Bridge Resources plans to resume production from its 100% interest Bridge North Sea Ltd. Durango 48/21a-4Z well as soon as weather conditions permit. The Waveney Platform operator has been waiting for a three day weather window, free of ice and fog, since mid-December to undertake required offshore switching and maintenance operations prior to restarting the well remotely from the onshore Bacton terminal.
The extended shut-in period since July 2, 2009 has demonstrated significant reservoir pressure recharge to refine the previous material balance reserve estimation. A revised independent reserve estimate in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities will be requested following resumption of production.
Durango Back-out Gas Status
The extended shut-in period has also demonstrated the integrity of the gas back-out agreement with Bridge receiving repayment over 1.0 BCFG while the well has been shut in. Bridge's back-out gas credit is now below 1.0 BCFG.
For the current month through January 24, Bridge has been receiving an average 5 MMCFGD repayment despite system downtime due to adverse weather. Individual daily payback rates have been as high as 11.0 MMCFGD and monthly back-out repayment revenue through January 24 is $780,000.
On resumption of production Bridge plans to coordinate closely with the LAPS pipeline operator to minimize back-out gas deductions. Even though Bridge receives significant back-out repayment revenue with the Durango well shut-in, revenue will be boosted with the restart of production due to higher net gas volumes, the rich condensate yield of 25 BBLS/MMCF, and the higher UK gas and oil prices. Condensate production is not subject to back-out.
UK gas prices indicated a possible futures floor mid-December and Bridge elected to monetize all its monthly hedges through May 2010. Only the June 2010 monthly put remains to provide a hedge against lower gas prices in the summer. The net gain for 11 months actual plus the June forecast is $13.564 mm, comprising $16.183 mm revenue less the $2.619 mm put cost.
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