AZA Quarterly Report
April 30 2008 - 7:49AM
UK Regulatory
RNS Number:4364T
Anzon Energy Limited
30 April 2008
ANZON ENERGY LIMITED (CODE: AEL)
30 April 2008
ANZON ENERGY LIMITED ANNOUNCES THAT ITS SUBSIDIARY
ANZON AUSTRALIA LIMITED ("ANZON" OR "THE COMPANY") (ASX CODE:AZA) HAS
TODAY MADE THE FOLLOWING ASX ANNOUNCEMENT
QUARTERLY REPORT TO 31 MARCH 2008
HIGHLIGHTS
PRODUCTION
* Oil production from the Basker and Manta fields (100%) during the first
quarter averaged 8,893 barrels of oil per day. This is after including the
logistical downtime during the two periods when crude was sold to a
Melbourne refinery.
* In the first quarter 2008 the BMG Joint Venture sold approximately 817,000
barrels of crude oil to a Melbourne refinery, resulting in approximately
US$78 million in gross sales revenue with an average realised price of
approximately US$104 per barrel.
DEVELOPMENT PROJECTS
* The Basker-6 well was spudded on 6 March 2008 using the rig the Ocean
Patriot. On 28 March 2008 work was completed on the wire-line logging and
pressure surveying (MDT) to evaluate the Intra-Latrobe sands. The well's
objectives were approximately 40 metres low to prognosis and all sands
encountered were intersected below their individual sand hydrocarbon/water
contacts. Pressure data however provided encouraging information supporting
hydraulic communication of these sands across the field. This was a positive
result as it indicated that the Basker sands are more continuous and extensive
than previously thought. A decision was made by the BMG Joint Venture parties to
sidetrack (ST) the well a short distance of 380 m to the north east and drill
the Basker-6 ST1.
* The Basker-6 ST1 commenced immediately after the Basker-6 logging
results. The sidetrack completed all logging and pressure survey evaluation on
15 April 2008. The well encountered oil in five sands, four of which had been
seen in other wells in the Basker field and one new sand in the upper Intra
Latrobe. This well was successful in proving up the South Eastern extension of
the Basker field and the potential for additional hydrocarbon reserves in a new,
shallower oil pool. The well has been completed using a three packer, multiple
zone intelligent completion, which allows each zone to be controlled by
isolation. The well is scheduled to be tied into the existing facilities in July
2008 with first production soon thereafter.
* The BMG Joint Venture has also secured a drilling rig, the Kan Tan IV,
for its 135 day drilling program. The drilling program is expected to commence
in early 2009, with a combination of development, appraisal and exploration
wells.
* During the quarter Anzon completed reprocessing the 3D seismic over
the BMG license areas. Together with the results of the Basker 6 ST1 well, Anzon
is upgrading its assessment of the known resources of the license areas, in
readiness for the expanded, facilities for oil and gas, expected to be in place
by first quarter 2010.
CORPORATE ACTIVITIES
* On 23 January 2008, Anzon announced that it had received a superior
proposal to merge with Nexus Energy Limited ("Nexus") and that its Board of
Directors had unanimously resolved, in the absence of a superior proposal, to
approve an offer by Nexus to acquire all of the issued shares in Anzon in
exchange for Nexus shares or a mixture of Nexus shares and cash. Anzon has
entered into a merger implementation deed with Nexus to effect the merger.
Following the announcement of Anzon's support for the Nexus proposal, ARC
informed Anzon that it had terminated its merger implementation agreement with
Anzon, and as a result Anzon was required to pay a $4 million break fee.
* During March 2008 Anzon drilled the Basker-6 appraisal well followed
immediately by the Basker 6 ST1 well - see above. Given the timing of receipt of
this drilling information, Anzon, with the support of Nexus, adjourned the
scheme meeting (which was scheduled to occur on 18 April 2008) to a date to be
advised, in order to allow Nexus an opportunity to review the new Basker field
data.
* Anzon will continue to keep shareholders fully informed of any updated
in relation to the proposed merger with Nexus, including the details of when and
where the adjourned meeting is to take place.
A. PRODUCTION & DEVELOPMENT ACTIVITIES
Basker-Manta Oil Development (VIC/L26)
(i) Project Update
Oil production for the quarter amounted to 808,321 bbls, an average daily
production rate of 8,883 bopd. This is after including the logistical downtime
during the two periods when crude was sold to Melbourne refinery.
(ii) Oil Marketing
In the first quarter of 2008, the BMG Joint Venture sold approximately 817,000
barrels of crude oil to a Melbourne refinery, resulting in approximately US$78
million in gross sales revenue with an average realised price of approximately
US$104 per barrel.
At this point in time marketing of the crude has continued on a "spot" basis.
