Mediterranean Oil & Gas has provided the following operational and trading update for the period July 1, 2008 to December 31, 2008. The Company's financial year end has been changed to 31 December. Therefore the last financial year comprised of only the six month period from July 1, 2008 to December 31, 2008 for which the Company intends to publish audited accounts by June 30, 2009 in accordance with its published financial calendar.
Italian Gas Production
The Italian onshore gas business over the six month period to December 31 generally performed in line with the previous period. Gas production for the period was approximately 10MMscm (0.35Bcf). Production was down approximately 13% mainly due to maintenance works on some of the production wells and related facilities.
The gas price on the main sales contract at the end of 2008 was €0.347/scm per cubic metre which is equivalent, as at 31 December 2008, to 13.86 USD per Mcf. This compared with a gas price of €0.333/scm as at 30 June 2008 on the same contract.
The Company is also aggressively continuing to progress the development of additional gas assets which are waiting to come on stream. This is an ongoing process and may be summarized as follows:
Ombrina Mare Development (MOG Operator - 100%)
The Company continues to prioritize and advance this 100%-owned project. The field development plan has been completed and the application for grant of concession was submitted on December 17, 2008. In addition, tenders for the award of the Environmental Impact Study ("EIS") have been evaluated and the contract has been awarded to the preferred bidder. The EIS should be completed within 3 months and submitted for the approval to the Italian environmental authorities by July 2009.
With 2P reserves of 20mmbbls of oil and 6.5Bcf of gas the development of the existing certified Ombrina Mare oil and gas reserves is already a major project for our Company. However the permit covers an area of 270 sqkm 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 platform carbonate reservoir. The larger Cretaceous carbonate reservoir underlying the Oligio-Miocene is also known to be oil bearing although it is not known whether the oil trapped in this area will be recoverable.
In addition to current 2P reserves, a further 11 to 18mmbbls (best to high case) of contingent oil resources and 3Bcf of best case contingent gas resources have been identified by the Company.
The Company also believes that other structures on this permit represent significant potential for additional discoveries of oil and gas.
Guendalina (MOG 20% - ENI Operator)
ENI, the operator of the Guendalina Gas Field, currently under development, has advised it expects to receive the production concession grant by the middle of this year (2009). Capital works will then commence. The Company has a 20% interest in this field which currently has 2P gas reserves of 22Bcf (100% basis). First gas is forecast for 2010.
Serra San Bernardo Exploration (MOG Operator - 22.89%)
Drilling of the MG2 exploration well has been postponed to the first half of 2010.
The Company is continuing to be actively engaged in on-shore Italy exploration to maintain and expand its position in a market with strong demand for gas. Our exploration programme in this context may be summarized as follows:
Gas Storage Feasibility Study
The Company is finalizing a feasibility study related to the concession of some of our depleted fields to gas storages.
A Feasibility Study by Politecnico Torino on one of our fields is in the last stage of finalization. Also a review of the legal and authorization process relating to this study is underway.
The current adverse economic climate clearly calls for more prudent and selective management of the Company's assets. The Company continues to prioritize the development of the 100% owned Ombrina Mare discovery. There has been no further material advancement on MOG's Tunisia (Medjerda) and France (Grenade) interests.
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