The Directors of Mediterranean Oil & Gas Plc are pleased to present the Company's preliminary report and financial statements for the year ending 30 June 2008.
Highlights within the reported period
Post Period Highlights
"The successful appraisal of the Ombrina Mare Oil and Gas Field was a major landmark in the growth of Mediterranean Oil & Gas plc," Chairman Michael Bonte-Friedheim stated. "The Company was admitted to AIM two and a half years earlier with a portfolio of oil and gas exploration, development and production assets in the central Mediterranean region and the goal of becoming a medium sized producer. Ombrina Mare and its appraisal and development was central to the strategy for achieving that goal and certification of the first 20 MMbbl of 2P oil reserves and 6.5 Bcf of 2P gas reserves at the field was an enormous step forward."
The Company's success with the Ombrina Mare 2 vertical and horizontal appraisal wells enabled independent reserve engineers to certify very significant oil and gas reserves. We are currently preparing development options and undertaking the preliminary feasibility analysis to enable an application for a production concession and the field development plan to be lodged with the Italian authorities by the end of 2008. We have engaged independent engineers to assist in undertaking this work. Whilst it is difficult to anticipate the final conclusions before receiving the completed reports, management's current expectation based on the presently certified reserves is for oil production of between 5,000 to 8,000 bbls/d utilising 5 oil production wells and gas production between 3 and 5 MMcf/d utilising 2 gas production wells. On this basis the current reserves is estimated to provide a field life of 15 to 20 years.
The development of the existing certified Ombrina Mare oil and gas reserves is a major project for our Company however the Permit covers an area of 270 km2 and is highly prospective for the discovery or appraisal of additional oil and gas. Approximately 50% of the main Ombrina Mare field as delineated on the seismic has now been appraised for oil. All of the reserves certified to date come from the Oligio-Miocene carbonate level. The larger Cretaceous carbonate layer underlying the Oligio-Miocene are also known to be oil bearing although it is not known whether the oil trapped in this area will be recoverable.
The Company has identified within the Permit further remaining contingent oil resources of 11 to 18 MMbbls (best to high case) and 3 Bcf of best case contingent gas resources.
The unappraised prospective oil resources are currently being re-assessed. There are also a number of gas leads and resources which were not fully appraised by the OM2 wells - which were directed towards appraising a significant a portion of the oil field as could be achieved with a single horizontal well.
The BR 269 Permit is highly prospective for further oil and gas fields and there are two other potential oil bearing structures with prospective resources of 10 to 20 MMbbls (best case to high case) in what have been denominated the Ombrina Mare South and South East structures. With the development of the Ombrina Mare Field any additional reserves which are identified may be developed using the infrastructure created for the Ombrina Mare field at minimal additional capital expense thereby lowering the commerciality threshold for the additional reserves. Further exploration of the permit is therefore a very high priority for the Company.
ENI the operator of the Guendalina Gas Field, currently under development, has advised it expects to receive the production concession grant by the end of 2008. Capital works will then commence. The Company has a 20% interest in this field which currently has 2P gas reserves of 22 Bcf (100% basis).
The Company has a portfolio of exciting large scale exploration projects the most notable of which are our Maltese acreage, the Monte Grosso prospect in the Basilicata region of Italy and our interest in the Medjerda permit in Tunisia.
The Company completed its Exploration Study on Blocks 4, 5, 6 and 7 of Area 4 Malta offshore (MOG 90% and operator) and has been granted a 20 year production sharing contract by the Government of Malta over these Blocks. There are a number of very large targets which are well advanced and we will continue to study these in preparation for drilling. Malta is a frontier province and our acreage adjoins the well known and highly sought after Libyan acreage.
The Monte Grosso well is arguably the highest profile exploration project in Western Europe. Commencement of the exploration well has been postponed due to the unavailability of the specialist drilling rigs required to conduct the well. It is now anticipated that the well will be drilled in 2009 with Saipem's Emsco 3 rig.
The first exploration well drilled on the Medjerda Permit in Tunisia (MOG 25%), while disappointing in that it was not a discovery well, provided evidence of a functioning hydrocarbon system within the vicinity. The joint venture has suspended the well and is undertaking further seismic to ascertain whether there is potential for an updip location that may be hydrocarbon bearing. The joint venture has also committed to undertake seismic in the north of this large permit where the proximity to infrastructure and other hydrocarbon discoveries makes it an ideal location for further exploration.
In our three major exploration projects, Malta, Monte Grosso and Tunisia, the Company has substantial stakes in areas that may deliver potential giant finds. The Company also has 13 exploration permits and 9 pending applications in Italy. Overall our exploration portfolio provides, in the Company's estimate best case unrisked prospective resources of 1.4 billion barrels of oil and 93 Bcf of gas net to the Company.
Given the focus we are now applying to Ombrina Mare, the Company's exploration strategy will be to target areas near existing infrastructure which could, in the event of a discovery, be brought on stream quickly. It is also to limit ourselves to our 3 large projects and potential re-assessment of the size of the stake in those projects to balance them with our other commitments going forward. We have also commenced a full review to re-assess the exploration and development potential in our Italian gas production acreage. Any new gas reserves discovered inside existing production concessions can be brought into production rapidly without any significant additional production cost or regulatory hurdles. The first results of this ongoing assessment are encouraging and a drilling campaign is being prepared.
Oil & Gas Reserves and Resources
The independent certification of 20 million barrels of 2P oil reserves at Ombrina Mare established the Company as having material oil reserves for the first time. 6.5Bcf of 2P gas reserves were also confirmed by the OM2 Well before the balance sheet date and independently certified in October 2008. They increased the Group's 2P gas reserves by 55% from 1 July 2007.
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