18th Jul 2006 07:00
Burren Energy PLC18 July 2006 Burren Energy Plc ("Burren" or the "Company") Pre-Close Trading and Operational Update Prior to the announcement of interim results for the six months to 30 June 2006in September Burren is issuing a trading and operational update in respect ofthe Group's performance in 2006 to date. The information herein has not beenaudited and is subject to further review. Highlights • Solid financial performance in first six months • 17% increase from H1 2005 in group working interest production to 33,900 bopd • 40% increase from H1 2005 in weighted average realised oil price of US$60.90 • Significantly reduced average realised price discount to Brent in Congo from US$6.90 per barrel in 2005 to US$1.22 per barrel in H1 2006 • Cash balance at 30 June 2006 almost doubled to US$215 million from US$125 million at 31 December 2005 • Exploration success and operational progress in Turkmenistan • Encouraging results from two exploration wells in South Burun: o B062 perforated over a 7 metre zone and is currently cleaning up on test. Oil is flowing to surface o B064 encountered exceptionally high pressures and an 18 metre zone is to be tested in the near future • Development well B250 in North Burun encountered new oil pool and flowed at initial rate of 2000 bopd • Commencement of water injection at an aggregate rate of 5000 bwpd • Congo on track for exploration and water injection in H2 2006 • First half average production up 49% at 57,000 bopd but forecast to stabilise at 53,000 in H2 2006 • Drilling of water injection wells underway • Five exploration wells to be drilled in H2 2006 • Outlook • 15 well appraisal and exploration programme in H2 across Congo, Turkmenistan, and India Finian O'Sullivan, Chief Executive Officer, commented: "Burren has had an encouraging start to 2006 with increased production andexploration success especially with Burun south flank wells B062 and B064 inTurkmenistan. We look forward during an active second half to testing andappraising these discoveries as well as starting water-injection in Congo." Enquiries: Burren Energy Tel : 020 7484 1900Finian O'Sullivan, Chief Executive OfficerAtul Gupta, Chief Operating Officerwww.burren.co.uk Pelham PR Tel: 020 7743 6676James HendersonAlisdair Haythornthwaite Notes to Editors Burren Energy is an independent oil and gas exploration and production group,headquartered in London. It is focused on four regions: the Caspian region ofthe former Soviet Union, West Africa, Middle East and, through a strategicinvestment stake in the Hindustan Oil Exploration Company, India. The company islisted on the London Stock Exchange ("BUR.L"). Trading Overview and Outlook Group working interest* production for the first half of 2006 averaged 33,900bopd, a 17% increase over the first half of 2005. Of this, Turkmenistanaccounted for 15,000 bopd, virtually unchanged from H1 2005, and Congo accountedfor 18,900 bopd, up 35%. On an entitlement basis, Burren's net production was19,000 bopd in the first half, equally apportioned between Turkmenistan andCongo. Working interest production for the rest of the year is forecast to remainfairly flat between 33,000 bopd and 34,000 bopd with a higher proportion of rigtime being deployed in drilling exploration and water injection wells relativeto development oil wells. The weighted averaged realised price in H1 06 was US$60.90. In Congo, as aresult of new blending and throughput arrangements at the Djeno terminal whichcame into effect at the beginning of the year, the average realised pricediscount to Brent was US$1.22, a material improvement compared with the averagediscount of US$6.90 suffered in 2005. In Turkmenistan the discount was $8.90 buthas reduced to US$8.00 with effect from 1 July under a new offtake contract. Nohedge contracts are in place in 2006. Capital expenditure forecast for the full year including contribution toassociate remains unchanged at $230 million. Cash balances at 30 June had risen to US$215 million from US$125 million at 31December 2005. Turkmenistan Gross production in the first half averaged 18,700 bopd, down slightly from the19,000 in H1 2005. This reflects the shift in focus in 2006 to date fromdevelopment to exploration, with both of the heavy rigs and one of the workoverrigs primarily devoted to drilling exploration wells. The one development well,B250, on the eastern boundary of the Burun field encountered a new 120m thickoil pool and flowed at an initial rate of 2000 bopd. The two deep South Burun exploration wells both logged hydrocarbons with B062just starting its test