20 Feb 2009 07:00
FOR IMMEDIATE RELEASE
20 February 2009
MELROSE RESOURCES PLC
2008 Production and Year-end Reserves Report
Melrose Resources plc (LSE: MRS) ("Melrose" or "the Company") the oil and gas exploration, development and production company today reports production for the year to 31 December 2008 and oil and gas reserves as at that date. This information is provisional and unaudited and may be subject to further review.
2008 Production
Melrose's working interest production in 2008 totalled 56.2 Bcf of gas and 3,649 Mbbl of oil and condensate, equating to an average daily production rate of 35.6 Mboepd. This represents an increase of 43% as compared to 2007, which is primarily due to the contribution of a full year of production from the Company's West Khilala and West Dikirnis fields in Egypt.
Melrose's net entitlement production in 2008 totalled 30.0 Bcf of gas and 1,769 Mbbl of oil and condensate. The average daily rate was 18.5 Mboepd, representing an increase of 23% from 2007.
In Egypt, gross production totalled 47.0 Bcf and 3,376 Mbbl of oil and condensate, averaging 30.6 Mboepd. Melrose's net entitlement production totalled 20.9 Bcf of gas and 1,497 Mbbl of oil and condensate, an average rate of 13.6 Mboepd. Production from the Galata gas field in Bulgaria totalled 7.4 Bcf, an average rate of 3.4 Mboepd. In the USA, Melrose's production totalled 1.8 Bcf of gas and 273 Mbbl of oil and liquids, an average rate of 1.5 Mboepd.
The average realised prices received by Melrose were as follows:
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| Bulgaria | Egypt | USA |
| Gas ($ per Mcf) | 5.35 | 2.71 | 9.13 |
| Oil ($ per bbl) | - | 97.55 | 93.21 |
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Total production in 2008 was marginally higher than the Company's current market guidance of 18.3 Mboepd which was issued in late October 2008.
Proved and Probable reserves
The Company's total proved and probable reserves at 31 December 2008 were 66.6 MMboe, which equates to an annual reserve replacement ratio of 290%. A detailed breakdown of Melrose's proved and probable reserves as at 31 December 2008 calculated on a net entitlement basis is as follows:
| Egypt | Bulgaria | USA | Total | |||||||
| Oil Mbbl | Gas MMcf | Gas MMcf | Oil Mbbl | Gas MMcf | Oil Mbbl | Gas MMcf | ||||
| Proved developed | 3,069 | 111,188 | 3,538 | 2,984 | 11,272 | 6,053 | 125,998 | |||
| Proved undeveloped | 2,179 | 20,928 | 20,465 | 17,661 | 14,438 | 19,840 | 55,831 | |||
| Proved | 5,248 | 132,116 | 24,003 | 20,645 | 25,710 | 25,893 | 181,829 | |||
| Probable developed | 2,167 | 17,676 | - | - | - | 2,167 | 17,676 | |||
| Probable undeveloped | 350 | 9,108 | 20,546 | - | - | 350 | 29,654 | |||
| Probable | 2,517 | 26,784 | 20,546 | - | - | 2,517 | 47,330 | |||
| Developed | 5,236 | 128,864 | 3,538 | 2,984 | 11,272 | 8,220 | 143,674 | |||
| Undeveloped | 2,529 | 30,036 | 41,011 | 17,661 | 14,438 | 20,190 | 85,485 | |||
| Proved and probable | 7,765 | 158,900 | 44,549 | 20,645 | 25,710 | 28,410 | 229,159 | |||
The 2008 year-end reserves reflect the impact of production volumes and the reserves revisions announced in the second half of the year with respect to the Permian Basin fields in the USA. The volumes also reflect additions from the Kaliakra and Kavarna field discoveries in Bulgaria, the East Abu Khadra, Damas and North Dikirnis field discoveries in Egypt and the Tamad producing field upgrade in Egypt.
The combined Kaliakra and Kavarna proved and probable reserves booked at 31 December 2008 are 35.8 Bcf which represents a conservatively risked volume and assumes a 100% working interest.
The disclosed reserves volumes are entirely consistent with an independent reserves assessment which has just been completed on the Company's assets.
Discounted Net Present Value of Reserves
The net present value discounted at 10% per annum ("NPV10") of the Company's Proved and Probable reserves at 31 December 2008 was as follows:
| Egypt | Bulgaria | USA | Total | ||||
| $000 | $000 | $000 | $000 | ||||
| Proved developed | 257,334 | 18,230 | 104,341 | 379,905 | |||
| Proved undeveloped | 44,704 | 33,596 | 385,064 | 463,364 | |||
| Proved | 302,038 | 51,826 | 489,405 | 843,269 | |||
| Probable developed | 90,978 | - | - | 90,978 | |||
| Probable undeveloped | 25,538 | 78,639 | - | 104,177 | |||
| Probable | 116,516 | 78,639 | - | 195,155 | |||
| Proved and probable | 418,554 | 130,465 | 489,405 | 1,038,424 |
The NPV10 value is calculated on the basis of these commodity prices and of estimates of capital and operating costs at current prices with the resulting net cashflows being discounted at 10% per annum. The NPV10 value is not necessarily an indication of realisable market value.
Commenting on these figures, David Thomas, Chief Executive, said:
"Melrose has delivered strong operational performance in 2008, with production increased by 23% on a net entitlement basis compared with 2007. We are also particularly pleased to have achieved a proved and probable reserve replacement ratio of 290% for the year."
For further information please contact:
| Melrose Resources plc David Thomas, Chief Executive Robert Adair, Executive Chairman Diane Fraser, Finance Director | 0131 221 3360 |
| Buchanan Communications Ben Romney Ben Willey | 0207 466 5000 |
or visit www.melroseresources.com
Note:
Proved and probable reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from known reservoirs and which are considered commercially producible. The figures are estimated on the basis that there should be a 90% probability that the actual quantity of recoverable reserves will be more than the amount estimated as proven and there should be a 50% probability that the actual quantity of recoverable reserves will be more than the amount estimated as proved and probable. The reserves stated are directors' estimates based upon evaluations by Company employees which have been reviewed by independent petroleum engineers.
Glossary:
bbl - barrel of oil, condensate or natural gas liquids
Bcf - billion cubic feet of gas
Mbbl - thousand barrels of of oil, condensate or natural gas liquids
MMboe - million barrels of of oil, condensate or natural gas liquids equivalent
Mboepd- thousand barrels of of oil, condensate or natural gas liquids per day
Mcf - thousand cubic feet of gas
MMcf - million cubic feet of gas
MMcfpd - million cubic feet per day
MMcfe - million cubic feet of gas equivalent
Disclaimer
This announcement contains certain operational and financial information in relation to 2008 that is subject to final review and has not been audited. Furthermore it contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst Melrose believes the expectations reflected herein to be reasonable, the actual outcome may be materially different owing to factors either within or beyond Melrose's control, and accordingly no reliance may be placed on the figures contained in such forward looking statements.