26th Jan 2005 07:00
Burren Energy PLC26 January 2005 Burren Energy Plc Pre-close Trading Update Burren Energy Plc intends to announce its preliminary results for the year ended31 December 2004 on 4 April 2005. Prior to entering the pre-results close periodBurren is providing the following guidance as to the Company's tradingperformance in 2004 and prospects for 2005. Group net production for 2004 averaged 14,200 bopd, an increase of 74% over 2003(8,140 bopd). In Turkmenistan net production averaged 9,300 bopd compared with6,770 in 2003, an increase of 37%, and net production from the Republic of Congo(Brazzaville) ("Congo") averaged 4,900 bopd compared with 1,370 bopd in 2003, anincrease of 256%. Group net production is currently just above 20,000 bopd, compared with 9,000bopd in January 2004. Burren expects to have achieved net production of 24,000bopd by the end of 2005 as a result of continued development drilling in bothTurkmenistan and Congo and without taking into account the impact of anyproduction arising from exploration drilling. Cash flow before financing in 2004 was positive despite a doubling of capitalexpenditure compared with 2003. Cash balances at the year end were £21 millionand debt (including finance leases) was £4.3 million. The debt is allattributable to the shipping business and is not guaranteed by the parentcompany. In 2005 Burren intends to invest approximately £100 million on its existingprojects of which approximately a quarter will be exploration-related.Geographically, 50-55% of this investment is expected to be spent inTurkmenistan, 40-45% in Congo, and a maximum of 5% in Egypt. In all up to 60wells could be drilled, of which up to 17 could be exploration wells (themajority of which will be in Turkmenistan). This compares with 29 wells in 2004of which only one was exploration. During 2005 Burren will continue to advance negotiations with the Turkmenauthorities regarding a gas sales contract for its gas production. The Company has engaged Ryder Scott, the Houston-based petroleum consultants, toperform an independent audit of its oil reserves as at 31 December 2004, theresults of which are expected to be made public on or before the preliminaryresults announcement date. A review by individual operation follows: Turkmenistan Nebit Dag (100% working interest. Operator : Burren) In Turkmenistan, current production is approximately 18,000 bopd gross, 11,000bopd net to Burren. In 2004 10 development wells were drilled on the Burun fieldof which 7 were shallow wells to depths less than 1500m. The 4 most recentshallow wells, drilled since October, are currently producing an average of 450bopd per well. The workover programme continued throughout the year. At year endthere were 115 producing wells in on the Burun field, with a further 40 wellsshut in. In 2005 Burren intends to run a continuous programme of shallow drilling for upto 15 wells, and to drill up to 6 deep development wells on the Burun field. 3D seismic over a 700 sq. km area of the license area outside the Burun fieldhas been acquired and processed, and interpretation is expected to be completeby the end of April to enable the selection of locations for explorationdrilling. Up to 12 deep and shallow exploration wells are intended to be drilledthis year, and negotiations are advanced to contract a second deep drilling rigfor this purpose. An early drilling project will be to re-enter and test the B60exploration well on the south flank of the Burun field. Despite a significant increase in capital expenditure compared with 2004, NebitDag is expected to continue to generate substantial free cash flow in 2005 foruse by the Group for other investment opportunities. Republic of Congo (Brazzaville) Kouilou / M'Boundi (35% working interest. Operator : Maurel & Prom)Kouakouala (25% working interest. Operator : Maurel & Prom) Current gross production from Congo is 38,000 bopd , 9,300 bopd net to Burren.36,000 bopd is from M'Boundi (22 wells in production) and 2,000 bopd is fromKouakouala (4 wells in production). In 2004, 17 wells were completed on M'Boundi and 1 on Kouakouala, and there arenow 4 rigs in operation in these fields. The three most recently drilled wellsin the M'Boundi field are currently producing more than 4,000 bopd each. In 20053 rigs will drill continuously on M'Boundi, with up to 22 development wellsplanned. Facilities upgrade will continue in order to ensure gross productioncapacity of 60,000 