programme. A 7 metre zone was perforated and although thewell is still cleaning up, oil has flowed to surface at increasing rates.Combined with the results of well B250, these wells provide very positiveindications for the Nebit Dag Deep exploration play beneath the Nebit Dag fieldto the east of Burun. During the rest of the year we intend to drill a series ofappraisal wells to the east of Burun, within the exploration area of the NebitDag PSA, to appraise the extension to oil pools found in wells B250 and B062. Well B064 encountered exceptionally high pressures approaching 12,000 psi and an18 metre zone is to be tested shortly. Further appraisal drilling will beplanned based on pressure and test data. Shallow exploration drilling enjoyed mixed results : whilst the Kara Tepe andUrundzhuk prospect towards the eastern end of the Nebit Dag PSA area did notyield any hydrocarbons, a small discovery was made at Nebit Dag East for whichearly production approval has been obtained and the discovery well is onproduction at a rate of 250 bopd. Water injection has commenced into both deep and shallow reservoirs at anaggregate rate of 5000 bwpd with 3 injector wells in operation. Congo 12 development wells have been drilled in 2006 to date on the M'Boundi field ofwhich 8 have been completed and are on production. Amongst these were four wellson the perimeter of the field which assisted in the more accurate delineation ofthe field's northern and southern limits but however encountered thin orunproductive reservoir and could not be completed as producers. Gross M'Boundi production averaged 57,000 bopd during H1 06, up 49% comparedwith H2 05, but is expected to stabilise at around 53,000 bopd in the secondhalf due to natural field decline and a less active development programme as thefocus shifts to the water injection programme which is forecast to impactproduction in 2007. 4 drilling rigs and a workover rig are in operation in the M'Boundi field . Thedrilling of water injection wells is now under way and the workover rig ispreparing to drill shallower water source and salt leaching wells. Five exploration prospects have been identified for drilling with a well plannedon each. Three of these, Loufika, Tioni and Kingila are in the Kouilou licenseare (Burren 35%) to the south east of the M'Boundi field and the first well, onLoufika, is expected to spud in August. The two remaining prospects are to thenorth-west of the M'Boundi field : Nanga, in the Kouilou license area, andDongou, at the southern end of the Noumbi license (Burren 37%). Egypt The third of the cretaceous exploration wells on the East Kanayis license(Burren 100%) did not find hydrocarbons and, like the previous two wells, hasbeen plugged and abandoned. Focus will now shift to the deeper Jurassicpotential, where 3D seismic acquisition has been completed and is beingprocessed. Drilling is expected to resume in 2007 once the seismic has beeninterpreted, and so the rig has been subcontracted to a third party for theintervening period. In the North Hurghada Marine license (Burren 100%) an aeromagnetic survey hasbeen carried out and the data is undergoing processing. Detailed re-mapping ofthe area from existing data is also under way. The North Lagia license award (onshore northern Gulf of Suez, Burren workinginterest 90%) was ratified by Parliament in May. Yemen The award of Block 6 (Burren working interest 92%) has now been ratified byparliament and the PSA became effective in June. Collection of existing 2Dseismic data has commenced and a tender for a new 3D seismic campaign is beingorganised. Oman Formal government approval to Burren's farm in to 40% of the offshore block 50is expected in the near future and the operator, Hunt, is preparing for seismicacquisition in Q4 India (HOEC 26%) The London arbitration tribunal hearing the case between HOEC (inter alia) andHardy Oil & Gas plc in relation to the latter's claim to certain rights under ashareholder's agreement reached its conclusions in June in a ruling againstHardy. This means that Hardy have no claim to any pre-emption rights overBurren's 26% holding in HOEC. Operationally, a 3 well drilling programme on the PY-1 license and theneighbouring CY-OSN-97/1 license (HOEC 80%) is expected to commence in August.HOEC has announced a rights issue to fund this expenditure in which Burrenintends to participate. *Working interest production in Turkmenistan is calculated as gross productionless the Initial Oil to which the State is entitled under the terms of the PSA This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Burford Capital