TIDMEXI
RNS Number : 8077G
Exillon Energy Plc
18 May 2011
Exillon Energy
18 May 2011
Interim Management Statement
Exillon Energy plc ("Exillon Energy", the "Company" or the
"Group") (EXI.LN), a British listed independent oil producer with
assets in two oil-rich regions of northern Russia, Timan-Pechora
("Exillon TP") and West Siberia ("Exillon WS"), today issues its
Interim Management Statement for the period beginning 1 January
2011. The financial and production data are for the period from 1
January 2011 to 30 April 2011 and all other information, including
details on operations is as at 17 May 2011.
Key highlights
Prospecting and appraisal drilling
-- 2011 appraisal well programme has been completed
successfully
o Appraisal Well 5 (Well 50P) - the well encountered 12.4 meters
on net oil pay of the Jurassic P reservoir on a northern extension
to the East EWS I field which contained pre drill estimates of 13.3
million barrels of possible reserves
o Appraisal Well 3 (Well 139) - successfully tested a western
extension to the EWS II field by confirming the presence of 28.1
meters of effective net oil pay in an area that is currently mapped
as a zero net pay zone
-- Acquired 250 square km of 3D seismic - results of seismic
interpretation will be ready in Q4 2011
-- Acquired 440 square km of gravimetric and magnetic survey -
preliminary results of magnetic survey support Groups hypothesis
that EWS II and EWS III fields are in communication
-- Acquired 840 geochemical samples - results detected
hydrocarbon shows in areas targeted by the Group
Development drilling
Achieved 100% drilling success across seven development wells
and two appraisal wells drilled in 2011, extending the perfect
drilling success rate since 2006 to 23 wells. The development wells
were drilled with an average drilling time of 20 days per well, and
at an average cost of US$ 1.0 million.
The wells have been tested and encountered the following
effective oil net pay zones:
-- Well EWS I - 16: 23.1 meters
-- Well East EWS I - 391: 4 meters
-- Well East EWS I - 371: 13.8 meters
-- Well EWS I - 20: 14.6 meters
-- Well East EWS I - 33: 7.5 meters
-- Well East EWS I - 36: 5.4 meters
-- Well East EWS I - 38: 9.0 meters
Field development
-- Constructed 18.7 km of electricity lines that will allow the
Group to save on diesel costs upon installation of gas power
generators in Q2 2011
-- Constructed 10.8 km of infield pipelines enabling production
from isolated well pads
-- Completed 38 km of all season roads allowing for year-round
access to major fields in Exillon WS
-- Constructed well pads 2, 4, 32 for further development
drilling
Production
-- The average daily production rate reached 7,386 bbl/day in
the period to 30 April 2011, an increase of 166% over the
comparable period in 2010 (2010: 2,780 bbl/day).
Financial
-- Equity offering raised US$ 148.0 million in the second
quarter
-- Group cash balance of US$ 180.9 million at 30 April 2011 and
US$ 47.6 million of debt
MATERIAL EVENTS AND TRANSACTIONS
Placement of Shares
The Group placed 23,438,000 new ordinary shares to institutional
investors. The price per share was 400 pence, resulting in net
proceeds to the Company of US$ 148.0 million.
Production
Gross production for the four months to 30 April 2011 averaged
7,386 bbl/day. This represents a 166% increase over the comparable
period in 2010 when the average daily production rate was 2,780
bbl/day. The Group's revenue for the period comprised revenues from
sales of crude oil and amounted to US$ 52.3 million.
Drilling
Exillon WS drilled nine wells in the period, achieving 100%
drilling success rate, and extending a perfect drilling success
rate to 23 wells since 2006.