bopd, and pilot water injection programmes will be initiatedin Kouakouala and, subsequently, on M'Boundi. As well as a high-resolution aeromagnetic survey over the whole of the Kouiloulicense area, a 230 sq. km. 3D seismic survey has nearly been completed overpossible extensions to the M'Boundi field to the north-west and south-east, theresults of which are expected to have been interpreted by mid year. Within therest of the Kouilou license area it is intended to shoot 2D seismic during thefirst half of 2005 over several prospects, the results of which should beavailable during the second half of the year. Up to four exploration wells are expected to be drilled within the Kouilou areaduring the year, of which two will be sited to test the northern and southernextent of the M'Boundi field. The PSA relating to the Noumbi permit to the north of Kouilou was signed onbehalf of the Congolese Ministry of Hydrocarbons in 2004 and is awaitingparliamentary ratification. Burren expects to be in a position to commenceexploration activity during 2005. Egypt East Kanayis (100% working interest) Following signature of the PSC for the East Kanayis block in Egypt's WesternDesert in September, an office has been established in Cairo and work is welladvanced to prepare for seismic acquisition and drilling, with spud of the firstexploration well intended around the middle of 2005. Applications have been made for 3 other blocks in recent licensing rounds, theresults of which are still awaited. Shipping During 2004 Burren acquired 3 tugs and barges with a combined deadweight freightcapacity of 10,500 MT for operation in the Russian river system. Overall,freight carried in 2004 was below expectations, primarily due to the unscheduledclosure of the Volga-Don canal for a month in the autumn. The shipping business is no longer considered core to Burren and the Company isworking towards its disposal. Finian O'Sullivan, Chief Executive of Burren, commented: "Burren has had an excellent year with significant growth in productiondelivered across the business, in particular from our assets in West Africa. "The company expects that ongoing development and exploration drillingprogrammes planned in Turkmenistan and the Congo over the new financial yearwill further drive performance as well as supporting exploration operations inour new geographical area of Egypt. "The Group is on track to deliver a record performance for the year and theBoard remains confident of the prospects for growth going forward." ENQUIRIES: Burren Energy PLC Tel: 0207 484 1900Finian O'Sullivan, Chief Executive OfficerAndrew Rose, Chief Financial Officerwww.burren.co.uk------------------ Gavin Anderson & Company Tel: 0207 554 1400Deborah Walter / Charlotte Stone Notes to Editors Burren Energy is an independent oil and gas exploration and production group,headquartered in London. It is focused on two principal regions: the Caspianregion of the former Soviet Union and West Africa, with recently addedexploration acreage in Egypt. The company is listed on the London Stock Exchange("BUR"). Burren's total proven & probable oil reserves as announced on 5 April 2004 were133 Mmbbls, (net to the Group on an entitlement basis). In the Caspian region ofTurkmenistan, Burren has a 100 per cent. working interest in the Nebit Dag PSA,which contains the Burun oil and gas field with net proven and probable oilreserves at 5 April 2004 of 95 Mmbbls. In the Republic of Congo (Brazzaville),Burren has working interests in the M'Boundi, Kouakouala and Pointe Indiennefields with aggregate net proven and probable oil reserves at 5 April 2004 of 38Mmbbls, of which 36 million barrels were in M'Boundi. Significant explorationand development programmes are underway in Turkmenistan and the Congo. This announcement contains certain operational and financial information inrelation to 2004 which subject to final review and has not been audited.Furthermore it contains certain forward-looking statements which are subject tothe usual risk factors and uncertainties associated with the oil & gasexploration and production business. Whilst the Company believes theexpectations reflected herein to be reasonable the actual outcome may bematerially different owing to factors either within or beyond the company'scontrol, and accordingly no reliance may be placed on the figures contained insuch forward looking statements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Burford Capital