Melrose ups production guidance

Oil and gas firm Melrose Resources saw first half revenue and profit tumble as a result of lower oil prices and the planned cessation of production from its Galata field.Revenue in the six months to 30 June 2009 fell to $97.6m from $234m the year before. The company achieved an average price per barrel of oil of $79.99 during the period, down from $106.67 a year earlier but higher than the average price achieved in the second half of 2008.Earnings before interest, tax, depreciation and amortisation tumbled to $75.4m from $213.1m while profit before tax slumped to $19.8m from $134.2m.Average daily production in the first half of the year on a working interest basis was 34.6m barrels of oil equivalent per day (boepd), giving a net entitlement of 16.3m boepd.Production levels in the first half of the year exceeded expectations as a result of which the company now expects to achieve average daily production of 37.5m boepd (16.3m boepd net entitlement), compared to previous guidance of 34m boepd (15m boepd net entitlement).The company expects to produce 40m boepd per day in 2010 on a working interest basis (17m net entitlement assuming a $70/bbl Brent oil price). The company, which raised £11.2m through an equity placing in July, has renegotiated its debt facilities, with the senior debt facility increased to $450 from $440m. In addition the possibility of bringing an element of probable reserves into future borrowing base calculations has been introduced.Expenditure in 2009 is expected to be around $165m, slightly lower than previously indicated. The company is not paying an interim dividend this year, preferring to contemplate a dividend payment once the full year results are known.