TIDMCEO
RNS Number : 0120J
Coastal Energy Company
01 August 2012
TSX: CEN August 1, 2012
AIM: CEO
Coastal Energy Announces Results of Third Party Interim Reserves
Evaluation
Coastal Energy Company (the "Company" or "Coastal Energy") (TSX:
CEN, AIM: CEO) announces the results of an interim third party
evaluation of its onshore and offshore reserves in Thailand. RPS
Energy Ltd. ("RPS") prepared a report dated July 30, 2012, with an
effective date of March 31, 2012, in accordance with the guidelines
established by the Society of Petroleum Engineers ("SPE"). The RPS
report was prepared to incorporate the Company's drilling results
at Bua Ban North & South in 2012 as well as information from
core analyses which were completed subsequent to the RPS report
published on March 27, 2012, which had an effective date of
December 31, 2011. All comparisons made use the reserve numbers
from the report effective December 31, 2011 as the base.
Offshore Proved reserves (1P) increased by 30% to 81.0 mmbbl and
offshore Proved plus Probable reserves (2P) increased by 60% to
127.7 mmbbl. Total company Proved reserves (1P) increased by 26% to
87.9 mmboe and total company Proved plus Probable reserves (2P)
increased by 45% to 149.1 mmboe.
The following table presents a summary of the recoverable oil
volumes:
(in mboe) Offshore (Oil) Onshore (Gas) Total
------------ ------------------------------------------------------------------------ ---------------------- ------
Class Bua Ban Songkhla A Bua Ban Bua Ban Songkhla H Other Sinphuhorm Dong Mun
North South Main
------------ ----------- ----------- ----------- ------------ ----------- ------ ----------- --------- ------
1P 72.0 6.0 2.6 0.4 0.0 0.0 6.9 0.0 87.9
------------ ----------- ----------- ----------- ------------ ----------- ------ ----------- --------- ------
2P 108.3 11.7 5.3 1.5 0.9 0.0 21.4 0.0 149.1
------------ ----------- ----------- ----------- ------------ ----------- ------ ----------- --------- ------
3P 122.0 16.3 20.0 2.7 0.9 0.0 24.6 0.0 186.5
------------ ----------- ----------- ----------- ------------ ----------- ------ ----------- --------- ------
Contingent
Resources 0.2 5.6 0.3 2.4 0.0 0.0 2.8 10.0 21.3
------------ ----------- ----------- ----------- ------------ ----------- ------ ----------- --------- ------
Prospective
Resources 45.2 69.0 5.2 3.6 8.0 122.4 13.7 17.9 285.0
------------ ----------- ----------- ----------- ------------ ----------- ------ ----------- --------- ------
The following table presents a summary of the net present values
of future cash flows (in USD millions):
Reserves Offshore Onshore Before Total Before Offshore Onshore Total After
Class Before Tax Tax PV10 Tax PV10 After Tax After Tax Tax PV10
PV10 PV10 PV10
--------- ------------ --------------- ------------- ----------- ----------- ------------
1P $3,456.3 $197.0 $3,653.3 $1,734.1 $135.0 $1,869.1
--------- ------------ --------------- ------------- ----------- ----------- ------------
2P $5,272.2 $376.0 $5,648.2 $2,246.7 $251.0 $2,497.7
--------- ------------ --------------- ------------- ----------- ----------- ------------
3P $6,543.7 $427.0 $6,970.7 $2,383.4 $285.0 $2,668.4
--------- ------------ --------------- ------------- ----------- ----------- ------------
Note: Reserve figures are shown as net working interest before
royalties (Thailand royalty regime is discussed in the MD&A of
the Company's Annual Report dated December 31, 2011). After-tax NPV
figures are defined as future net revenues discounted at 10%.
Reserve numbers taken from the Company's competent person's report
prepared by RPS Energy Ltd. dated as of July 31, 2012 (prepared in
accordance with NI 51-101 and the COGE Handbook) which may be found
on the Company's website at www.coastalenergy.com. Onshore reserve
and resource numbers reflect Coastal's increased interest in APICO,
which became effective January 1, 2012.
Offshore
Bua Ban North
1P reserves increased by 29% to 72 mmbbl and 2P reserves
increased by 60% to 108.3 mmbbl. The increase in reserves was
driven by a substantial increase in the stock tank oil originally
in place (STOOIP) figure following analysis of core samples from
Bua Ban North. The core analyses indicate that the level of water
saturation in the field is approximately 25%; lower than the 40%
level which was being used to calculate the original STOOIP
volumes. The STOOIP number also increased due to the additional
appraisal and development drilling which was performed on the field
in the first quarter (Bua Ban North B-12 & B-13).
Bua Ban South
The Company booked 2.6 mmbbl of 1P reserves and 5.3 mmbbl of 2P
reserves following the exploration & appraisal program at Bua
Ban South. A further 14.7 mmbbl was placed in the Possible reserves
category, bringing the 3P reserves to 20.0 mmbbl. The Company
expects that it will be able to re-categorize much of the Possible
reserves into 1P and 2P once production testing is performed.
Songkhla A & Bua Ban Main
2P reserves at Songkhla A and Bua Ban Main increased by 18% and
20% respectively as reservoir performance in 2012 has been better
than modeled.
