RPT.L Regulatory News (RPT)

16 Jan 2007 07:01

Regal Petroleum PLC16 January 2007 Immediate Release 16 January 2007 REGAL PETROLEUM PLC ("Regal" or "the Company") Update on Ukrainian Operations Regal is pleased to announce an update on the operations being conducted in its100% owned Mekhediviska/Golotvschinska (MEX-GOL) and Svyrydivske (SV)gas-condensate fields. Licence History and Terms The MEX-GOL and SV field production licences were granted to Regal (100%) inJuly 2004 to allow gas and condensate production from the deep Carboniferoussandstone reservoirs for a period of 20 years. The validity of the productionlicences was confirmed by the Supreme Court of Ukraine on 12 December 2006. Production The Company is presently producing gas and condensate from four wells on theMEX-GOL field area and one well on the SV field. Since the wells were re-openedon 1 August 2006, following the field closures during the licence litigation,the Company has had uninterrupted production from the MEX-GOL and SV fields. Theaverage daily production between 1 August and 31 December 2006 was 3.85 mmcf ofgas and 447 bbls of condensate (1134 boe). Average realised sales prices overthis period were $3.05/mcf for gas and $57.34/bbl for condensate. Workovers As part of a planned campaign to reactivate dormant wells and increaseproduction from existing wells the SV-10 well on the SV field was nitrogenlifted using coiled tubing in early October 2006 and placed on production testin mid November 2006. During the test phase the well has so far produced anaggregate of 100 mmcf of gas and 1940 bbls of condensate. The producedcondensate has been sold along with Regal's other production. It is planned that the SV-10 well will be put on permanent production followingthe installation of separation equipment in the vicinity of the well site toremove condensate and water. The processed gas will be tied in to the nearbyRegal gas pipeline. This new satellite facility, along with the existing mainprocessing facility, will have the potential for processing gas and condensatefrom future workovers and new wells. Based on equipment lead times the tie-in ofthe SV-10 well is expected to be completed by mid-year 2007. A total of five other wells have been identified as short-term candidates forworkover. Early indications suggest that average workover costs will beapproximately $240,000 per well. Studies are currently underway under thedirection of the new management team, using Western European expertise, whichwill lead to a decision in early 2007 on the best wells to re-enter. Once thisre-entry work is completed, planned for the 3rd quarter 2007, the results willstrengthen the current production and revenue from the field with an expectedproduction uplift of at least 40% by end 2007. Seismic and Reserves A contract has been signed between the Company and Ukrainian State Enterprise -Ukrgeofizika to undertake a 3D seismic survey on the Company's behalf covering100 km2 of the producing area of the MEX-GOL field. The survey will be acquiredand processed by Ukrgeofizika and is expected to be available for interpretationby July 2007. Mobilisation of the seismic crew is now nearly complete and theseismic field operations have recently commenced. The survey is anticipated tocost approximately US$2.5 million to acquire, process and interpret, and ainitial payment of $600,000 has already been made for the mobilisation. In parallel with the planned seismic acquisition, a reservoir engineering reviewhas commenced that will lead to the building of a new reservoir model which,when combined with the 3D seismic and ongoing well studies, will allow fieldreserves to be recomputed. The published reserves, audited by RyderScott inSeptember 2005 and as reported in the Company's Annual Report and Accounts forthe year ended 31 December 2005, are set out in the table below. These reservesare stated according to the petroleum resources classification system anddefinitions of the Society of Petroleum Engineers. Net Remaining Reserves Proved Probable Total(as at 31.12.2005)Oil/Condensate - mmbbls 11.4 13.7 25.1Gas - bcf 403.4 407.9 811.3Total - mmboe 83.3 86.4 169.7 Development Drilling The Company is considering the recommencement of drilling operations on theMEX-103 well that was suspended in 2005 following the licence litigation whichhas now been successfully concluded. In addition, several new developmentlocations have been selected and permits for drilling on these sites are nowbeing actively sought. Drilling operations on any new well sites are likely tocommence in 3rd quarter 2007 since drilling rigs and materials need to besourced. Full Field Development Plan With the completion of the planned 3D seismic it is anticipated that acomprehensive reservoir model of the MEX-GOL field can be created and theexisting full field development plan will be updated. Drilling and facilitiesconstruction can then commence and is expected to be underway before the end of2007. It is planned that an update of the reserves will also be undertaken in4th quarter 2007 with the view to issuing an audited revised estimate by yearend. If, as expected, the current 3D operations are successful, it is plannedthat a 3D survey will be acquired over the SV field in 2008. The Company remains committed to realising the full potential of the proved andprobable reserves in its Ukrainian licences. Various funding mechanisms areunder investigation to allow the Company to effectively take forward thedevelopment program. New Technical Staff Mr Les Devine has been engaged as Manager International Drilling, reporting tothe Company's Chief Operating Officer, to ensure that Regal has access to thebest available drilling practices and technology. Les has 30 years ofinternational experience gained in operations in Europe, India and Algeria,including 20 years working with drilling contractors including Smedvig andDeutag. He will initially be based in the Ukraine. For further information, please contact: Regal Tel: 020 7408 9500 Neil Ritson, Chief Executive OfficerFrank Scolaro, Chairman Definitions: km kilometresmcf thousand cubic feetmmcf million cubic feetbcf billion cubic feetbbls barrels of oilmmbbls million barrels of oilboe barrels of oil equivalentmmboe million barrels of oil equivalent In accordance with the guidelines of the AIM market of the London StockExchange, Neil Ritson BSc (Hons) Geophysics, FGS, Chief Executive Officer ofRegal Petroleum plc, is the qualified person that has reviewed the technicalinformation contained in this press release. This information is provided by RNS The company news service from the London Stock Exchange