Tap's Revenue Rebounds to $23.6MM
Tap Oil Limited
Friday, August 29, 2008
Tap Oil Limited generated revenue of $23.6 million and a Gross Profit of $2.2 million in the first half of 2008, despite lengthy, but temporary shut downs to its two producing facilities, Woollybutt and the Harriet Joint Venture, off northern Western Australia. The restricted production of 440,000 barrels of oil equivalent (boe) from the two fields was partially offset by higher realized oil prices of A$123.81 per barrel and lower operating costs.
Tap Oil has a balanced portfolio of producing and exploration assets, with $66.8 million of cash reserves, and a tight capital base. The Company is seeking to generate material growth by successfully exploring in moderate risk, high impact hydrocarbon provinces and through selective business development activities.
During the past six months, safety issues at the leased FPSO facility at Woollybutt were addressed enabling production to recommence. Further, the development of Woollybutt South was completed in June, extending the life of the field significantly. As a result the Woollybutt Field was producing at 12,000 barrels of oil per day (bopd) at the end of the half, 50% higher than a year ago.
Production at the Harriet Joint Venture was consistent with expectations until the Varanus Island incident on 3 June 2008. Repairs are currently underway and the deferred production from Harriet is expected to resume in December 2008. Tap has a comprehensive insurance package covering both the costs of repairs to the Harriet Joint Venture facility and business interruption for Tap's loss of revenue. Insurance claims on both these matters are underway. Within the Harriet Joint Venture the successful drilling of Simpson-9 and Simpson-10 development wells will increase production by around 4,000 bopd compared to pre-incident production levels.
Tap's gas sales from the resale of John Brookes gas was also affected by the Varanus Island incident, however this production recommenced in early August and Tap is currently achieving around 80% of its total gas sales revenues prior to the incident.
Over the past six months, Tap's exploration strategy has continued to focus on high impact, moderate risk exploration activities. In line with this strategy, Tap completed its entry into Block M, onshore Brunei (Tap 39%) during the half.
Tap Oil CEO Mr Peter Stickland said, "Block M is located in a proven hydrocarbon province which contains the existing Belait oil and gas field. In late 2008, early 2009 Tap will begin to explore the block with seismic acquisition and two appraisal wells on the Belait field."
During the half, two exploration wells were drilled in Western Australia, Johnson-1 in WA-358-P and Marley-2 within the Harriet Joint Venture, both of which were dry holes and subsequently plugged and abandoned. Before drilling, Tap had identified Johnson-1 as not meeting its strategic criteria and reduced its exposure by farming down its interest.
Tap also undertook seismic data acquisition and processing in the T/47P permit in the Bass Basin. Processing of seismic is ongoing but expected to yield multiple high quality prospects for drilling in Q3, 2009.
Tap’s WA-351-P on the Exmouth Plateau is a low-risk, LNG-scale potential, exploration permit. During the reporting period the Joint Venture prepared for a 3,500km2 3D seismic survey over the area, which commenced in August 2008. Prospect maturation is anticipated in early 2009 ahead of potential drilling in late 2009.
In the Philippines the 3D seismic interpretation of the SC 41 permit yielded a diverse range of high impact play types and prospects. The first prospect, Lumba Lumba-1A, has been drilled but was plugged and abandoned as a dry hole. Tap will continue to assess the other prospects and play types and is likely to drill a further exploratory well late in 2009.
"A quality exploration portfolio will create the foundation for Tap’s future performance. In Brunei (Block M), Philippines (SC 41) and particularly in WA-351-P we have world class blocks with the potential to add high value for our investors. We are actively looking for further opportunities which fit our stated objectives."
"Although production and revenues have been temporarily interrupted this year, Tap has the balance sheet strength to deliver on its stated growth objectives," Stickland said.