Meridian Petroleum Unveils 1H 2009 Interim Results
Meridian Petroleum has announced its interim results for the six months ended June 30, 2009.
- 3D seismic survey on PEL 82 license in South Australia confirms prospective resources1 of 430 million bbls of oil or 630 bcf of natural gas, significantly greater than expected
- Acquisition strategy to be more broadly based -- larger deals and new geographic target areas
- Revenue of US $3.1 million (2008 H1 : US $8.7 million)
- Investment of US $3 million in exploration activity (2008 H1 : US $1.7 million)
- Cash generated from operations of US $1.6 million (2008 H1 : US $1.8 million)
- Operating profit before depreciation of US $0.5 million (2008 H1 : US $2.7 million)
- Adjusted EBITDA2 of US $1.75 million (2008 H1 : US $3.2 million)
- Average net production of 430 barrels of oil equivalent per day (boepd) (2008 H1 : 660 boepd)
- Disposal of Orion interest for US $0.2 million
Stephen Gutteridge, Chairman of Meridian Petroleum, said, "In comparison to 2008, we experienced a much more challenging environment, with lower energy prices, particularly for US natural gas, and lower production levels with the expected decline in Orion output. However, with strong gains on our hedging contracts and tight control of costs, our operations continued to be cash generative and we have invested strongly in the business. In Australia that investment has confirmed potentially transformational prospectivity and our focus is now on the next steps to firm up this potential. In the US we will continue to invest in sustaining and improving production at the East Lake Verret field. Adding further high-quality assets remains a priority and we are continuing to pursue attractive opportunities across a broad range of size and geography."
During the first half of 2009, Meridian Petroleum continued its three-pronged strategy to develop the business -- investment in exploration in Australia; sustaining production and undertaking development drilling in the USA; and the pursuit of acquisition opportunities in North America and Europe.
Expenditure on exploration activity, funded from the Company's cash reserves, was US $3 million, a significant increase on previous years. The majority of this was invested in the 3D seismic survey covering 88 square kms of the PEL 82 license in South Australia. The results of that survey confirmed significant prospectivity of around 430 million bbls of oil or 630 bcf of natural gas. Prospectivity on this scale represents a transformational opportunity and we have now moved on to the next stage of development, planning a two well drilling program.
Operating performance in the first half of 2009 was good, with consistent production from the East Lake Verret field in Louisiana, minimal downtime with no significant environmental or safety issues, and positive cash-flow. This was achieved against the background of very challenging overall market conditions, with average US natural gas prices under US $5 per mcf, around 40% of the prices seen in the first half of 2008.
Average daily production in the first half was 430 barrels of oil equivalent per day (boepd), down from 660 boepd in the same period last year. This was entirely due to the expected decline in production at the Orion field in Michigan, USA, and in June 2009, we sold our interest in that field. In contrast, the East Lake Verret field, which we acquired with effect from March 2008, maintained better than expected levels of output throughout the first half, producing an average of 219 boepd, virtually unchanged from a year ago.
The combination of lower production from Orion and lower natural gas prices reduced revenues from US $8.7 million in the first half of 2008 to US $3.1 million in 2009. However, US $1.2 million of cash gains from hedging contracts, combined with tight cost control, enabled the Company to continue to generate cash from operations.
In terms of drilling activity, the Pontiac well in Michigan, a 50/50 prospect targeted at further sour gas potential was, disappointingly, a dry-hole. Subsequent to the half-year period, we drilled and suspended the McKerall 3 well in East Lake Verret. We are currently reviewing this well with a view to planning for re-entry when US natural gas prices improve.
Acquisition activity has continued to focus on adding proved reserves and incremental production and a number of opportunities to acquire either assets or companies remain under discussion.
- Meridian Petroleum Unveils 1H 2009 Interim Results (Sep 24)
- Meridian's Prospective Resources in Australia Up 300MM Barrels (Sep 17)
- Meridian Sustains Production at ELV Field 'Beyond Expectations' (Sep 17)