MOG Achieves Significant Progress in Malta, CEO Says
- Business & Finance
The Board of Mediterranean Oil & Gas Plc announced an operational update related to the Company’s activities.
The Company highlighted the following:
– Rapid and positive developments at offshore Malta Area 4
– Ombrina Mare production concession award is further delayed by the Italian Ministry of Environment and of Protection of Land and Sea (“MEPLS”)
– Q2 2013 net production was 7.51 MMscm, representing an average net production of 82,560 scm per day
– Guendalina Field well GUE-2ss (ENI 80% and operator) has been shut-in since March 2013
– MOG total Q2 2013 revenue of €2.35 million, at an average price of €0.31 per scm.
Dr. Bill Higgs, Chief Executive of Mediterranean Oil and Gas, commented:
“The second quarter of the year has seen very significant progress with our activities in Malta as we get closer to the drilling of the Hagar Qim 1 exploration well with our partner Genel Energy.
“Progress in Italy has been slower than anticipated and the continued challenges to conducting our activities reinforce our strategic objective to diversify our portfolio and areas of operations.
“As planned, we enter the second half of the year with major value driving events still ahead of us and we look forward to updating shareholders on progress.”
The second quarter has continued to see rapid and positive progress at offshore Malta Area 4 blocks 4, 5, 6 & 7, where the Company has a 25% interest in Phoenicia Energy Company Ltd (“PECL”), which has the exploration and development rights under the Production Sharing Contract. Along with the partner, Genel Energy Plc (“Genel”), the Company has secured the use of the Paul Romano deep-water semi-submersible drilling rig to drill one exploration well in Q4 2013. The Paul Romano will drill the Hagar Qim 1 exploration well in water depths of approximately 450 metres and will target reservoirs at a depth of approximately 2,500 metres. The exploration well will target unrisked likely gross prospective resources in the Lower Eocene/Paleocene of 109 MMboe (27 MMboe net to MOG).
On 21 June 2013, PECL signed a 16km2 well seabed site survey contract with Fugro for the Hagar Qim 1 well and the site seabed survey being undertaken by the vessel Minerva 1 has now been completed. The data obtained will assist the operational team in determining the most suitable location for the well.
A contract has been signed with AGR for the provision of drilling support services to aid in the planning and execution of the drilling activities. All equipment required for the drilling has now been procured and the logistics for the well are on track to be ready ahead of the anticipated spud date in Q4 2013.
In response to the lengthy and continuing delays to the EIA approval for the Ombrina Mare Project, the Company wrote to MEPLS on 1 July 2013 giving 10 days’ notice to complete approval of the EIA, in accordance with applicable regulations.
Following completion of this 10 day period, MEPLS issued a letter to the Company requesting the Company to complete an ‘Autorizzazione Integrata Ambientale’ (an Integrated Environmental Authorisation) (“AIA”) for Ombrina Mare as an additional pre-condition for MEPLS to consider the approval of the EIA.
This is contrary to previous written notification issued by MEPLS to the Company in October 2012 that, consistent with the conditions required by Italian environmental law, the EIA procedure could be completed without performing the AIA at this time. It also follows the ruling issued in favour of MOG’s EIA submission by the EIA Technical Committee on 25 January 2013, and the EIA Director General of MEPLS sending the draft EIA decree with a positive recommendation to the office of the Minister on 17 April 2013.
In light of MEPLS response, the Board is reviewing a number of options in consultation with legal counsel and reserves its rights regarding the continuing delay to the Ombrina Mare Project.
Work on the Ombrina Mare CPR by ERC Equipoise Ltd, which will provide an up-to-date estimate of reserves and resources ahead of the Company’s plans to drill a pilot development well is being finalized, the results of which will be announced when appropriate.
MOG’s total net production for Q2 2013 was 7.51 million scm (equivalent to 0.27 Bcf, or 47,764 boe) and 17.386 MMscm for the first half of the year, in line with guidance provided by the Company in April 2013. This represents average net production of 82,560 scm per day or 525 boe per day during Q2 2013 and average net production of 96,055 scm per day or 611 boe per day during the first half of 2013.
The Guendalina Field achieved net gas production (MOG 20% W.I.) of 6.41 MMscm (equivalent to 0.23 Bcf or 40,768 boe). This represents an average net production of 70,435 scm per day or 448 boe per day in Q2 2013.
Production levels were down quarter-on-quarter due to Guendalina Field well GUE 2ss being taken offline on 5 March 2013 to determine the cause of an influx of water which resulted in the well ceasing production. MOG continues to work with the operator to analyse the possible remedial work that can be undertaken to restart production. GUE 2ss well is not expected to come back on stream in 2013. The Company is studying the feasibility of increasing production from the GUE 3ss well to compensate for part of the production shortfall. Prior to the shutdown, well GUE 2ss accounted for approximately 30% of total production from the Guendalina Field.
MOG’s total revenue for Q2 2013 was €2.35 million, representing an average realised price of €0.31 per scm. Total revenue for the first half of the year was €5.4 million. In this period, net revenue from the offshore Guendalina Field was €4.6 million and €792,000 for the onshore Italy gas fields.