Melrose announced its interim results for the six month period ended 30 June 2011.
Robert Adair, Executive Chairman commented, "The first half of 2011 represented an important turning point for the Company, with the production revenues from our two core areas in Egypt and Bulgaria allowing us to progress a number of high potential exploration initiatives.
"The Company has delivered a strong financial performance and our underlying profitability has continued to improve while we have made a major step towards reducing financial gearing.
"We look forward to making further progress in continuing to grow as a diversified, well balanced exploration and production company."
The first half of 2011 has been a period of strong financial performance for the Company as we began to see the benefits from our new Bulgarian gas field developments which came on stream late last year. Coupled with production from our existing Egyptian assets, the new fields have helped generate significant post tax profits and operating cash flow of $33.2 million and $104.9 million, respectively, and we are on track to reduce our financial gearing towards 100 percent by year end.
The Company achieved an average production rate of 20.2 Mboepd on a net entitlement basis (equivalent to 38.0 Mboepd on a working interest basis) during the first half of 2011. This was somewhat below forecast due to a number of operational factors in Egypt which we are addressing through a remedial drilling and work-over program. While these considerations should have a minimal impact on reserves, we feel it prudent to reduce our full year production guidance to 36.0 Mboepd on a working interest basis pending completion of the rig activities.
During the period we made good progress on a number of exploration initiatives as we strengthen the Company's focus on high growth opportunities. We completed the interpretation of the 3D seismic data which we acquired over the South East Mansoura concession in Egypt last year and were pleased to confirm significant oil potential in the Cretaceous exploration play. We plan to drill our first test well on this play later this year on a prospect called Al Hajarisah. We also completed the acquisition of key 2D seismic surveys over our high potential frontier exploration blocks in Egypt (Mesaha) and offshore France (Rhône Maritime). Detailed interpretation of these surveys is still ongoing but the preliminary analysis indicates that both blocks contain numerous large structures which could form the basis for hydrocarbon traps. We plan to drill our first well on Mesaha next year and envisage 3D seismic acquisition or drilling on the Rhône Maritime block within the same timeframe.
During the period, the Company announced the Concession Agreements for the Muridava and Est Cobalcescu concessions offshore Romania had been signed and we are looking forward to acquiring seismic surveys over these blocks in 2012 with a view to starting a drilling campaign in 2013. In addition, the Company has exercised its option to enter a two year extension of the Galata exploration permit in Bulgaria. Both these shallow water western Black Sea areas are highly prospective, containing a number of plays and have the potential to make a significant contribution to the Company's growth plans.
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