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30 Jan 2009 07:00
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30Β January 2009
MERIDIAN PETROLEUM plc
("Meridian"Β orΒ "theΒ Company")
Pre-Close TradingΒ Update
Meridian Petroleum (AIM: MRP),Β the oil and gas exploration andΒ productionΒ companyΒ with producing assets in the USA and exploration licences in Australia, announcesΒ that it will release its preliminary results for the year endedΒ 31Β December 2008 in mid-April, and is issuing thisΒ tradingΒ update prior to moving into theΒ pre-resultsΒ close period.
Overview of 2008
Total net production in 2008 of 1.27Β bcf of natural gas and 26,900 bbls of oil/natural gas liquids ("NGL")Β
- This equates to average net production in 2008 ofΒ 654Β boepd
Gross production from the Orion field of over 1.5 bcf,Β at an average rate of overΒ Β 4mmcfd,Β achieved with minimal unplanned downtime and no major environmental issues
Strong cash position enhanced by over US$650,000 of hedging gains in 2008
Current Trading
Solid start to 2009 with net daily production in January of 2.8mmcfd of natural gas and 77bbls/day of oil/NGL
Major development activity planned in H1 2009Β aimed atΒ delivering a substantial increase inΒ USΒ gas production in H2
-Β H1Β developmentΒ expenditure currently estimated at US$3.5 - 4.0 million
Company in a strong position to capitalise on a favourable environment for further acquisitions with several opportunities being evaluated
ProductionΒ Update
Orion 36 Well,Β Michigan,Β USA
Average gross daily gas production (excluding downtime)Β in DecemberΒ wasΒ 4.0mmcfd andΒ the well producedΒ a total ofΒ 119mmcf of gas.Β Β Production of NGLΒ inΒ DecemberΒ wasΒ 1,840Β bbls.Β January gross production to date has averaged 3.3mmcfd of gas andΒ 70Β bbls/day of NGL.
Net production toΒ MeridianΒ inΒ DecemberΒ (based on a Net Revenue InterestΒ of 54.589%) wasΒ 64.9mmcf of gas andΒ 1,004Β bbls of NGL.Β Β ThisΒ equatesΒ toΒ 11,820Β barrels of oil equivalent (boe)Β at a daily production rateΒ ofΒ 381Β boepd.
CurrentΒ typical flowing well-head pressureΒ isΒ in the range ofΒ 240-270Β psi.Β
The average price for Orion gas sold duringΒ December wasΒ US$6.51Β per mcf.Β Β AlthoughΒ USΒ gas pricesΒ have weakened over the second half of 2008Β MeridianΒ continuesΒ to benefit from bothΒ MichiganΒ pricing andΒ aΒ 7-8% btu premiumΒ for its production,Β giving a substantial uplift on Henry Hub prices.Β
The Company's hedging contracts produced a profit ofΒ US$150,000 inΒ December and JanuaryΒ hedgingΒ gainsΒ are expected to substantiallyΒ exceed thatΒ level.
East Lake Verret Field (ELV),Β Louisiana,Β USA
Production from theΒ ELV FieldΒ improved in December as production fromΒ the Kafoury 1 wellΒ recovered to previous levels.Β Gross gas productionΒ wasΒ 168mmcf, and gross oil productionΒ wasΒ 6,179Β bbls.Β Β
Meridian's net share of productionΒ inΒ December wasΒ 34.1mmcf of gas andΒ 1,390Β bbls of oil, equivalent toΒ 7,073Β boe at an average daily rate of 228Β boepd. AverageΒ netΒ daily production in January to date isΒ 206Β boepd.
