Europa O&G released its interim results for the six month period from July 31, 2009. The period saw a combination of exploration success and portfolio consolidation. The Company now holds production, appraisal and exploration assets in three core EU countries: UK, Romania and France. Exploration successes came in the UK and Romania, where oil was encountered in the Hykeham-1 exploration well and gas tested from the Voitinel-1 well. Portfolio consolidation came primarily with the relinquishment of the Egyptian West Darag concession and the development of a more focused strategy for the Company's European core assets in the near to medium term.
Production revenues from the UK fields led to a profit before exploration write-offs and tax of £0.2 million. In September 2009 the Company issued 12,500,000 shares at 14p and raised £1.7 million. The shares were placed with new and existing investors and represented 16.6% of the Company's enlarged share capital. Europa participated in the drilling of the Voitinel-1 exploration well during the later part of 2009. This Romanian well encountered gas-bearing Miocene sands in a large structural closure. In February 2010, the operator, Aurelian, announced the potential for up to 400 billion cubic feet (bcf) of gas in place in the Voitinel trend, this being 115 bcf net to Europa.
At the other geographical extremity of the EU, Europa drilled the Hykeham-1 exploration well in November 2009. Situated near the city of Lincoln in the UK, the well encountered a 4m oil-bearing sand and the well was cased ready for perforating and an extended well test. To date only small volumes have been produced, incompatible with the geological data and so the well is being shut-in until a decision has been made on the type of remedial action required.
The Company relinquished its interest in the West Darag concession, onshore Egypt. The decision, driven by the lack of identified drill-ready prospects needed to commit to phase 2 of the concession, resulted in a write-off of the £0.7 million investment in Egypt. The Directors recognized this was an opportunity to concentrate on maturing the Company's core European assets.
As a consequence, the Company has a very active program of work on its European licenses in 2010. Production enhancement work at West Firsby and workover of the Crosby Warren-2 well will be undertaken in April with a view to significantly increasing well productivity. Immediately following on from this work will be the re-test and frac of Voitinel, which has been delayed by the persistent winter conditions on-site.
Further out into 2010, a re-mapping of the Berenx gas discovery, using a 3D seismic volume recently made available, will commence. In-house estimates of potential gas-in-place at Berenx, which is 20km along trend from the 8.7 trillion cubic feet (tcf) Lacq gasfield, are up to 1.7 tcf.
The coming six months will see significant progress on the UK production projects with a target production stream of 500 bopd from the East Midlands by late 2010. In Romania and France, as described below, the Company holds large gas resource potential which it is hoped can be booked into the pre-development contingent category during the year. The booking of a substantial Contingent Resource asset and creating stronger production revenues are the two key value-enhancing drivers for the shareholders in 2010.
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