Antrim Reports on Q1 Results, Boosts Average Production in Argentina

Antrim reported its financial and operational results for the three month period ended March 31, 2009.

HIGHLIGHTS

  • Increased production in Argentina to 1,590 boepd
  • New well tie-ins and additional pipeline capacity in Argentina completed on target
  • Average gas price in Argentina increased 78% to $1.44 per mcf over Q1 2008
  • Financial flexibility with strong cash position of US$ 31.2 million and no debt

In the first quarter 2009, average production in Argentina increased to 1,590 barrels of oil equivalent per day (“boepd”) compared to 1,503 boepd in the first quarter 2008. Oil and gas revenue decreased to $3.2 million for the three months ended March 31, 2009 compared to $3.7 million for the same period in 2008. Revenues decreased as a result of lower oil production and lower oil prices partially offset by higher gas production and higher gas prices. Cash flow from operations was $0.3 million for the three months ended March 31, 2009 compared to $1.4 million for the same three month period in 2008. Current production from Argentina exceeds 1,800 boepd.

United Kingdom

Work continues on Antrim's two major North Sea properties Fyne (Antrim operated, 75% working interest) and Causeway (Antrim operated, 65.5% working interest). A Field Development Plan ("FDP") for the 20 million barrel (gross) Fyne Field is being constructed. The FDP envisages oil production from three producing wells two of which were drilled in 2008. Production systems and an export route are currently under evaluation including production through existing infrastructure located between 7 and 21 km from the Fyne Field and the deployment of an independent floating production storage and offloading system ("FPSO"). The Fyne Field forms the core of a group of Antrim owned and operated licenses in the Central North Sea including several licenses awarded in the recent UK 25th Bid Round (blocks 21/24c, 21/28b and 21/29c).

Progress has been made on Antrim's Causeway FDP (submitted to the UK Department of Energy and Climate Change ("DECC") in December 2008) and work continues with the Dunlin platform operator to incorporate significant cost and time savings into the subsea completion and tie-in of the production and injection wells to the Dunlin processing facilities. Antrim plans to include these changes into an updated FDP. Geological and geophysical work including reprocessing and interpretation of Causeway 3D seismic data has been completed and will be also incorporated into the FDP.

On April 22, 2009, the United Kingdom government announced a package of reforms to its North Sea fiscal regime as part of the 2009 budget. Although details of the reforms have not been provided, it appears that both the Causeway and Fyne projects will receive an economic benefit from these measures.

Argentina

Commissioning of the pipeline linking the Company's gas producing fields in Tierra del Fuego with the San Martin gas sales line across the Straits of Magellan was completed in mid September 2008 and has enabled Antrim to deliver gas to the Argentine mainland at higher prices. The system is currently delivering 20 (net 5.2) million cubic feet per day ("mmcf/d") to mainland markets. Antrim’s focus in the first quarter 2009 has been on increasing production through well tie-ins. Antrim anticipates production in 2009 to average approximately 2,300 boepd.

OVERVIEW OF OPERATIONS

United Kingdom -- Block 21/28a ("Fyne")

A FDP for the 20 million barrel (gross) Fyne Field is being constructed. The FDP envisages oil production from three producing wells two of which were drilled in 2008. Production systems and an export route are currently under evaluation including production through existing infrastructure located between 7 and 21km from the Fyne Field and the deployment of an independent FPSO. The Fyne Field forms the core of a group of Antrim owned and operated licenses in the Central North Sea including several licenses awarded in the recent UK 25th Bid Round (blocks 21/24c, 21/28b and 21/29c).

The 21/28a-2 discovery well tested up to 3,600 bopd. In August 2008, the 21/28a-10z well tested on natural flow at rates up to 4,000 bopd.

United Kingdom -- Block 211/22a South East and Block 211/23d ("Causeway")

As previously announced, Antrim signed a Heads of Terms agreement in 2008 for the provision of platform hosting services on the Dunlin Alpha platform. Work continues with the Dunlin platform operator to incorporate significant cost and time savings into the subsea completion and tie-in. Antrim plans to include these changes into an updated FDP which is expected to be submitted to DECC in late 2009. Geological and geophysical work and interpretation of Causeway 3D seismic data has been completed and will also be incorporated into the FDP.

There are no additional wells planned before oil is produced under the proposed first phase of the development which will involve production from the 2006 discovery well 211/23d-17z supported by the pressure maintenance well 211/23d-18 drilled in 2008. An initial production rate of 15,000 bopd is expected (net 9,800 bopd) with a first year average rate of 7,000 bopd (net 4,600 bopd). Facility construction commitments will not be undertaken pending stabilization of commodity prices and the recovery of the capital markets.

Argentina -- Tierra del Fuego, Austral Basin

Net production to Antrim from the Tierra del Fuego licenses in the three months ended March 31, 2009 was 1,337 boepd compared to 1,162 boepd for the comparable period in 2008. Gas and natural gas liquids ("NGL") production in the first quarter 2009 was 6.2 mmcf/d and 42 barrels per day, respectively, compared to 4.7 mmcf/d and 67 barrels per day in the same period in 2008.

Commissioning of the pipeline linking the Company's gas producing fields with the San Martin gas sales line across the Straits of Magellan in mid September 2008 has enabled Antrim to redirect and deliver gas to the continent where higher prices are available. The system is currently delivering 20 (net 5.2) million cubic feet per day (mmcf/d) to mainland markets. By mid 2009, this delivery rate is expected to increase to 32 mmcf/d (net 8.2) under the terms of new sales contracts which will allow for Antrim's previous gas discoveries to be placed on production.

Net oil production in the first quarter 2009 was 267 bopd compared to 316 bopd for the comparable period in 2008. Oil production decreased due to a shippers strike in December 2008 resulting in the need to shut-in production in early January as the oil storage tanks were full. Full production was restored on January 19, 2009.

The drilling program in Tierra del Fuego was successful in adding reserves, future production potential and significant value. Current economic conditions dictated a shift in strategy away from drilling, which was discontinued in December 2008, towards increasing production through existing well tie-ins. Antrim plans to add new locations to the drilling inventory as drilling is expected to recommence in early 2010, subject to favourable commodity prices.

Argentina -- Medianera and Tres Nidos Sur, Neuquen Basin

Net production to Antrim from the Medianera license in the three month period ending March 31, 2009 was 14 bopd compared to 61 bopd for the comparable period in 2008. The Medianera license was determined uneconomic at current oil prices and in February 2009, Antrim shut-in all production from the field. Under the terms of the Tres Nidos Sur license, Antrim must acquire a minimum of 50 km2 of 3D seismic and drill an exploration well by end 2009. Required permitting and environmental studies for the 3D seismic acquisition are underway. Antrim has a 70.0% working interest in the Tres Nidos Sur license.

Argentina -- North West Basin

Net production to Antrim from the Puesto Guardian license in the first quarter of 2009 averaged 239 bopd compared to 280 bopd for the same period in 2008. The reduction in production volumes was the result of natural production declines. Antrim has a 40% working interest in the Puesto Guardian license.
 

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