18th Jul 2005 07:00
Burren Energy PLC18 July 2005 18 July 2005 Burren Energy plc Interim Pre-Close Trading Update -------------------------------- Burren intends to announce its interim results for the half year ended 30 June2005 on Monday 19 September. Prior to entering into the pre-results closeperiod, Burren is providing the following guidance on the Group's tradingperformance. Group net production in the first half of the year averaged 22,200 bopd, anincrease of 90% over 11,710 bopd in the first 6 months of 2004. A summary ofproduction and realised prices (before hedging losses) is given below: H1 2005 H1 2004 Increase Net Production (bopd) Turkmenistan 12,300 8,210 50% Congo 9,900 3,500 183% ---------------------------- Total 22,200 11,710 90% Realised Prices (US$/bbl) Average Brent reference 49.5 34.4 Turkmenistan 45.0 28.8 Congo 41.9 32.1 ------------------ Average Group 43.5 29.7 Group net production in June averaged 25,000 bopd, compared with an average forJanuary of 20,000 bopd. Although working interest production volumes areexpected to increase in the second half of the year, the percentage of Congoproduction to which Burren is entitled will, at the current oil price, reduceowing to full recovery of historic costs being achieved under the productionsharing agreement terms. Taking this factor into account, net production for theyear is expected to average 22,500 bopd. The group had net cash balances at 30 June, including funds held in escrow forthe open offer for Hindustan Oil Exploration Company ("HOEC": see India below),of US$31 million. Capital expenditure for 2005 as a whole, excluding investmentin HOEC, is expected to approximate US$150 million, of which slightly less thanhalf was expended in the first 6 months of the year. Turkmenistan------------ The shallow drilling programme on the Burun Field is proceeding verysuccessfully, with 8 wells completed this year. There are now 14 shallow wellson production with average production of 300 bopd per well, producing 20% oftotal field production of 21,000 bopd. The shallow drilling programme isfocusing on shallow exploration targets delineated on the recently acquired 3Dseismic data. Additionally, 4 deep wells (down to 4,500m) have been drilled andcompleted this year. Average production per well from the 6 deep wells currentlyon production is similar to those from the shallow wells. However, numerousreservoir intervals available for future perforation in a deep well mean thatthe recoverable oil is substantially greater than for a shallow well. The arrival of a second deep drilling rig, contracted for deep exploration work,has been delayed until completion of its current contract in Kazakhstan. Becauseof this the rig currently engaged in development drilling on the Burun fieldwill be redeployed in October to drill deep exploration wells. Congo----- On the M'Boundi field, 13 wells have been drilled this year with 3 rigs inoperation. All but three of these wells have been put on production, and fieldproduction has thereby increased from 30,000 bopd in December 2004 to 43,000bopd in June 2005, with 29 producing wells at present. A fourth drilling rig hasbeen moved to M'Boundi and is expected to commence drilling in August.Approximately 12 further development wells are expected to be drilled by the endof the year. Two of these wells, MBD 1303 and 1003, have located the eastern limit on part ofthe field in the northeast, and were plugged and abandoned. Further south, alsoon the eastern side of the field, well MBD1801 encountered oil shows in the mainreservoir sections below the oil water contact and has been temporarilysuspended pending further testing. On the western side of the field the mostrecent well, MBD1101, encountered good quality Vandji 'C' sand and a flow testwill commence shortly. M'Boundi field processing and export capacity is being increased from thecurrent 60,000 bopd to 90,000 bopd and equipment ordered for an initial 20,000bwpd water-injection scheme, scheduled to start 2Q 2006. As outlined in ourstatement of 29 March, work is underway at the Total operated Djeno exportterminal to enable M'Boundi and Kouakouala crude to be blended directly with thelight N'Kossa crude which should lead, by the end of the year, to highernetbacks of approximately Brent minus $1.0 per barrel. Activity has commenced in the Kouilou exploration area along the Mengo fieldtrend. Well Tchiniambi-1, drilled by Elf in 1990, has been re-entered and testedat an initial rate of 300 barrels of oil per day from the potentially large butlow permeability Mengo sandstones reservoir. The results and future programmeare currently being studied. At the northern end of the trend on a separatestructure, exploration well Diosso-1 was drilled to evaluate the Mengo reservoirand the shallower reservoirs still producing from the Pointe Indienne field. Thewell encountered water-bearing reservoir and was plugged and abandoned. Interpretation of the new 3D seismic data on the potential northern and southernextensions of the M'Boundi field and the 320 km of 2D seismic data over otherareas in the vicinity of the M'Boundi and Kouakouala fields has begun anddrilling targets are expected to be selected during Q4. Egypt----- The continuing technical evaluation of the East Kanayis Concession hasidentified several small, shallow exploration prospects at depths between 5,000feet and 9,000 feet. These are being prepared for drilling, subject to rigavailability in an increasingly tight market, in the fourth quarter of 2005. Inaddition, well Qattara Rim-2X which was drilled and tested oil in 1987 will bere-entered and tested to assess the oil production potential. New seismic isalso planned to evaluate exploration prospects at the deeper Jurassic levelwhere there is potential for gas-condensate accumulations. Parliamentary approval has been obtained for the North Hurghada Marine licenseand signature is expected in the near future. Parliamentary approval for theNorth Lagia Concession is anticipated later this year. India----- The public open offer to acquire a further 20% of the share capital of HindustanOil Exploration Company (HOEC) is awaiting clearance by the Indian stock marketauthorities. The delay results as a consequence of consideration being given bythe authorities to the potential consequences of legal actions commenced byHardy Oil & Gas Limited ("Hardy") in the Indian courts. These actions relate torights alleged by Hardy to arise from a shareholders agreement, the validity ofwhich is disputed by the other parties, including HOEC. Burren and its advisershave made detailed representations to the Indian stock market authorities thatthe legal actions are not relevant to the open offer. The timing of anyclearance, however, cannot be guaranteed. The share price of HOEC has increased substantially since Burren acquired itsindirect 26% holding in February, valuing Burren's investment at US$55 millioncompared with a US$26 million purchase price. Shipping-------- Shipping traded profitably during the first half of the year. Negotiations areadvanced for the disposal of Burren's interest in three tug/barge trains and weexpect to sign a Sale and Purchase Agreement related to these assets during thesummer. International Financial Reporting Standards (IFRS)-------------------------------------------------- The work on restating Burren's 2004 financial statements under IFRS has beensubstantially completed. We expect to release the restated 2004 profit & lossaccount, balance sheet and cash flow statement during August, in advance of therelease of Burren's interim 2005 results under IFRS on 19 September. ENQUIRIES: Burren Energy PLC Tel: 020 7484 1900Finian O'Sullivan, Chief Executive OfficerAndrew Rose, Chief Financial Officerwww.burren.co.uk Gavin Anderson & Company Tel: 020 7554 1400Deborah Walter / Charlotte Stone This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Burford Capital