Capital spending in Hazira during fiscal 2005 included completion of construction on the offshore platform and the drilling and completing of five development wells on the platform, costs are expected to be within the budgeted range of $35 to $40 million (net).
Planned development at Hazira in fiscal 2006 includes the drilling of two more gas wells, six to eight oil wells and installing oil handling facilities. Capital spending is budgeted between $18 and $23 million (net) for fiscal 2006.
Net production from Hazira in fiscal 2005 is expected to be 43 million cubic feet per day. Production for fiscal 2006 is expected to be between 60 and 65 million cubic feet per day (net) with an exit rate of 70 million cubic feet per day (net). Oil production from Hazira is expected to commence in December 2005 and production guidance will be given at that time.
Operating expenses for Hazira in fiscal 2005 are expected to be lower than the budgeted $2.00 per boe. Operating expenses for fiscal 2006 are budgeted between $1.30 and $1.40 per boe.
In Surat, fiscal 2005 average production levels increased to 7 million cubic feet per day (net) and exited within the budgeted range of 11 to 12 million cubic feet per day (net). Production in fiscal 2006 is expected to average between 12 and 14 million cubic feet per day (net).
Operating expenses in Surat were higher than budgeted for 2005 due to start up and initial production costs. Operating costs for fiscal 2006 are budgeted to be approximately $2.70 to $3.00 per boe and are expected to decline.
During fiscal 2005, four wells were drilled and a new 3D seismic survey was shot in the D6 Block. Net capital expenditures for the year are expected to be $12 to $15 million. One exploration well, D6-E1, is currently drilling. Five additional exploration wells, including one well on the new 3200 sq. km. seismic shoot, and two development wells are scheduled for fiscal 2006. Other development activities planned for fiscal 2006 include seismic, facility construction and infrastructure. Total planned expenditures for fiscal 2006 are between $20 and $25 million (net).
Six wells were drilled in the NEC-25 Block during fiscal 2005 at an expected cost less than the budgeted $15 million (net). Planned activities for fiscal 2006 include seismic, drilling of four exploration wells, front-end engineering and preparation of development plans at a budgeted cost of between $8 and $10 million (net).
Feni-3, Feni-4 and Feni-5 were completed during fiscal 2005 and placed on-stream. Facilities were upgraded to increase production capacity to 50 million cubic feet per day. Actual capital expenditures for fiscal 2005 are expected to be $20 to $25 million. Two additional development wells at Feni are planned for fiscal 2006.
The Company expects production for March 2005 to be approximately 40 million cubic feet per day. Average production for fiscal 2006 is forecast to be 40 million cubic feet per day and assuming success from drilling two additional wells, an exit rate of 40 to 50 million cubic feet per day is expected. Operating expenses for fiscal 2006 are budgeted between $0.95 and $1.05 per boe.
Activity commenced at Chattak during 2005, with the acquisition of 3D seismic, drill site preparation, pipeline construction and drilling of the Chattak-2 well. Technical difficulties experienced during the drilling of Chattak-2 resulted in the loss of the well and the drilling of a relief well is expected to commence by April 30, 2005. The majority of costs associated with the loss of the Chattak-2 well are expected to be covered by insurance. Capital expenditures in Chattak for fiscal 2005 are expected to be between $15 and $25 million.
Planned development in Chattak for fiscal 2006 includes drilling three wells at Chattak West, one well at Chattak East, building facilities and pipeline at a total expected cost of between $35 and $40 million. Initial production at Chattak West is expected to commence in December 2005.
Capital expenditures during fiscal 2005 for Block 9 are expected to be $15 to $20 million (net), which included the completion of drilling the Lalmai well and drilling of the Bangora well.
Future plans for Block 9 include the tie-in of the Bangora well and commencement of production in a continuation of the appraisal phase, a 3D seismic program over the Bangora and Lalmai structure, and further appraisal drilling. Planned capital expenditures for fiscal 2006 are between $15 and $20 million (net). Production in Block 9 is targeted for fourth quarter 2005.
Overall, the Company expects to reach its budgeted production for fiscal 2005 of 60 to 65 million cubic feet per day (net) and to reach the budgeted exit rate of 100 million cubic feet per day (net). The Company expects production increases to continue with average production for fiscal 2006 budgeted between 120 and 140 million cubic feet per day (net) and an exit rate of approximately 160 million cubic feet per day (net).
Total capital spending for fiscal 2005 is expected to be slightly under the budgeted $120 million (net). Total planned capital spending for fiscal 2006 is between $120 and $140 million (net).
Total operating expenses per boe for fiscal 2005 are expected to be $2.20 to $2.40 per boe. The Company has budgeted operating expenses for fiscal 2006 between $1.50 and $1.70 per boe.
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