LONDON (Alliance News) - Volga Gas PLC Friday said production in its first quarter of the year was up by more than 50% compared to its 2013 average rate after upgrade works at its Dobrinskoye gas processing plant, but it said development drilling at its VM field is progressing slower than expected.
The oil and gas exploration and production group, which operates in the Volga region of Russia, said its total production was 4,512 barrels of oil equivalent per day in the three months to March 31, which is a 52% increase on its yearly average for 2013.
It added that, despite relative weakness of the Russian rouble during the period, revenues for the three months amounted to roughly USD11.6 million.
Volga Gas said production levels were improved in November, following regulatory approvals for upgrade works at its Dobrinskoye gas processing plant, and have been maintained at the higher rate since then. It said the plant continues to operate with a throughput of more than 500,000 cubic metres per day of gas.
The company said that following the imminent installation of certain additional improvements at Dobrinskoye, final approval of a completed upgrade will be sought, which should bring the site to a full capacity of 1.05 million cubic metres per day.
Volga Gas noted that development drilling at the VM field is progressing slower than expected but that its VM#3 production well has reached a depth of 1,210 metres and is expected for completion during the third quarter.
The company said it continues to operate profitably and to generate positive cash flow in line with management expectations. The group's net cash has risen to USD14.6 million at May 31, up from USD8.0 million at the start of 2014.
The news comes after the company announced earlier this month that it will conduct a formal sale process after exploring its strategic options and has asked potential bidders to contact Russian financial group Otkritie.
Volga Gas shares were down 1.4% to 127.25 pence Friday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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