Bridge Resources Corp. has received an updated Durango Reserves Report from MHA Petroleum Consultants ("MHA") prepared in accordance with National Instrument 51-101 Standards for Disclosure of Oil and Gas Activities. Results are as follows (in US Dollar equivalents at US $1.84 to 1.0 GBP):
The Present Values are net of $123.1 million sunk capital expenditures; net of $59.0 million operating, transportation and processing costs; and net of $176.6 million taxes on a Durango stand-alone basis. Past and future UK North Sea exploration and development investments would offset this future Durango tax liability, thus increasing the Durango net present values to Bridge.
Forward UK gas prices are strong and Bridge has the potential to further improve Durango profitability through implementation of gas price hedges when Durango is on stream. Bridge also anticipates that the existing hedge put of $9.20/mcf (50p/therm) for 4.8 bcf production will be replaced by a higher price put. Bridge wishes to emphasize that this existing put does not include an obligation to deliver gas at this price and the put was purchased solely as insurance against an unexpected drop in UK gas prices.
Durango development operations are continuing on schedule. The pipeline has been laid, the umbilical laying operation is currently in progress, and Waveney Platform modifications are continuing. These development activities are being debt financed by the Pounds Sterling 35,000,000 facility provided by the banking syndicate led by the Royal Bank of Scotland. This facility comprises a Pounds Sterling 30,000,000 tranche plus a Pounds Sterling 5,000,000 tranche which is available for unbudgeted costs. To date, Bridge has drawn approximately 80% of the Pounds Sterling 30,000,000 tranche.
Bridge anticipates first gas production from Durango next month.
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