11 Mar 2010 07:00
Immediate Release 11 March 2010
GLOBAL ENERGY DEVELOPMENT PLC
(the "Company")
THREE YEAR PLAN
Global Energy Development PLC, the Latin America focused petroleum exploration and production company (LSE-AIM: "GED"), is pleased to announce details of its Three Year Plan ("Plan") running 2010 through to the end of 2012 prepared in conjunction with independent consultants.
The purpose of the Plan is to increase production volumes whilst developing the Company's reserve base and represents much increased drilling activity when compared to historic levels. The Plan includes the drilling of 13 strategically located wells, plus one well re-entry, two accompanying seismic acquisition programmes and the construction of facilities. The Company owns 100% of all its contracts and hence holds a 100% interest in all the wells to be drilled.
The wells to be drilled were selected from over 1,000 potential drill sites by the independent petroleum engineers Ralph E. Davis Associates, Inc. ("RED") after re-evaluating all technical data. RED selected the wells with the purpose of trying to move the majority of the Company's current probable and possible reserves into the proved reserve category whilst significantly increasing daily production volumes. The Company's net probable and possible reserves stand at a combined 212.1 million barrels of oil equivalent ("BOE") per a reserve report independently prepared by RED dated 31 December 2009. The Company's proved reserves stand at 60.8 million BOE net to the Company per the same report.
Cost estimates for the wells to be drilled were sourced from a major oilfield services provider while RED provided production estimates. RED then assessed economics to establish the sequence of drilling which would maximize production and cash flow and negate or reduce the need for external cash to fulfill the Plan, with the Company intending to fund the entire Plan itself from cash flow from operations. For planning purposes the Company added cost contingencies and risked downwards RED's production estimates. Factoring these in, the total cost of the Plan is estimated at approximately $110 million and is anticipated to result in combined new production of approximately 9,000 barrels of oil per day ("BODP") net to the Company (total undeclined initial rate for all wells) in addition to moving an additional 200 million BOE to proved reserves (net to the Company) by the end of 2012.
Since the Company owns 100% of all its contracts, not only does it retain all production apart from royalties payable to the applicable government agency, but it can also control the order and pace of the Plan. A decision to accelerate the Plan or outside factors may mean the Company looks to financing alternatives outside of internal cash flow.
All the wells to be drilled are defined as development wells by RED as they will be drilled in proved locations or are located on identified geologic structures.
For further information:
Global Energy Development PLC
| Catherine Miles, Company Secretary | +44 (0)20 7228 4266 |
| www.globalenergyplc.com | +44 (0)7909918034 |
Matrix Corporate Capital LLP
| Alastair Stratton | +44 (0)20 3206 7204 |
| Tim Graham | +44 (0)20 3206 7206 |
Notes to Editors:
The Company's shares have been traded on AIM, a market operated by the London Stock Exchange, since March 2002 (LSE-AIM: "GED"). The Company's balanced portfolio covers the countries of Colombia, Peru and Panama and comprises a base of production, developmental drilling and workover opportunities and several high-potential exploration projects. The Company currently holds seven contracts: five in Colombia; one in Peru; and one in Panama.
Proven and probable oil and gas reserves are estimated quantities of commercially producible hydrocarbons which the existing geological, geophysical and engineering data show to be recoverable in future years from known reservoirs. The proved reserves reported by Ralph E. Davis Associates, Inc. ("RED"), independent petroleum engineers, conform to the definition approved by the Society of Petroleum Engineers ("SPE") and the World Petroleum Council ("WPC"). The probable and possible reserves reported by RED conform to definitions of probable and possible reserves approved by the SPE/WPC using the deterministic methodology.
The information contained within this announcement has been reviewed by RED. In addition, the information contained within this announcement has been reviewed by Mr. Stephen Voss, a Director of the Company, for the purpose of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in respect of AIM companies which outlines standards of disclosure for natural resource projects. Mr. Voss is a Registered Professional Engineer in Texas and has been a Member of SPE for 26 years.
This release may include statements that are, or may be deemed to be, "forward-looking statements". They appear in a number of places throughout this release and include, but are not limited to, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, liquidity, prospects, growth, strategies and expectations of the industry. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates may differ materially from those described in, or suggested by, any forward-looking statements contained in this release. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward-looking statements contained in this release, those developments may not be indicative of developments in subsequent periods. A number of factors could cause developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in law or regulation, currency fluctuations (including the US dollar), the Group's ability to recover its reserves or develop new reserves, changes in its business strategy, political and economic uncertainty. Save as required by law, the Company is under no obligation to update the information contained in this release.