Longer term "firm" off take arrangements continue to be reviewed. Crude Oil
sales remain at a premium to the APPI Tapis Oil marker, which continues to be at
a premium to the WTI marker.
B. DEVELOPMENT PROJECTS
As reported in the 30 September 2007 quarterly report, the BMG Joint Venture
decided to delay the Final Investment Decision ("FID") for the gas phase and
optimise the oil development. Oil production is the major source of
profitability for the project and is the first priority of further development
activity. Accordingly the BMG Joint Venture remains fully committed to the oil
development expansion.
In regards to the expanded oil development, Anzon has announced that the BMG
Joint Venture has secured a drilling rig, the Kan Tan IV, for its 2009 drilling
program. The Kan Tan IV contract provides 135 days of rig time starting in early
2009 with which to drill a range of wells that are likely to include additional
Basker oil wells, gas delineation and exploration wells. Access to the Kan Tan
IV is via a consortium agreement with other oil companies operating in
Australasia and is expected to provide the opportunity for additional drilling
in 2009.
As part of the overall expanded development, the BMG Joint Venture is continuing
to assess the merits of committing to a larger FPSO (to replace the existing
FPSO and shuttle tanker) to accommodate an optimal oil development ahead of a
revised gas development plan.
The Basker-Manta-Gummy (BMG) Project is a Joint Venture between:
Anzon Australia Limited 40% (Operator)
Beach Petroleum Limited 40%
CIECO Exploration and Production (Australia) Pty Ltd* 20%
* Beach Petroleum Ltd. has entered into an arrangement to sell a 10% equity
stake to Sojitz Energy Australia Pty Ltd. Beach Petroleum's equity in the BMG
project will be 30% after the completion of this transaction.
C. EXPLORATION ACTIVITIES
(i) PEP 38259
The company advised the ASX in November 2006 that drilling of the Cutter-1
exploration well was completed on 9 November 2006. The well was drilled to a
total depth of 2,930 meters before being plugged and abandoned. Further
feasibility studies are continuing in this exploration acreage.
Joint Venture interests in PEP 38259 are:
AWE New Zealand Pty Ltd (Operator)* 25%
Tap (New Zealand) Pty Ltd 40%
Beach Petroleum (NZ) Pty Limited 20%
Anzon New Zealand Limited 15%
*Upon Tap resigning as Operator, AWE was appointed effective December 31st 2007.
(ii) VIC/P56, VIC/P49
Anzon farmed in to these Nexus operated exploration project areas, which are
adjacent to the Basker-Manta fields. Further studies are continuing in this
exploration acreage.
Joint Venture interests in these Permits are as follows:
- VIC/P56: Nexus Energy Limited 90% / Anzon 10%
- VIC/P49: Nexus Energy Limited 80% / Anzon 20%
(iii) VIC/L26, VIC/L27, VIC/L28
The BMG Joint Venture holds three production licences in the Gippsland Basin.
Oil production commenced from VIC/L26 initially in 2005, with the Full Field
Development coming on line in December 2006. VIC/L27 and VIC/L28 provide for the
development of the known gas resources and exploration of further hydrocarbon
potential in the acreage.
Potential exists for additional hydrocarbon accumulations in the intra-latrobe
formations within the company's production licences. Geophysical and geological
studies by Anzon have identified at least 4 leads which are presently being
matured for potential drilling in 2009 or later. Reprocessing of the 1996
Basker-Manta 3D seismic survey has been completed and is being used to mature
the leads previously identified.
(iv) Summary of Permit Interests
A summary of Anzon's interests in its respective permit/lease areas as at 30
September 2007 are set out below:
Permit Interest Operator Location
VIC/L26, L27 & L28 40% Anzon Australia Bass Strait
VIC/P49 20% Nexus Energy Ltd Bass Strait
VIC/P56 20%* Nexus Energy Ltd Bass Strait
PEP 38255 15% Tap Oil Ltd Canterbury Basin (NZ)
*Nexus and Anzon Australia Exploration (No.1) Pty Ltd registered interest in VIC
/P56 is 40% and 10% respectively, but in the process of changing to an 80% and
20% interest respectively.
D. CORPORATE MATTERS
(i) Merger with Nexus Energy Limited (NXS)
On 23 January 2008, Anzon announced that it had received a superior proposal to
merge with Nexus Energy Limited ("Nexus") and that its Board of Directors had
unanimously resolved, in the absence of a superior proposal, to approve an offer
by Nexus to acquire all of the issued shares in Anzon in exchange for Nexus
shares or a mixture of Nexus shares and cash. Anzon has entered into a merger
implementation deed with Nexus to effect the merger. Following the announcement
of Anzon's support for the Nexus proposal, ARC informed Anzon that it had
terminated its merger implementation agreement with Anzon, and as a result Anzon
was required to pay a $4 million break fee.