Appraisal well 5 (EWS I - 50 )
Appraisal well 5 (EWS I - 50 ), which was spudded on 9 March
2011, was designed to test a five square km northern extension to
the East EWS I field. The well reached a target depth within the
Jurassic P reservoir at 1,858 meters, confirming the presence of
12.4 meters of net oil pay within the Jurassic. The well flowed
water-free oil naturally to the surface with a flow rate of 690
bbl/day on a 10 mm choke, and was drilled on a turn-key contract in
18 days. This appraisal well contained pre drill estimates of 13.3
million barrels of possible reserves (Miller and Lents December
2010 reserves report). The well will be connected to existing
production facilities in Q2 2012.
Appraisal well 3 (EWS II - 139)
Appraisal well 3 (EWS II - 139) which was spudded on the 4 April
2011 was drilled in 31 days on the western margin of the EWS II
field. The well was designed to test a western extension to the EWS
II field, and successfully confirmed the presence of 28.1 meters of
effective net oil pay in an area that is currently mapped as a zero
net pay zone (Miller and Lents December 2010 reserves report). The
well also showed that oil water contact zone is at least 25 meters
lower than previously anticipated, which further supports the
Group's hypothesis that EWS II and EWS III fields are in
communication. The well was drilled directionally 0.6 km to the
west from a standalone well pad. Testing of the well will be
completed in Q3 2011.
EWS I - 16
The EWS I -16 well, which was spudded on 25 December 2010, was
drilled on a northern extension of the EWS I field. The well flowed
water-free oil with a flow rate of 370 bbl/day and was drilled in
19 days on a turn-key contract. The well reached target depth
within the Jurassic P reservoir at 1,824 meters, confirming the
presence of 16.6 meters of effective net oil pay within the
Jurassic. In addition the well encountered 6.5 meters of effective
net oil pay within the Pre-Jurassic at a depth of 1869 meters,
making the total effective net oil pay encountered by the well of
23.1 meters. The well was drilled directionally 1.0 km to the north
from the existing well pad.
EWS I - 391
The EWS I - 391 well, which was spudded on 25 December 2010, was
drilled in 19 days on the north-western part of the East EWS I
field on a turn-key contract. The well encountered producing
Jurassic P reservoir at 1,862 meters, confirming the presence of 4
meters of effective net oil pay. The well was drilled directionally
1.0 km to the north-west from the existing well pad 30, and will be
connected to existing production facilities upon completion of
testing.
EWS I - 38
EWS I - 38 well, which was spudded on 2 March 2011, was drilled
in 17 days on the eastern part of the East EWS I field on a
turn-key contract. The well encountered producing Jurassic P
reservoir at 1,858 meters, confirming the presence of at least 9.0
meters of effective net oil pay within the Jurassic. The well was
drilled directionally 1.1km to the north-east from the existing
well pad. On completion of testing the well will be connected up to
existing production facilities.
EWS I - 20
EWS I - 20 well which was spudded on 13 April 2011, was drilled
in 24 days on an eastern part of the East EWS I field on a turn-key
contract. The well flowed water-free oil naturally to the surface
with a flow rate of 625 bbl/day on an 8 mm choke. The well
encountered the Jurassic P reservoir at 1,809 meters, confirming
14.6 meters of effective net oil pay within the Jurassic. The well
was drilled directionally 0.9 km to the north-west from the
existing well pad.
EWS I - 33
EWS I - 33 well which was spudded on 20 March 2011 was drilled
in 15 days on an eastern part of the East EWS I field on a turnkey
contract. The well encountered the Jurassic P reservoir at 1,845
meters, confirming the presence of 7.5 meters of effective net oil
pay within the Jurassic. The well was drilled directionally 0.5 km
to the east from the existing well pad.
EWS I - 371
EWS I - 371 well which was spudded on 5 April 2011 was drilled
in 19 days on an eastern part of the East EWS I field. The well
encountered the Jurassic P reservoir at 1,864 meters, confirming
the presence of 13.8 meters of effective net oil pay within the
Jurassic. The well was drilled directionally 1.5 km to the east
from the existing well pad. On completion of testing the well will
be connected up to existing production facilities.
