Commenting on the completion of the Production Station, Austral CEO and President Thompson Jewell said, "We are very pleased to have reached this point; the construction of the production station has been a long, and sometimes trying, process and we wanted to make sure that we had everything in place before talking to our shareholders at our recent shareholder briefing in Wellington. We were able to announce then that we were looking forward to showing guests around the Production Station and helping us formally commission the plant in early October. We are all very pleased to be able to produce hydrocarbons using our own equipment, and we can be justly proud of the achievements of our dedicated team. Now we can focus on using Cheal as a platform for other developments."
Since the pre-commissioning test phase began on August 10, 2007, the "state of the art" oil and gas production facility has been fully certified, and has processed some 14,000 barrels of oil and 5.9 million scf (standard cubic feet) of gas from the "A" site wells. Production rates have been ramped up and down according to planned well-testing protocols. The field (both A and B wells) is currently reduced to around 600 barrels of oil and 580,000 scf (standard cubic feet) of gas per day while optimization work is undertaken on one of the "A" site wells. The field has produced some 212,000 barrels of oil and 185 million scf of gas in total since test production began.
Cheal is a producing oil and gas field south of Stratford in onshore Taranaki, New Zealand. It is 69.5% owned by Austral, which is also field operator. The field comprises four active wells, with two more in an advanced planning phase, and contains 2.6 MMbbl of independently certified oil reserves (2P) and around 1.8 bcf of associated gas. Austral has put in place all relevant oil, gas and LPG sales contracts for the Cheal output.
In other news, on September 14, 2007, in accordance with the company's incentive remuneration policy, 705,000 share options were granted to all current staff and directors. The options were granted in recognition of and to incentivise staff efforts in successfully moving the company into a new era as an oil and gas exploration and production company. The exercise price of these options is a five day volume weighted average of US$1.20. A further 60,000 options were granted to Mr. Bernie Zinkhofer upon his appointment as a director, the exercise price of which is the closing price on the date of grant, being $1.23. All options granted are exercisable for 5 years, and vest in three equal tranches over 18 or 24 months.
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