White Nile Reports Year End Results
White Nile Ltd, the AIM listed oil and gas exploration company, announces its results for the year ended June 30, 2006.
Phil Edmonds, Chairman of White Nile made the following statement: "It gives me great pleasure to report on White Nile's progress towards fulfilling its objective of becoming a new independent oil producer focused in Southern Sudan and the immediate region. During the period under review we have made progress on many fronts having advanced our exploration program on Block Ba in Southern Sudan, strengthened local and governmental relationships, assembled an experienced team and network of international partners, and established local offices and representation. With these in place the Board believes that White Nile is well positioned to achieve its objectives and generate further value for its shareholders."
As shareholders will know, our flagship project is the 67,000 sq km Block Ba in Southern Sudan, an area equivalent to approximately 28 UK North Sea blocks or 11 UK North Sea quadrants. Our exploration program is currently focusing on the extensions of the productive Muglad and Melut Basins and is being coordinated from our exploration hub at Padak, in the western section of Block Ba north of Bor, as well as our administrative office in Juba.
A high resolution 2D seismic evaluation program is being undertaken, which is already enabling us to identify drill targets and help us understand the true extent of the oil potential of the area. Over 550 km of high-density 2D seismic data has already been interpreted from the prospective Jonglei sub-basin of the Muglad Basin in the western part of Block Ba. Several prospects have subsequently been identified in the 1,800 sq km project area.
The seismic data has been processed and interpreted to provide a new understanding of the prospectivity of the Jonglei sub-basin of the Muglad Basin. A sedimentary section of up to 7 km in thickness and rift structures suitable for forming hydrocarbon traps are clearly shown, which are analogous to the producing South Sudanese Thar Jath, Mala, Heglig and Unity oilfields of the Muglad Basin to the northwest of Block Ba. In this way the geological conditions pertaining to the formation of oilfields in the Muglad Basin (Blocks 1, 2, 4 and 5A) have been extrapolated into the Jonglei sub-basin in Block Ba. Blocks 1, 2 and 5A host the known Unity, Heglig and Thar Jath oilfields that have estimated oil in place of circa 600 million, 550 million and 1 billion barrels respectively.
We have planned an ongoing exploration and development program for Block Ba, which includes drilling a minimum of two exploration wells in 2007 during the dry season, with the first exploration well targeted for the first quarter of 2007. We have already identified for use a Romanian F200 DH modular drill rig, which will target the identified structures on Block Ba, where we believe the productive Muglad Basin extends into the concession area, including one large structure of over 50 sq km.
Further 2D seismic surveying will be undertaken and 3D seismic will be considered over any discoveries. White Nile will continue its high-density 2D seismic program in the Pibor Post Basin, part of the productive Melut Basin, which extends from Block Ba northwards and includes the Great Palogue discovery and the Adar-Yale oilfield. These oilfields have estimated oil in place of circa 2.9 billion barrels and circa 276 million barrels respectively. The exploration program at Pibor remains on target to commence in early 2007.
White Nile agreed a two year Joint Study Agreement in July 2005 with the Petroleum Operations Department of the Ministry of Mines of the Federal Democratic Republic of Ethiopia, covering the area of southern Ethiopia known as the 'Southern Rift Basins'. The approximate 70,000 sq km area is adjacent to Petronas' Gambela Block in the north and borders Southern Sudan and Kenya to the south.
Exploration in the area is based on the geological concept that the petroliferous Cretaceous and early Tertiary basins of Southern Sudan extend south-eastwards beneath the younger and less prospective East African rifts. The Company has completed the first half of its initial geophysical program of magneto-telluric and gravity surveys in the Southern Rift Basins. Preliminary interpretation of data already gathered is now underway, which once completed should enable us to understand the future prospectivity of the region.
The Comprehensive Peace Agreement was signed between Northern and Southern Sudan in January 2005, which has lead to increased stability in the south of the country. The Government of Southern Sudan ('GOSS') is actively encouraging foreign investment with a broader aim to build its economic and physical infrastructure. This situation seems set to improve as the US differentiates between Southern Sudan and the Northern Sudanese Government in Khartoum by starting to allow economic activities between US companies and Southern Sudan by lifting certain trade sanctions.
White Nile has always recognized the importance of developing contacts with both local communities and the GOSS. This was highlighted by the original transaction which transferred a 50% equity stake in the Company to Nile Petroleum Corporation ('NPC'), the national oil company of Southern Sudan, in return for a 60% interest in Block Ba. While the remaining 40% was retained by NPC, it was incumbent upon White Nile to raise the exploration and development finance to ensure the advancement of Block Ba.
