LONDON (Alliance News) - Jupiter Energy Ltd on Tuesday said it is focused on starting and completing a work programme on its fields in Kazakhstan that have been shut-in and not producing oil since early 2015, with the hope of restarting production in the first half of this year.
All producing wells have been shut-in since February 2015, a decision made in response to subdued oil prices. A three-year work programme to be conducted from 2017 to 2019 has been submitted for approval, with the hope of securing that in the first quarter.
Licence extensions for both the Akkar East and West Zhetybai oilfields have also been approved. Jupiter sought a three-year extension until December 29, 2019, but was informed that it may get a further extension to 2020 if it pursues the North East and South East land extensions.
Trial production licence extensions for both oilfields have also been submitted. All approvals should be in place by the end of March, allowing the company to "recommence oil production in the first half of 2017".
"The company will keep shareholders updated on progress with the approval of the 2017 to 2019 Work Program and the extension of the Trial Production Licences for the Akkar East and West Zhetybai oilfields," said Jupiter.
In late 2015, Jupiter considered restarting production as the lack of production hampered cashflow and forced the business to rely on debt funding as it had not secured approval to raise new equity. Major shareholders and others were forced to help fund the company in the meanwhile.
Jupiter Energy said it has total debt of USD34 million at the end of 2016, through a total of five promissory notes. Waterford Petroleum Ltd holds USD11.3 million worth of notes plus a further USD9.6 million. Mobile Energy Ltd holds USD10.2 million worth of notes, Midocean Holdings Ltd holds USD2.2 million and other private investors hold the remaining USD719,951.
Waterford Petroleum holds a 29.5% stake in Jupiter.
In preparation for production restarting, Jupiter said it is working with various oil marketing groups to secure oil sales agreements and position itself for a return to oil production once all the relevant approvals have been secured.
"Assuming that the trial production licences are approved for the Akkar East and West Zhetybai oilfields during the first quarter of 2017, that requisite funding to recommence operations is in place and most importantly domestic oil prices reach a level that ensures cashflow from oil production will be positive, the company will consider recommencing production during the 1st half of 2017," said Jupiter.
"Under the current care and maintenance approach, sufficient working capital is in place until the end of September 2017 to enable the company to work towards resolving its longer term funding requirements," Jupiter added.
In addition, Jupiter said progress has been made regarding to desired extension to the trial production licence covering J-50. The J-50 well has been shut-in since December 2014, when the last licence expired.
"The underlying issue delaying the trial production licence renewal is the request by the Committee of Geology that Jupiter Energy reach agreement with its neighbour MangistauMunaiGas over the division of reserves associated with both companies' share of the Akkar North accumulation," said Jupiter.
"Jupiter Energy has been in dialogue with MangistauMunaiGas on this issue for some time but has been unable to reach formal agreement with MangistauMunaiGas with respect to the division of Akkar North reserves," Jupiter added. "The company believes progress has been made during the quarter on this issue and will update shareholders as soon as the relevant authorities have made any definitive decisions on this matter."
Jupiter shares were untraded on Tuesday, last trading at 12.25 pence on January 24.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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