Petsec Raises Reserve Estimate by 70%
Oil and gas discoveries in the China and the Gulf of Mexico gave Petsec Energy a 70% boost in estimated recoverable reserves to 65 billion cubic feet of gas equivalent (Bcfe) in the first half of 2006.
The latest reserves estimate compares with 38 Bcfe at the start of the current calendar year.
Petsec announced the expanded reserves figure today when reporting a 33.3% increase in net profit before tax to US$9.6 million (A$12.9 million) for the six months to 30 June 2006 compared to US$7.2 million (A$9.3 million) for the previous corresponding period.
Income tax expense was US$3.1 million for the half year. Actual income tax paid was only US$0.2 million due to the utilization of carried forward tax losses.
Net profit after tax was US$6.5 million (A$8.7million).
Net revenue after royalties increased by 7.3% to US$33.9 million from production of 4.6 Bcfe, and earnings before interest, tax, depreciation, depletion, amortization and exploration expense (EBITDAX) was US$27.7 million.
Net cash flow from operating activities rose by 9.5% to US$26.6 million.
Net cash at the end of the period was U$25.7million.
Exploration Success and Reserves Growth
Oil and gas reserves grew significantly during the half year. Six wells were drilled and five were successful, discovering 21 Bcfe of gas in the Main Pass 18/19 leases in the Gulf of Mexico, USA, and in excess of 2.5 million barrels of oil in Block 22/12, Beibu Gulf, China, net to Petsec.
These discoveries increased USA reserves to 42 Bcfe of gas and to the order of 4-7 million barrels of oil in China.
The three successful wells in Main Pass 19 came into production in May 2006. The Main Pass 18 well discovered 7.5 Bcf of gas and in excess of one million barrels of oil. Further exploration potential exists in this lease and on the adjoining lease Main Pass 103. Development of the discovery and further exploration is anticipated late this year into early 2007. Production of the discovered gas is awaiting negotiated access terms to the jointly owned Main Pass 19 platform.
The Wei 6.12 South discovery in China intersected over 270 feet (80.5 meters) of net oil pay and flowed 5,750 barrels of high quality oil per day. The discovery has demonstrated significant upside for this structure and the surrounding prospects which are seismically similar and in the same productive formation. It is anticipated that the surrounding prospects will be drill tested in 2007.
The operator, ROC Oil, has issued guidance that the oil in place for the Wei 6.12 South/6.12.1 discoveries ranges between 60 to 100 million barrels of oil. Oil recovery is anticipated to exceed 40%.
The Wei 6.12 South oil discovery was extensively appraised by two sidetrack wells, delivering sufficient data to commence feasibility studies with the expectation that an oil development plan could be achieved in early 2007. Development is anticipated to be similar to that of the 12.8 West oil field (10 million barrels recoverable) on which an oil development plan was completed in late 2005.
In October Petsec Energy expects to commence a 2-5 well drilling program in Mobile Bay, Gulf of Mexico, to test 5-11 Bcfe of gas net to Petsec. Also in October a 2-3 well drill program is anticipated on Moonshine, onshore Louisiana, to test 6-10 Bcfe of gas. A net exposure of 11-21 Bcfe.
Development and exploration of Main Pass 18/103 is anticipated in late 2006/early 2007.
Feasibility studies will continue on the Wei 6.12 South oil discovery in China with the expectation of delivering an oil development plan in early 2007.
A review of the recently acquired 33 Gulf of Mexico leases will be conducted to determine a suitable drilling schedule for 2007. The acquisition of the leases in early August increased Petsec's 3D seismic mapped prospect inventory in the Gulf of Mexico to a reserves potential exceeding 280 Bcf of gas and 32 million barrels of oil which represents potential sevenfold of the Company's current reserves. The leases also contain some 43 Bcfe of undeveloped gas not including the recent Main Pass 18 discovery.
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