Management Resource Solutions Regulatory News (MRS)

19 Feb 2008 09:30

Melrose Resources PLC19 February 2008 FOR IMMEDIATE RELEASE 19 February 2008 MELROSE RESOURCES PLC 2007 Production and Year-end Reserves Report Melrose Resources plc (LSE: MRS) ("Melrose") the oil and gas exploration,development and production company today reports production for the year to 31December 2007 and oil and gas reserves as at that date. This information isprovisional and unaudited and may be subject to further review. The information is provided in advance of a visit by a group of oil and gasindustry analysts to Melrose's Egyptian operations on 25 February. Copies of thepresentations which will be made to the analysts during the visit will be madeavailable on Melrose's website on 25 February. 2007 Production Melrose's net entitlement production in 2007 totalled 29.2 Bcf of gas and 607.8Mbbls of oil and condensate. Total production of 32.8 Bcfe represents anincrease of 18% from 2006. Production from the Galata gas field in Bulgaria totalled 10.1 Bcf, an averageproduction rate of 27.7 MMcfpd. In Egypt, gross production from Melrose'sproperties totalled 36.7 Bcf and 802.3 Mbbls of oil and condensate. Averagegross production rates were 100.4 MMcfpd and 2,198 bpd. Melrose's netentitlement production totalled 17.4 Bcf of gas and 381.9 Mbbls of oil andcondensate, an average of 47.8 MMcfpd and 1,046 bpd. Melrose's production in theUSA totalled 1.7 Bcf of gas and 226 Mbbls of oil and liquids, an average of 4.6MMcfpd and 619 bpd. The average realised prices received by Melrose were as follows: Gas ($ per Mcf) Oil or Condensate ($ per bbl)Bulgaria 4.23 -Egypt 2.66 68.61USA 7.05 64.79 Total production in 2007 was slightly lower than forecast primarily due to adelay in achieving first production at West Dikirnis. As previously announced,this field came on stream on 30 November and production has been increasedgradually in order to acquire well test and reservoir data which will be used tohelp maximise ultimate oil and gas recoveries. Gross production has reached8,000 bopd and is now expected to exceed the target level of 10,000 bopd by theend of February. The gross production at West Khilala has also been increasedgradually over the last few months and is currently 102 MMcfpd. The previousguidance for total Melrose net production in 2008 of 120 MMcfepd remainsunchanged. Proved and Probable reserves Melrose's Proved and Probable reserves as at 31 December 2007 and calculated ona net entitlement basis comprised: Egypt Bulgaria USA Total Oil Gas Gas Oil Gas Oil Gas Mbbl MMcf MMcf Mbbl MMcf Mbbl MMcf ------------- ------- ------- ------- ------- ------- ------- -------Proveddeveloped 3,967 109,866 16,110 2,259 12,519 6,226 138,495Provedundeveloped 191 11,954 - 9,008 6,969 9,199 18,923 ------- ------- ------- ------- ------- ------- -------Proved 4,158 121,820 16,110 11,267 19,488 15,425 157,418 ------- ------- ------- ------- ------- ------- ------- Probabledeveloped 455 8,532 - - - 455 8,532Probableundeveloped 4,201 31,837 - 34 3,735 4,235 35,572 ------- ------- ------- ------- ------- ------- -------Probable 4,656 40,369 - 34 3,735 4,690 44,104 ------- ------- ------- ------- ------- ------- ------- Developed 4,422 118,398 16,110 2,259 12,519 6,681 147,027Undeveloped 4,392 43,791 - 9,042 10,704 13,434 54,495 ------- ------- ------- ------- ------- ------- -------Proved andprobable 8,814 162,189 16,110 11,301 23,223 20,115 201,522 ------- ------- ------- ------- ------- ------- ------- The 2007 year-end reserves figures reflect the impact of production volumes, thereserves revisions announced in the second half of the year and reservesadditions from the South Zarqa, North East Abu Zahra and West Zahira discoveriesin Egypt and the Johnson appraisal well in the United States. Total reserves atthe year-end were 322,212 MMcfe. Discounted Net Present Value of Reserves The net present value discounted at 10% per annum ("NPV10") of the Group'sProved and Probable reserves at 31 December 2007 was as follows: Egypt Bulgaria USA Total $000 $000 $000 $000 --------------------- -------- ------- ------- ------- Proved developed 397,912 57,020 90,903 545,835Proved undeveloped 3,918 - 203,033 206,951 -------- ------- ------- -------Proved 401,830 57,020 293,936 752,786 -------- ------- ------- ------- Probable developed 35,004 - - 35,004Probable undeveloped 127,516 - 16,818 144,334 -------- ------- ------- -------Probable 162,520 - 16,818 179,338 -------- ------- ------- ------- -------- ------- ------- -------Proved and probable 564,350 57,020 310,754 932,124 -------- ------- ------- ------- The NPV10 value is based upon the following pricing assumptions: • USA: $70.00 per bbl and $7.00 per Mcf• Bulgaria: $5.53 per Mcf• Egypt: $70.00 per bbl and $9.92 per Mcf (Qantara) and $2.50 and $2.65 per Mcf (El Mansoura) The NPV10 value is calculated on the basis of these commodity prices and ofestimates of capital and operating costs at current prices with the resultingnet cashflows being discounted at 10% per annum. The NPV10 value is notnecessarily an indication of realisable market value. Commenting on these figures, David Thomas, Chief Executive, said: "Melrose has delivered strong operational performance in 2007, achieving firstproduction from both the West Khilala and West Dikirnis field developments. As aresult we saw a significant production increase on 2007 and anticipate a furthermaterial increase in 2008. West Dikirnis, in particular, will contributesignificant oil volumes increasing our exposure to high world oil prices." For further information please contact: Melrose Resources plc 0131 221 3360David Thomas, Chief ExecutiveRobert Adair, Executive ChairmanMunro Sutherland, Finance Director Buchanan Communications 0207 466 5000Tim ThompsonBen Willey or visit www.melroseresources.com Note:Proved and probable reserves are the estimated quantities of crude oil, naturalgas and natural gas liquids which geological, geophysical and engineering datademonstrate with a specified degree of certainty to be recoverable in futureyears from known reservoirs and which are considered commercially producible.The figures are estimated on the basis that there should be a 90% probabilitythat the actual quantity of recoverable reserves will be more than the amountestimated as proven and there should be a 50% probability that the actualquantity of recoverable reserves will be more than the amount estimated asproved and probable. The reserves stated are directors' estimates based uponevaluations by Company employees which have been reviewed by independentpetroleum engineers. Glossary:bbl - barrel of oil or condensate or natural gas liquidsBcf - billion cubic feet of gasBcfe - billion cubic feet of gas equivalentbpd - barrels of oil or condensate per dayMbbls - thousand barrels of oil or condensateMboepd- thousand barrels of oil or condensate per dayMcf - thousand cubic feet of gasMMcf - million cubic feet of gasMMcfpd - million cubic feet per dayMMcfe - million cubic feet of gas equivalent DisclaimerThis announcement contains certain operational and financial information inrelation to 2007 that is subject to final review and has not been audited.Furthermore it contains certain forward-looking statements that are subject tothe usual risk factors and uncertainties associated with the oil and gasexploration and production business. Whilst Melrose believes the expectationsreflected herein to be reasonable, the actual outcome may be materiallydifferent owing to factors either within or beyond Melrose's control, andaccordingly no reliance may be placed on the figures contained in such forwardlooking statements. This information is provided by RNS The company news service from the London Stock Exchange