Stuart Petroleum Limited has provided the following information as an update of its operations following completion of the drilling of the Bazzard 1 exploration well.
Stuart has developed a well balanced portfolio of growth opportunities underpinned by a strong cashflow from the Cooper Basin and recently paid its fourth consecutive annual dividend.
Cooper Basin production is continuing at a rate of approximately 35,000 barrels of oil per month net to Stuart. This production is generating around $4.5 million to $5.0 million of gross revenue per month. Stuart is currently receiving approximately A$140 per barrel of gross revenue for each barrel sold.
Revenues are favorably impacted by the recent fall of the Australian dollar against the US dollar. This exchange rate movement has provided an offset to the decline in US dollar oil prices. Furthermore, the Company's oil price hedging strategy is providing a benefit in the current price environment. The last hedges placed will provide a floor of US $100 per barrel for a significant quantity of Stuart’s total production for the next two financial years.
Oliver Oil and Condensate Field Development -- Timor Sea
In order to balance Stuart's portfolio of exploration risk, the Company recently announced the acquisition of a 50% interest in the Oliver oil and condensate field in the Timor Sea. The Oliver field has a mean recoverable oil volume of almost 10 million barrels of oil and condensate net to Stuart as determined by an independent expert.
The Oliver oilfield development project is proceeding according to schedule with the commencement of field mapping utilizing recently acquired 3D seismic. Engineering scoping studies for the subsea and FPSO development are due to commence before year end. The Oliver 2 appraisal well is scheduled for drilling in the third quarter of 2009.
Stuart intends to establish a strategic partnership to assist in funding and proceed with the Oliver field development and will engage with interested parties before year end.
The Company will integrate the results of the Bazzard 1 well in Gippsland Basin permit Vic P53 before making a decision whether or not to elect to drill a second well in this permit and commit to further exploration in the area.
The Bazzard well was funded utilizing Stuart's long established working capital facility designed to make available Cooper Basin cash flows in manner tailored to suit the Company's business requirement. In the near term these cash flows will now be utilized to repay working capital facilities.
The Company plans to grow strongly through appraisal and development of its 50% owned Oliver oil and condensate field in the Timor Sea.
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