As with Orion, theΒ Company benefits from aΒ pricing premiumΒ to Henry HubΒ for its ELV gas production.Β
DevelopmentΒ Programme Update
The first half of 2009 will be a period of significant activity for the Company with a planned development spend of US$3.5-4.0 million.Β Β TheΒ current intention is to fund this from the Company's cash resources althoughΒ discussions withΒ MacquarieΒ on the most appropriate use of Tranche B of the loan facilityΒ will continue.Β
Although currentΒ USΒ natural gas prices are weak,Β MeridianΒ sees considerable scope for improved market conditions later this year and some 60% of the planned spend is focused on delivering a substantial increase in the Company'sΒ USΒ gas production during the second half of this year.Β Β The balance of the expenditure will be on the 3DΒ seismicΒ surveyΒ inΒ Australia.Β Β
Development plans for the second half of 2009 will beΒ kept underΒ review in the light of market conditions and the results of the first half drilling and seismic activity. Β
Australia
In order to commence field operations, the PEL 82Β licence was brought out of suspension onΒ 5Β January. Fencing and slashing (grass-cutting) crews were immediately deployed across the 88 sq km of the survey area.Β Β There have been no issues with landholders and all necessary documentation has been completed and submitted to PIRSA (Primary Industries and Resources,Β South Australia).
The Terrex full surveying crewΒ isΒ commencingΒ workΒ todayΒ in preparation for the recording crew's arrival. The Terrex recording crewΒ isΒ currently on location in theΒ DarlingΒ BasinΒ andΒ hasΒ beenΒ held up by heavy rain.Β Β It isΒ currently scheduled to arrive at PEL 82 onΒ 15 FebruaryΒ to commence the 3D seismic survey.Β
PontiacΒ Well,Β Michigan,Β USA
MeridianΒ has now received the drilling permit for theΒ PontiacΒ well and the lease, participation and operating agreements have all beenΒ finalised.Β Β With rig utilisation in theΒ USΒ falling sharply, the Company has negotiated hard for lower daily drilling costs, and has nowΒ committed to a contract on satisfactory terms.Β Preparatory work at the drilling site will commence shortly and drilling isΒ scheduled to commenceΒ during the second half of February andΒ isΒ expectedΒ to takeΒ approximatelyΒ 15 days.
TheΒ PontiacΒ structure lies alongside the Orion structure and isΒ aΒ very similarΒ Niagaran ReefΒ inΒ its geology and potential.Β Β At Orion, 3 wells were drilled vertically into the structure before the very successful optimum producer, the current Orion 36 well, was brought onstream.Β Β PontiacΒ will be drilledΒ directionally into the reef along a north-south line and this is expected to enhance the prospects for success on first drilling, although provision has been made inΒ theΒ costings for a possible sidetrack.Β Β Not all Niagaran reefs are as successful as Orion however, and the Company currently estimates the prospects forΒ PontiacΒ as 50/50.Β Β There has been increased interest in this well from other parties and in order to mitigate the risk of a dry-hole, the CompanyΒ is in discussions toΒ reduce itsΒ initialΒ working interest from 90% to 75%.Β Β If agreed, theΒ Company's net revenue interest wouldΒ initially be 51%Β reducingΒ to 38.25% once drilling and development costs are recovered.Β Β
EastΒ LakeΒ VerretΒ (ELV),Β Louisiana,Β USA.
Detailed plans and costings are currently being drawn up for the Company's first development well at the ELV field.Β Β TheΒ current schedule is for drilling to commence early in Q2 but final timingΒ mayΒ depend on the speed with which partners make their consent/non-consent decisions. The undeveloped reserves at ELV were a major attraction in theΒ acquisitionΒ inΒ JuneΒ 2008Β and the CompanyΒ is expectingΒ enhanced production in the second half of this year. DiscussionsΒ are underway forΒ MeridianΒ to acquire an increased interest in some of the ELV acreage.
Acquisitions
The current significantly lower oil and gas prices are generating an increasing number of acquisition opportunities, both for assets and companies.Β Β MeridianΒ is currently pursuing a number of interesting prospects with a primary focus on adding proven reservesΒ with existingΒ productionΒ and near-term upside.Β
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For further information contact:
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Meridian Petroleum |
+44 (0) 207 811 0140 |
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Stephen Gutteridge, Chairman |
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Β |
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Ambrian Partners |
+44 (0) 207 634 4858 |
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Marc CramsieΒ /Β Samantha Harrison |
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Financial Dynamics |
+44 (0) 207 831 3113 |
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Ben Brewerton / Ed Westropp |
Ed Childers, the Company's Chief Operating Officer, who meets the criteria of a qualified person under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.
- Ends -
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