During March 2008 Anzon drilled the Basker-6 appraisal well followed by the
Basker 6 ST1 well. The sidetrack is being completed at present and planned to be
tied into the existing facilities in July with first production shortly
thereafter. Given the timing of receipt of this drilling information, Anzon,
with the support of Nexus, adjourned the scheme meeting (which was scheduled to
occur on 18 April 2008) to a date to be advised.
Anzon will continue to keep shareholders fully informed of any updated in
relation to the proposed merger with Nexus, including the details of when and
where the adjourned meeting is to take place.
(ii) Investment in Nexus Energy Limited (NXS)
Anzon holds 65.7 million shares in NXS representing approximately a 12% interest
in its share capital.
(iii) Woodside Claim
During the reporting period no further formal communication has occurred in
relation to this matter.
(iv) Project Finance Facilities
The total project finance balance as at 31 March 2008 was reduced to US$26.58
million. The balance of the project finance facilities is fully cash backed.
For further information please contact:
Tony Strasser, Company Secretary: +61 2 9922 7899
Grant Thornton Corporate Finance: Fiona Owen +44 20 7383 5100
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
Anzon Australia Limited
ABN Quarter ended ("current quarter")
46 107 406 771 31 March 2008
Consolidated statement of cash flows
Current quarter Year to date
(12 months)
Cash flows related to operating activities $A'000
$A'000
1.1 Receipts from product sales and related debtors 36,161 36,161
1.2 Payments for (a) exploration and (249) (249)
evaluation
(b) development (7,733) (7,733)
(c) direct (12,598) (12,598)
operating & production 17,991 17,991
(d) Repairs (SPM) 1 (7,725) (7,725)
(e) administration2
1.3 Dividends received - -
1.4 Interest and other items of a similar nature 392 392
received
1.5 Interest and other costs of finance paid (9) (9)
1.6 Income taxes paid - -
1.7 Professional fees (750) (750)
Net Operating Cash Flows 25,480 25,480
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - -
- -
(b) equity investments
(c) other fixed assets (241) (241)
1.9 Proceeds from sale of: (a)prospects - -
- -
(b)equity investments
- -
(c)intangible assets
1.10 Loans to other entities - -
1.11 Loans repaid by other entities
1.12 Other development expenditure
Net investing cash flows (241) (241)
1.13 Total operating and investing cash flows 25,239 25,239
(carried forward)
1 The mooring reinstatement costs for the quarter are stated net of insurance
receipts amounting to $21.3 million.
2 Administration costs include office overheads, consulting fees, and other
corporate and associated costs.
3 The $4 million break fee paid to Arc Energy Limited is included in
Administration costs.
1.13 Total operating and investing cash flows 25,239 25,239
(brought forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. - -
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings (net of fees) - -
1.17 Repayment of borrowings (16,234) (16,234)
1.18 Dividends paid - -
1.19 Other financing expenses - -
Net financing cash flows (16,234) (16,234)
Net increase (decrease) in cash held 9,005 9,005
1.20 Cash at beginning of quarter/year to date 59,065 59,065
1.21 Exchange rate adjustments to item 1.20 (1,996) (1,996)
1.22 Cash at end of quarter 66,074 66,074
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
Current quarter
$A'000
1.23 Aggregate amount of payments to the parties included in item 1.2 208
1.24 Aggregate amount of loans to the parties included in item 1.10 -
1.25 Explanation necessary for an understanding of the transactions
Payments to directors consist of aggregate amounts paid to directors including salaries and
superannuation.
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated
assets and liabilities but did not involve cash flows
-
2.2 Details of outlays made by other entities to establish or increase their share in projects in which
the reporting entity has an interest
-
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used
$US'000 $US'000
3.1 Loan facilities 26,577 26,577
3.2 Credit standby arrangements
Estimated cash outflows for next quarter
$A'000
4.1 Exploration and evaluation -
4.2 Development 35,300
Total 35,300
Reconciliation of cash
Reconciliation of cash at the end of the quarter Current quarter Previous quarter
(as shown in the consolidated statement of cash
flows) to the related items in the accounts is as $A'000 $A'000
follows.
5.1 Cash on hand and at bank 56,625 53,604
5.2 Deposits at call
5.3 Bank overdraft
5.4 Deposits held by JV's 9,449 5,461
Total: cash at end of quarter (item 1.22) 66,074 59,065
Changes in interests in mining tenements
Tenement Nature of interest Interest at Interest at
reference beginning of end of
(note (2)) quarter quarter
6.1 Interests in mining
tenements relinquished,
reduced or lapsed
6.2 Interests in mining
tenements acquired or
increased
This information is provided by RNS
The company news service from the London Stock Exchange
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