Noreco Expects Significant Production Increases Through 2009
Noreco's production in August 2009 was 11,000 barrels of oil equivalents per day, realized at US $71 per barrel. Production is expected to increase significantly through the rest of 2009 as new wells start up on Nini and Brage, the new field Nini East starts production and the Siri and Lulita fields are brought back on stream.
On the Nini Field a new producer was started on August 27 at rates of more than 3,000 barrels per day gross. A Nini water injection well has also been drilled and completed at Nini, and will further strengthen the production from the field. At the Brage Field, drilling of the next infill producer is in the final stages and start of production is expected in October. The Nini East Field is scheduled to start production in Q4 and will contribute with more than 10,000 barrels per day gross. The Lulita Field is coming back on stream in mid October, following a 3 months maintenance production shutdown at the Harald Field.
The production in August was in line with the latest guidance for 2009. The underlying production from the fields was as expected in August, with good stable performance from most of the fields. The Nini Field production was significantly reduced in August due to a 7 days unplanned shutdown and downtime on Nini water injection during replacement of the water injection pipeline. The Siri field showed favorable production response to higher water injection and produced at rates up to 10,000 barrels per day gross in August. The Brage Field continues with strong production performance, producing at more than 35,000 barrels of oil equivalents per day gross at the end of August.
Production on the Siri platform was temporarily shutdown on August 31 as a routine inspection revealed cracks in steel plates on a subsea
water buffer tank connected to the main storage tank. The production shutdown includes all production from the Siri, Nini and Cecilie fields in Denmark. The Siri manning was reduced to a minimum while further investigation and mitigation planning is ongoing. Dong Energy, the Siri operator, has established a project organization that is working inspection, analysis and mitigation plans. Noreco is fully supportive of the operator's efforts and is in close dialogue with Dong Energy on resolving the issue. The partnership is taking all measures necessary to ensure that production will be restored in a safe and orderly manner as soon as possible and current estimates indicate that this can be in October. Noreco will provide further updates as significant new information becomes available. As a consequence of the temporary shut down at Siri, Noreco will most likely reduce the production guidance for 2009. A revision will be made when the exact timing of the start-up of the Siri Field is known.
Prior to the shutdown production from the Siri Field was 10,000 barrels per day gross, while total production over the Siri platform was in the order of 13,500 barrels per day gross. The shutdown is not expected to have any adverse effect on the reservoir or field reserves, and the production is expected to be fully restored when the Siri facilities are back in production in October.
The net achieved price of US $71/boe in August reflects Noreco's oil price put options at US $50 and US $75 per barrel as well as adjustments for inventory and NGL and gas prices. The production volumes and prices are preliminary and are subject to adjustments, including final allocations between fields, quality adjustments and prices.
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