Bengal Energy has announced its financial and operating results for the three and six months ended September 30, 2009.
Bengal continues to set the stage for material growth through exploration and exploitation opportunities on large-scale, high-impact plays in India and Australia. In October 2009, Bengal was provisionally awarded a 100% working interest in a 340,000-acre offshore block in the Cauvery Basin of India in what is the third large exploration block awarded to the Company in a proven, producing basin in the last 12 months. In March 2009, Bengal was awarded a 100% working interest in exploration permit AC/P47, a 861,000-acre block in the Timor Sea. In December 2008, Bengal was awarded a 30% working interest in the 234,000 acre onshore India block at CY-ONN-2005/1.
The new offshore block at CY-OSN-2009/1 in the Gulf of Mannar in the Cauvery Basin was provisionally awarded to Bengal by India's Directorate General of Hydrocarbons at the recent New Exploration Licensing Policy bid round in New Delhi, India. Oil companies operating in the basin have already committed to incur $215 million of exploration expenses within 50 kilometers of Bengal's new block over the next four years.
Bengal's new block is in the shallow water of the southern Cauvery Basin stretching seven to 16 kilometers offshore. More than 60% of the block is in depths of less than 100 meters of water with 85% of the block in depths of less than 500 meters. Bengal will hold 100% interest in the block and be the operator. At least one seismically defined feature on the new block identified from existing seismic data could be as much as 16,000 acres. The committed capital expenditures on the block are estimated to be US$2,020,000 (about $6/acre) for the four year Phase I exploration program. Bengal expects to sign a production sharing contract with the Government of India in early 2010, which would change the provisional award of the block into a formal agreement.
The new block solidifies India as a core area for Bengal and is consistent with the Company's strategy of pursuing high working interests and operatorship in areas with large identifiable features based on existing seismic data.
In addition to Bengal's recent progress in India, a Native Title Agreement was executed during the second quarter of 2009 with the Boonthamurra People on Authority to Prospect (ATP) 732P in Australia. Exploration activities are expected to commence in the first quarter of 2010 on this 654,000-acre block where Bengal has farmed-in to earn a 35% interest by incurring $3.0 million in exploration expenses over three years.
The recent developments in India and Australia are consistent with Bengal's strategy of seeking out areas and partnerships with national oil companies that involve low exploration capital commitments in the initial years with high-impact potential.
In order to accelerate the development of its high-impact prospects in India and Australia, Bengal raised $2.1 million during the second quarter of fiscal 2009 through the disposition of non-core, non-operated production assets in the Kaybob region of Alberta. The Kaybob assets contributed approximately $58,000 to Bengal's net operating income and 59 barrels of oil equivalent per day (boe/d) of production over the last six months. As a result of the disposition, Bengal had working capital of $4.0 million and no debt as at September 30, 2009.
Bengal believes its extensive inventory of 1.9 million net undeveloped acres of land in India and Australia, its balanced portfolio of production, exploitation and exploration opportunities and its strong technical focus all position the Company for growth.
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