Onshore
Dong Mun
Following the successful test of the Dong Mun sidetrack well
(Coastal 39% working interest) in the first quarter, the Company
has recorded 59.7 bcf (10.0 mmboe of high quality contingent
resources. This will be reclassified into 1P and 2P reserves once a
gas sales agreement is secured. The Company and its partners in the
onshore assets are currently working on the development plans for
the field as well as securing a sales agreement and evaluating
pipeline construction.
Operations Update
Two horizontal development wells and two water injection wells
were drilled at Bua Ban North. The two horizontal wells are
producing approximately 1,800 bopd each. Current offshore
production is 22,500 bopd, with total company production averaging
24,500 boepd.
The lack of aquifer support on the western side of the field had
caused the Company to shut in production from three of the existing
wells (Bua Ban North A-01, A-03 and A-11). Now that water injection
has been established, the Company will begin producing from these
three wells again once pressure rebuilds (expected to be in
approximately 30 days).
The rig is currently undergoing regulatory inspections and will
spud the Songkhla J Buried Hill prospect following completion,
which is expected next week.
The Company has purchased the production facilities at Bua Ban
North A, which will reduce its lease operating costs going forward
as well as provide tax advantages. This brings the number of owned
MOPUs to three.
Randy Bartley, President and CEO of Coastal Energy,
commented:
"We are extremely pleased with the results of the interim
reserves evaluation by RPS. Bua Ban North continues to surprise to
the upside. The core analysis gave us a lot of valuable information
about the reservoir and helped us to better formulate our field
wide development plan. We are looking to contract a second rig so
we can execute the Bua Ban North development while continuing our
exploration program and expansion into Malaysia.
"Drilling the much needed water injectors will help to bring
production from Bua Ban North back up to higher levels. We are
already seeing increased rates from the Bua Ban North A-08 well due
to the pressure reinjection. We expect to see benefits at the
remaining wells on the western flank in the coming month as the
water injection brings pressures up throughout the western side of
the reservoir and we begin producing from the remaining three
producers on that side.
"The Songkhla J exploration prospect is a pre-Tertiary objective
approximately 2.5 kilometers north of the discovery well at
Songkhla H. The well is expected to spud later this week and will
be drilled to a depth of 6,700 feet. We have also commenced the
planned 3D seismic acquisition over Block G5/43."
Randy Bartley, President and Chief Executive Officer of the
Company and a member of the Society of Petroleum Engineering and
Jerry Moon, Vice President, Technical & Business Development, a
member of the American Association of Petroleum Geologists, a
Licensed Professional Geoscientist and a Certified Petroleum
Geologist in the state of Texas, have reviewed the contents of this
announcement.
Additional information, including the Company's complete
competent person's report may be found on the Company's website at
www.CoastalEnergy.comor may be found in documents filed on SEDAR at
www.sedar.com.
This statement contains 'forward-looking statements' as defined
by the applicable securities legislation. Statements relating to
current and future drilling results, existence and recoverability
of potential hydrocarbon reserves, production amounts or revenues,
forward capital expenditures, operation costs, oil and gas price
forecasts and similar matters are based on current data and
information and should be viewed as forward-looking statements.
Such statements are not guarantees of future results and are
subject to risks and uncertainties beyond Coastal Energy's control.
Actual results may differ substantially from the forward-looking
statements.
Glossary of Technical Terms & Definitions
The following defined terms have the respective meanings set out
below:
1P Proved reserves.
2P Proved reserves + probable reserves.
3P Proved reserves + probable reserves + possible reserves
Development well A well drilled within the proved area of an oil
or gas reservoir to the depth of a stratigraphic horizon known to
be productive.
Exploratory well A well drilled to find a new field or to find a
new reservoir in a field previously found to be productive of oil
or gas in another reservoir.
Proved reserves Those reserves that can be estimated with a high
degree of certainty to be recoverable. It is likely that the actual
remaining quantities recovered will exceed the estimated proved
reserves.
Probable reserves Those additional reserves that are less
certain to be recovered than proved reserves. It is equally likely
that the actual remaining quantities recovered will be greater or
less than the sum of the estimated proved + probable reserves.
Possible reserves Those additional reserves that are less
certain to be recovered than probable reserves. It is equally
likely that the actual remaining quantities recovered will be
greater or less than the sum of the estimated proved + probable +
possible reserves.
Reserves The estimated remaining quantities of oil and natural
gas and related substances anticipated to be recoverable from known
accumulations, as of a given date, based on the analysis of
drilling, geological, geophysical, and engineering data; the use of
established technology; and specified economic conditions, which
are generally accepted as being reasonable. Reserves are further
classified according to the level of certainty associated with the
estimates and may be subclassified based on development and
production status.
Royalties A payment to the government or others, usually
expressed as a percentage of total hydrocarbon production.
Enquiries:
Coastal Energy Company
Email: investor@CoastalEnergy.com +1 (713) 877-6793
Strand Hanson Limited (Nominated Adviser)
Rory Murphy
Paul Cocker +44 (0) 20 7409 3494
Macquarie Capital (Europe) Limited
(Broker)
Paul Connolly
Jeffrey Auld +44 (0) 20 3037 2000
FirstEnergy Capital LLP (Broker)
Hugh Sanderson
Travis Inlow +44 (0) 20 7448 0200
Buchanan (Financial PR)
Tim Thompson
Ben Romney
Helen Chan +44 (0) 20 7466 5000
This information is provided by RNS
The company news service from the London Stock Exchange
END
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