract. The Company is relinquishing 50% of the area but retains the right to explore within the remaining area.
Financial Position
For the first quarter of this financial year, Emerald reports the following unaudited results:
|
3 Months to 31 March 2008 |
12 Months to 31 December 2007 |
||
|
Notes |
$ '000 |
$ '000 |
|
|
Revenue from oil sales |
(a) |
12,961 |
44,357 |
|
Adjusted EBITDA |
(b) |
8,355 |
30,092 |
|
Profit before tax |
6,202 |
8,589 |
|
|
Profit for the period |
3,540 |
6,551 |
(a) In the three months to 31 March 2008, all revenue from oil sales was generated in Colombia.
(b) Adjusted EBITDA is earnings before interest (and other finance income and costs), tax, depreciation,
depletion, amortisation, write-offs of oil and gas assets and share based payments, charged to the
income statement under IFRS 2.
Emeralds' Chief Executive Officer, Angus MacAskill, said:
"We are optimistic that our plans for the drilling of at least 4 exploration wells in the current year, financed by cash resources and strong cash flow from our production, will continue to deliver growth for the Company and thus enhance shareholder value".
Company web site may be found at www.emeraldenergy.com
Enquiries: Lisa Hibberd 020 7925 2440
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