The model was developed to enable the Southern Sudanese people to maximize the value of their oil assets as well as benefit directly from the generation of future revenues. The corporate structure White Nile has employed provides financial and economic independence for the GOSS and reduces its reliance on major corporates. The South Sudanese people have the ability to control the destiny of their oil assets to provide them with significant economic empowerment through an equity stake in White Nile.
The Company has previously reported there is a rival claim on Block Ba from the French oil company, Total. White Nile's agreement is with the GOSS, which now controls the territory where the concession is located, while Total allegedly had previously signed an agreement in regard to the Block with the Sudanese Government in Khartoum.
The GOSS continues to reaffirm their absolute right to have issued concessions in Southern Sudan, including Block Ba. We continue to have their support which translates into our confidence in our position and, which we believe, is emphasized by our continued investment and development program. However we do understand that the investment community is looking for complete clarity of title and we are actively petitioning our partners (specifically the GOSS) to obtain a solution to what we recognise as a political situation.
The Board has contracted the service of a leading regional environmental engineering firm Environmentalistes Sans Frontieres ('ESF') to conduct a full Environmental and Social Impact Assessment of the Company's activities in Block Ba. Based in Kenya, ESF has extensive African project experience in oil and gas, mining and related sectors. With local knowledge, international reach and experience in South Sudan, we feel that they are the right choice for this important undertaking. The study will take four months to complete with the objective being to ensure that the community needs and concerns will be addressed and that White Nile conform to internationally accepted standards in protecting the environment.
White Nile is also actively assisting the local community and helping the area regenerate as part of its commitment to social development. We have taken an active role in training local people to help in the development of the projects, as the Board sees the training of key workers being imperative in the development of the country. Responding to the community's key needs, we have employed over 1,000 local Sudanese in the repair of over 20 km of man made dyke between Jalle and Maar, as well as procuring food locally thus stimulating the local economy.
Over $1.5 million has also been spent on de-mining key artery roads and villages. So far, a 500 sq km area around Padak has been cleared, which has been overseen by de-mining experts, The Development Initiative ('TDI'). A number of locals have also been recruited and trained in mine clearance to develop local capacity in the region. We have also provided an emergency response team, which is positioned to give assistance to communities in the area when required in medical emergencies and when new ordinance is discovered.
On a general level, we have provided fish nets, maize grinding machines, sewing machines, generators, brick making machines and logistical support to the GOSS officials in the immediate area, as identified by the community and government officials. Together with TDI, we have supplied sports equipment and coordinated the formation of local teams to foster and develop team and community spirit.
A meeting was recently convened in Bor to debate and finalise a cohesive community development strategy in the Jonglei state, building upon the knowledge of the local community, the administrative structures of the GOSS and the sector specific strengths of the relevant NGOs. Organized by the United Nations Development Program, this was jointly chaired by representatives of the GOSS and White Nile, and attended by Government officials in Jonglei state and the respective community leaders from the Payams as well as representatives of NGOs and companies working in the area.
Our commitment is to Southern Sudan and we feel we have a responsibility to help in its reconstruction and achieve its latent potential.
To continue with our exploration and development of Block Ba we recently raised £12 million (before expenses) through the issue of 12,000,000 new ordinary shares at £1.00 per share. The funds raised will enable us to fast track operations and move into the drill stage of our development program, scheduled for the dry season in 2007.
White Nile remains focussed on the development of its oil concessions in Southern Sudan. The Company is still in the exploration stage and therefore is not producing revenue. In line with expectations, the Company is reporting a pre-tax loss of £1,417,577 (2005: £394,039)
The past year has seen many positive developments for White Nile. With its committed management team and strong local support, I am confident that our success will continue and that our future growth and stability is secure. By continuing to build relationships with industry specialists and local governments, we aim to strengthen further our portfolio of projects to become a leading independent oil producer in East Africa. Early results from Block Ba are very exciting and with further development I believe that we can significantly de-risk the project and therefore increase shareholder value. Our beliefs are further enhanced by the changing attitude of the US Government to the GOSS and the lifting of sanctions allowing US companies to carry out trading in Southern Sudan.
We are also party to the growing belief that the Southern Sudanese must have control over their own resources and therefore the actions they have previously taken will be recognized by the entire country and Government of National Unity. There is a growing feeling that a resolution will be reached, which we firmly believe will be in our favour. Block Ba has huge potential and we intend to develop it in tandem with our equity partners, the GOSS.
Finally, I would like to take this opportunity of thanking all our employees, partners and supporters in Southern Sudan for their hard work and I look forward to a continued strong relationship with them going forward.
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