In advance of these results and in the light of today's separate announcements regarding completion of the acquisition of certain producing interests in Australia and the planned disposal of certain producing interests in the UKCS, Paladin is pleased to provide the following guidance in respect of the Company's performance in 2004 and its prospects for 2005.
Group production for 2004 averaged approximately 41,500 boepd in comparison to the 42,006 boepd achieved in 2003, the benefits of an active investment program compensating for the natural production decline from the Company's more mature fields. This annualized level of production was slightly lower than anticipated at the time of the Company's interim results in September. Principal factors were a more conservative build-up to plateau production from the Goldeneye Field which was brought on-stream in early October, lower than anticipated production efficiency in the final six weeks of the year on the MonArb Fields, due to seal failures on both compressors on the Montrose platform, and some delays to new wells coming on-stream. In addition, continuing high oil prices had the effect of reducing the levels of reported Indonesian entitlement production. Production figures are subject to final reconciliation, particularly in respect of Indonesian entitlement production.
In line with expectations at the time of our interim results in September, the Goldeneye Field has now reached stabilized plateau production rates of 70,000 boepd (Paladin net share 5,250 boepd) and gross production capacity from MonArb is approximately 23,000 boepd (Paladin net share 13,800 boepd) with both compressors fully operational, which is anticipated in the next few days.
Annualized Group production for 2005 is expected to be some 20 per cent higher than in 2004 and average approximately 50,000 boepd, taking full account of the planned disposal of the Company's interests in the Ross and Blake Fields, announced today. In addition to the positive impact of the acquisition of the interests in the Laminaria and Corallina Fields, offshore north-western Australia, the Brechin satellite development adjacent to the MonArb Fields, which is progressing to plan for first oil in mid-year, and a five well infill drilling program on the Montrose Field should both make a significant contribution to the higher levels of production anticipated in 2005.
In respect of the Group's longer term growth prospects, good progress is being made to develop the Wood discovery as a satellite to the Montrose Field, and for the development of the Blane and Enoch discoveries on the UK-Norwegian median line. In Norway, joint venture partners have approved a plan of development to produce and export gas from 2007 onwards from the Njord Field.
In total, the Group plans to invest some £135 million on its existing assets in 2005, of which almost 60 per cent will be spent on its operated UKCS interests.
The Company also anticipates spending some £15 million (exclusive of activities in which Paladin's costs are carried) on a combination of near-field satellite exploration wells and higher risk, higher reward wildcat exploration wells, the primary focus being on Scandinavian and UKCS activity.
Earnings for 2004 are expected to be in the region of £35 million compared to £28.4 million in 2003.
Net debt at year-end was £107 million, inclusive of £5 million of finance lease liabilities and after payment of a US$15 million deposit towards the purchase of the Laminaria and Corallina interests.
Roy Franklin, Chief Executive of Paladin, commented:
'2004 has been a very active year for Paladin both operationally and in managing the Group's portfolio of oil and gas interests; very good progress has been made on both fronts. Group production in 2005 should rise to some 50,000 boepd, while the substantial capital investment program planned for 2005 and 2006 is specifically targeting further significant increases in production from our existing asset base. The 2005 exploration program should see Paladin participate in up to eight wells, and the Company remains in a strong financial position to make further acquisitions as and when opportunities arise which we consider attractive and material.'
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