EWS I - 36
EWS I - 36 well which was spudded on 26 April 2011 was drilled
in 21 days on an eastern part of the East EWS I field. The well
encountered the Jurassic P reservoir at 1,849 meters, confirming
the presence of 5.4 meters of net oil pay within the Jurassic. The
well was drilled directionally 1.2 km to the south-east from the
existing well pad. On completion of testing the well will be
connected up to existing production facilities.
Board Structure
The Group has appointed David Herbert as a Non-Executive
Chairman of the Board and Maksat Arip as CEO of the Group's
subsidiary holding companies.
Dr. Herbert has more than 20 years experience in investment
banking, including most recently as Managing Director and Head of
International Corporate Finance at ING Bank N.V. Dr. Herbert also
has considerable experience in the oil and gas industry, having
worked for more than 10 years at BP, where he served in a variety
of senior management positions. He has also held various
non-executive director and advisory roles with significant resource
and advisory businesses in Russia and the CIS. After receiving his
first degree in economics from the University of Dublin, Dr.
Herbert went on to complete his doctorate at Brunel University,
where he taught for eight years.
Maksat Arip's new position as CEO of the Group's subsidiary
holding companies will allow him to concentrate on the day-to-day
management of the Company's operations, as well as the development
and implementation of the Group's strategy.
FINANCIAL POSITION AND PERFORMANCE
Cash and cash equivalents and term deposits
The cash and cash equivalents and term deposits at 30 April 2011
were approximately US$ 180.9 million (30 April 2010: US$ 11.0
million).
Capital expenditure
Capital expenditure in the period to 30 April 2011 was around
US$ 30.2 million (2010: US$ 12.5 million). Of the total capital
expenditure, approximately 64% was attributable to infrastructure
with the balance spent on drilling. The infrastructure spend during
the first four months of the year included the construction of an
inter-field road, system of electricity supply and inter-field
pipeline system.
Realised prices
The average realised crude oil price during in the period to 30
April 2011 was approximately US$ 64.0 per barrel which was 30.6%
higher compared to the corresponding period last year (2010: US$
49.0/bbl). The Group's realised crude oil prices achieved a
discount of about 4% to Brent during the first four months of the
year.
CURRENT OPERATIONS AND OUTLOOK
The Group continues to follow the strategy of growing output and
also increasing reserves in a cost efficient and effective manner.
The Group has four drilling rigs that have been mobilized for
drilling in West Siberia and three more drilling rigs that are
currently mobilizing.
During the first quarter of 2011, the Group has completed all
season roads to EWS I and EWS II oil fields in Exillon WS. The
presence of all season roads will allow year-round access to major
fields in Exillon WS. During the course of the year, the Group also
expects to complete an entry point to the Transneft pipeline in
Exillon WS, complete a first stage of oil processing in Exillon TP,
and install additional gas power generators in Exillon TP and
Exillon WS. This additional infrastructure will significantly
improve operational efficiency.
About Exillon:
Exillon Energy is an independent oil producer with assets in two
oil-rich regions of Northern Russia: Exillon TP in Timan-Pechora
and Exillon WS in West Siberia. Exillon Energy plc is incorporated
in the Isle of Man, with an operational centre in Urai, Russian
Federation. For further information please visit:
www.exillonenergy.com
Disclaimer
This statement may contain forward-looking statements concerning
the financial condition and results of operations of the Group.
Forward-looking statements are statements of future expectations
that are based on the management's current expectations and
assumptions and involve known and unknown risks and uncertainties
that could cause actual results, performance or events to differ
materially from those expressed or implied in these statements. No
assurances can be given as to future results, levels of activity
and achievements and actual results, levels of activity and
achievements may differ materially from those expressed or implied
by any forward-looking statements contained in this report. The
Company does not undertake any obligation to update publicly or
revise any forward-looking statement as a result of new
information, future events or other information.
Contact details:
Tom Blackwell +44 207 920 2330
This information is provided by RNS
The company news service from the London Stock Exchange
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