Durango Field Back Online in UK North Sea
Bridge Resources has resumed production from its UK North Sea Durango Field. Prior to resumption of production, the Waveney Platform operator replaced the production meter and completed required platform maintenance.
Bridge made the commercial decision to shut-in Durango July 2, 2009 to recover gas reserves backed-out during the initial production period that commenced November 27, 2008. The decision to shut-in the well was facilitated by a financial gas hedge at 50p/therm ($8.00/mcf) on 4.8 bcfg.
Bridge has been repaid 1.4 bcfg while the well has been shut-in, reducing the back-out gas credit to 0.7 bcf. Payment from back-out gas has remained at a high level with Bridge receiving GBP 1.3 million ($2.0 million) since January 1, 2010. Production resumption will boost revenue due to higher net gas volumes at higher prices and associated condensate production of 24 bbls/mmcf.
The well has been restarted at the constrained rate of 10 mmcfd gas and 240 b/d condensate on a 20% choke with a flowing pressure of 1,842 psi. The flow rate will be progressively increased to calibrate the back-out gas percentage and then held at a level to optimize net gas production to Bridge with minimal back-out. Bridge will further advise the optimal production rate. There is no back-out for condensate at any production level.
As a result of the extended Durango shut-in period, Bridge's UK banking syndicate RBS-KBC-NAB has extended Bridge's debt facility for an extra six months through December 31, 2013. Bridge has agreed to the extension and will make a principal repayment of GBP 4.235 million bringing down the loan balance to GBP 29.97 million ($47.35 million). Bridge will make a further loan repayment on June 30, 2010 with the minimum amount of this payment based on redetermination of Durango reserves at March 31, 2010 (the fiscal year end of Bridge). With its current working capital level and forecast cash flow, Bridge will focus on accelerated debt reduction initiatives for both its primary debt facility and the secondary debenture facility.
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