TIDMEXI
RNS Number : 0968N
Exillon Energy Plc
26 August 2011
Interim Results for the First Six Months of 2011
and Recent Drilling Update
Exillon Energy plc ("Exillon", 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
results for the first six months to 30 June 2011, and an update on
recent drilling results. The financial and production data are for
the period from 1 January 2011 to 30 June 2011 and all other
information, including details on operations covers the period to
25 August 2011.
Group highlights
Financial - profitable and well-funded
-- Net profit of $11.2 million for the first six months of 2011
compared to net loss of $8.7 million for the same period of
2010
-- Strong balance sheet with $152.7 million of cash and cash
equivalents as at 30 June 2011 with $48.5 million of debt
-- New share issuance in April 2011 resulted in net cash
proceeds of $146.1 million
-- Total crude oil revenues amounted to $88.4 million, a y-o-y
increase of 222%
Production - new record levels
-- In June 2011, the Company reached a new record average
monthly production level of 9,161 bbl/day, an increase of 37% over
December 2010 level (6,686 bbl/day)
-- In the first half of 2011, average production reached c.
7,860 bbl/day, an increase of 146% over the same period in 2010
(3,195 bbl/day)
Regional highlights
Exillon WS
-- Successful drilling program continued; 15 wells drilled in
2011 (one exploration, three appraisal and eleven development
wells)
-- Acquired 250 sq.km of 3D seismic and 440 sq. km of
gravimetric and magnetic data. Interpretation is underway
-- Successfully completed the first stage of oil processing
facility on the EWS II field
-- Obtained regulatory approvals for construction of entry point
to Transneft pipeline system; subcontractors have been appointed
and construction has begun
-- Average monthly oilproduction in June 2011 reached 5,880
bbl/day
Exillon TP
-- Started construction of oil treatment unit. This will permit
on-site preparation of 100% of produced volumes to commercial
quality
-- Infrastructure completed for water injection system: water
well drilled and connected by 3.6 km high-pressure pipeline to an
injection well (Well #1VV); water injection has started
-- Average monthly oil production in June 2011 reached 3,281
bbl/day
Dear Shareholders,
The first six months of 2011 witnessed rapid growth at Exillon,
with production increasing 146% compared to the equivalent period
in 2010, and a net profit for the period of $11.2 million (in
accordance with IFRS, this includes an element of foreign exchange
translation gain). This growth was a result of continuing
investment in our surface infrastructure and the ongoing success of
our drilling programme. 15 wells have been drilled to date since
January 2011 and extensive drilling program is underway for 2011
and 2012.
The company is well funded thanks to the support of its
shareholders in the April 2011 placing, and we intend to continue
our expansion in a rapid but prudent manner. We will continue to
adapt carefully our drilling and other investment plans, as we
develop our understanding of the characteristics of our oil fields.
As production and revenue increase, our growing output will
increasingly fund the cost of exploration.
The construction of our direct entry point to the Transneft
pipeline at Exillon WS has been delayed from the second quarter to
the fourth quarter of 2011. This was caused by the longer than
expected time taken to obtain regulatory approvals for construction
of the facility. All necessary approvals have now been obtained,
and construction is underway. When completed, the entry point will
significantly reduce our transportation costs at Exillon WS.
As a result of well completion issues, initial production from
three wells on the EWS I field (#8, #38 and #371) did not meet our
expectations because of problems with water intrusion. Remedial
steps have been taken to repair these wells, and to minimise the
chances of a recurrence. It is likely that our overall production
by the end of 2011 will reach approximately 11,000 barrels per day,
compared to 14,000 barrels per day as we had previously
expected.
A review of our reserves and resources will be carried out later
this year, overseen by our new Chief Geoscientist, John Krupa. This
review will make use of the data collected by our 2011 drilling
programme, as well as our newly acquired 3D seismic, gravimetic and
magnetic data.
We have entered the second half of 2011 in a strong financial
position and we see considerable potential for further profitable
growth by continuing to increase production and enhancing our
operational efficiency. We continue to make additional hires in
Moscow, Urai and Usinsk to support the growth of our business,
including significant appointments to our senior management and
Board of Directors.
Mark Martin
Chief Executive Officer
MATERIAL EVENTS AND TRANSACTIONS
Drilling Update
Note: the following drilling update includes drilling results
for one appraisal and four production wells that have been
completed recently and haven't been previously announced.
Exploration Drilling Programme
-- Exploration well 4 (EWS-10274) was spudded on 8 May 2011 and
was designed to test an area between the EWS I and EWS II fields.
Preliminary results of wire logging confirmed the presence of 6.7
meters of effective net oil pay in the Jurassic formation and
expanded the management's understanding of the outline of the EWS
fields in a manner which may support further reserve growth. The
Group also studied the well deeper to a level of 2,620 meters but
did not encounter hydrocarbons below the Jurassic formation.
Analysis of the core results is continuing to assess the
characteristics of the deeper horizons. The well is currently being
prepared for production.
Appraisal Drilling Programme
-- Appraisal well EWS II - 111, which was spudded on 2 July
2011, was drilled on the southern margin of the EWS II field as an
off-structure flank position. The well was designed to test the
presence of hydrocarbons on the southern margin of the EWS II
field, and also to test a stratigraphic development concept. The
well encountered Jurassic J2-4 formation with an effective net oil
pay of 16.4 meters, which both increases the EWS II field area and
suggests that further stratigraphic plays should be pursued in
order to develop the field most efficiently.
The following appraisal results have been previously announced
during the course of 2011:
-- 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.
-- 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.
Development Drilling Programme
Exillon WS drilled eleven wells in the period, extending a
perfect drilling success rate to 29 wells since 2006. The
development wells were drilled on a turnkey basis with an average
drilling cost of $ 1.1 million.
The Group is pleased to announce successful completion of the
following wells:
-- The EWS I - 19 well, which was spudded on 8 May 2011, was
drilled on the southern part of the EWS I field. The well
encountered the Jurassic P reservoir at 1,938 meters, confirming
the presence of 13.6 meters of effective net oil pay within the
Jurassic. The well was drilled directionally 0.5 km north-west from
the existing well-pad 4.The well will be used in a pilot
water-injection program that will begin in Q3 2011.
-- The EWS II - 142 well, which was spudded on 18 May 2011, was
drilled on north-central part of EWS II field. The well encountered
Jurassic J2-4 interval at 1,955 meters, confirming the presence of
effective net oil pay of 10.9 meters within the Jurassic. The well
was drilled directionally 0.85 km south-west from the existing well
pad 2.
-- The EWS I - 14 well, which was spudded on 27 May 2011, was
drilled on the southern margin of the EWS I field. The well flowed
water-free oil with a flow rate of 280 bbl/day. The well
encountered Jurassic P formation at 1,821 meters, confirming
effective net oil pay of 10.7 meters. The well was drilled
directionally 1.4 km west from the existing well pad 4.
-- The EWS I - 45 well, which was spudded on 8 June 2011, was
drilled on the southern part of the East EWS I field. The well
flowed oil at a rate of 550 bbl/day. The well encountered Jurassic
P formation at 1,833 meters, confirming the presence of effective
net oil pay of 16.2 meters within the Jurassic. The well was
drilled directionally 0.8 km west of the existing well pad 32.
The following drilling results were previously announced during
the course of 2011:
-- The EWS I -16 well, which was spudded on 25 December 2010,
was drilled on the 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 1,869 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.
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