PA Resources' production increased in the fourth quarter, but was lower than expected at the end of 2010, mainly related to the Azurite Field in the Republic of Congo, but nearing final conclusion on improved fiscal terms for the Azurite Field, will offset the lower production performance to provide PA Resources with a higher net share of field revenues.
Production and sales
- PA Resources' average production increased to 12,100 barrels per day in the fourth quarter 2010 compared to 10,500 barrels per day in the third quarter. The Azurite Field in the Republic of Congo produced 8,050 barrels per day and the six Tunisian oil fields 4,050 barrels per day.
- The average production amounted to approximately 12,000 barrels per day at the end of 2010. This is lower than expected and means that PA Resources did not reach its production forecast of 15,000 - 20,000 barrels per day by the end of 2010.
Improved fiscal terms for Azurite and MPS licence in Republic of Congo
- An agreement on improved fiscal terms for the production sharing contract which covers Mer Profond Sud (MPS) and the Azurite Field has been reached with the authorities in the Republic of Congo. The new agreement means that both the Azurite Field and MPS license will obtain improved fiscal terms, which gives the license partners a larger net entitlement share of field revenues. The agreement has been formally approved by the Council of Ministers and will be submitted for Parliamentary approval. Net entitlement production refers to barrels of oil attributable to PA Resources under the terms of the production sharing contract and which can be equated to 'post tax' barrels.
Development of fields
- Azurite - Production on the Azurite Field in the Republic of Congo is lower than anticipated in the Plan of Development. All six planned production wells are now completed. The three production wells that were added during the fourth quarter have been producing at reduced rates awaiting the completion of planned water injection wells to provide necessary pressure support to the production.
- Azurite - Remaining work to be undertaken on Azurite is to complete the drilling and completion of two water injectors and one additional production well as earlier communicated. The field's third water injector is currently being drilled and development of the field is estimated to be completed in the second quarter instead of in the first quarter of 2011. Work by PA Resources and the operator is ongoing to update the forecasting of future production capacity of the Azurite Field and this work will be finalized with the benefit of information from the wells remaining to be drilled. PA Resources' assessment pending completion of the ongoing drilling and evaluation is that production will be lower than previously communicated.
- Didon North - Development planning and procurement is proceeding according to plan for the development of the Didon North discovery, located five kilometers northeast of the Didon Field's production platform in Tunisia. First oil is expected in the second half of 2011.
- Aseng - Development drilling and completions on the Aseng Field in Block I in Equatorial Guinea substantially advanced during fourth quarter 2010 with the drilling rig Atwood Hunter finishing its planned operations and being released in December, leaving the Pride South Pacific rig working until late in the first quarter 2011. Overall progress on upgrade of the FPSO, topsides fabrication and subsea assembly and testing remains on plan.
- Alen - The Plan of Development for the Alen Field in Block I in Equatorial Guinea has been submitted to the Government of Equatorial Guinea and is in the closing stages of the review process.
- Cobalt & Turquoise - Three wells have been drilled in the MPS license in Republic of Congo in late 2010. The exploration well Cobalt Marine 1 was plugged and abandoned as a dry hole. The appraisal wells Turquoise Marine 3 and 4 were unsuccessful at the primary Miocene target. Turquoise Marine 4 was drilled to a deeper target where non-commercial oil pay was encountered along with significant reservoir development. During 2011 substantial geoscience evaluation will be undertaken across the block to re-assess the prospectivity associated with this deeper reservoir which appears highly encouraging for the remaining prospectivity of Mer Profond Sud.
- Jelma - Drilling of two exploration wells are also under way at the Jelma license onshore Tunisia, where the first well in the prospect Sidi M'barek is now being drilled.
- DK 12/06 - Two exploration wells will also be drilled in the Danish license 12/06 in the first half of 2011. This license is located adjacent to the new German license assigned to PA Resources. For more information, see the press release dated 3 January 2011.
- Zarat - On the "7th of November" license, situated north of PA Resources' oil field Zarat offshore Tunisia, an appraisal well has been drilled by the operator Sonde Resources. The well spudded on 24 November and has reached total depth, with testing and evaluation in progress. Sonde anticipates that it will be able to provide an update of the well results in early Q1 2011. The drilling allows field unitization, where the oil reserves are allocated to the two licenses containing the field, which will form the basis for a revised development plan for the Zarat Field.
Bo Askvik, President and CEO at PA Resources, commented, "It is very disappointing that we did not reach the production levels we have earlier communicated in our production forecast, although PA Resources' production increased in the fourth quarter. However, it is with satisfaction that we note that this will be largely offset by improved fiscal terms in the Republic of Congo, which will give us a larger net share of revenues at the Azurite Field. It is of course also a disappointment with the outcome of the drilling of the Cobalt and Turquoise wells, but we are encouraged by the potential in the encountered deeper reservoir, which we will evaluate further."