Afren announces interim management statement
Afren plc (“Afren” or the “Company”), announces its Interim Management Statement and financial results for the three months ended 31 March 2012 and an update on its operations to 15 May 2012, in accordance with the reporting requirements of the EU Transparency Directive.
Information contained within this release is un-audited and is subject to further review.
2012 exploration campaign yielding significant success
High value discoveries offshore south east Nigeria at Okoro East and Ebok North Fault Block
Transformational Simrit-2 discovery in Kurdistan region of Iraq; exploration well being deepened ahead of extensive testing programme
Ongoing prospect maturation in East Africa with significant data acquisition; 1,570 km total 2D seismic, 9,000 km gravity and magnetic data
2012 exploration targeting mean resources of 630 mmboe (net to Afren)
Q1 net production of 41,308 boepd in line with expectations for the period (+327% year-on-year)
Early production wells on Okoro East to be drilled shortly
Further development of Ebok field ongoing (four production wells)
On track for full year net production guidance (42,000 boepd to 46,000 boepd)
Development work underway at Barda Rash field
On track for first oil in August 2012
Significantly cash generative portfolio
Turnover US$386.7 million (Q1 2011: US$73.4 million); profit after tax US$53.2 million (Q1 2011: US$11.1 million loss)
Net operating cash flow generated of US$300.2 million (Q1 2011: US$12.8 million net operating cash flow used); US$153.1 million net cash flow generated post capex (Q1 2011: US$147.2 million net cash flow used post capex)
Cash at bank US$399.0 million (Q1 2011: US$333.0 million)
Diversified sources of funding; maturing capital structure
Successfully completed US$300 million bond issue; majority of debt long dated (2016-2019)
Net debt US$639.4 million (Q1 2011: US$291.6 million)
Commenting on today’s IMS, Osman Shahenshah, Chief Executive of Afren plc, said: “We have made an excellent start to our 2012 exploration campaign with significant discoveries at Okoro East, Ebok North fault Block and Ain Sifni. Group production during the first quarter was in line with our expectations, generating US$300.2 million of net operating cash flow. We look forward to continuing our exploration programme, with wells in Nigeria, the Nigeria-São Tomé & Príncipe JDZ , Congo, the Kurdistan region of Iraq and East Africa, targeting in excess of 630 million barrels of oil equivalent net to Afren.”
Net working interest production during the first quarter was in line with expectations and reflects the management of ongoing development work, simultaneous operations and associated downtime at the Ebok field during exploration and development drilling. The Company remains firmly on track to achieve full year net production guidance. Nigeria .
Okoro and Okoro East On 17 January 2012, Afren and its partner Amni International Petroleum Development Company Ltd. (“Amni”) announced that the Okoro East exploration well had successfully made a new oil discovery. Located approximately 2 km east of the Okoro main field, the well was targeting equivalent reservoirs to the main field in a fault sealed three-way dip closed structure in addition to further prospectivity in a deeper horst block structure – a play concept that had not previously been explored on the block.
The well encountered net pay of 549 ft across both the upper and deeper targets, and test data confirmed the oil to be light and of good quality (38° to 40° API) in excellent reservoir sands with multi-Darcy permeabilities and average porosity of between 30% to 35%. The pressure data also obtained has helped with the Company’s structural understanding of the field and supports the Company’s pre drill volumetric estimates (Pmean STOIIP of 157 mmbbls).
The year ahead will see ongoing management of existing production at the Okoro field with the objective of optimising the oil recovery factor from the already developed reservoir zones. Afren and its partner Amni will shortly commence the drilling of two new production wells at Okoro East, whilst also defining the most appropriate long-term development solution for the entire field. Ebok and Ebok North Fault Block .
Having commissioned all production wells associated with the initial phases of the Ebok field development in 2011, the Company and its partner Oriental Energy Resources (“Oriental”) are in the process of drilling and completing a further four horizontal production wells at the field. The wells Afren plc Page 3 are being drilled from the West Fault Block wellhead platform and are targeting proved oil bearing reservoir zones that were not captured by the initial phases of development work. .
On 14 May 2012 the Company announced that the Ebok North Fault Block (“Ebok NFB”) exploration well has successfully made an oil discovery. The well was spudded on 12 April 2012 by Afren and Oriental, and reached a total depth of 4,320 ft, with the Transocean Adriatic IX jack-up drilling rig. The well was targeting a separate fault block structure located to the north of the main Ebok field, and has successfully encountered 370 ft net pay (TVT) of good quality oil in the same Tertiary reservoir sands equivalent to those that have been developed and are in production at the main Ebok field development. The discovery of significant oil pay at this location underlines the high-grade prospectivity that exists across the wider Ebok/Okwok/OML 115 area, and represents an important step towards unlocking the full volume and value potential of what is a core hub of Afren’s portfolio.
Logging operations at the Ebok NFB well have been completed, with data obtained supporting a Pmean STOIIP in excess of 100 million barrels of oil, towards the upper end of Afren’s pre-drill expectations. The well will now be suspended whilst Afren and Oriental determine the optimal development solution for Ebok NFB. This will likely incorporate synergies using the existing production, storage and offtake infrastructure at the main Ebok field and could involve the early drilling of new production wells from the existing wellhead platform at Ebok West Fault Block, followed by a full field development of Ebok NFB. The Transocean Adriatic IX rig will shortly commence the drilling of early production wells at the recent Okoro East discovery.
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