By John Lee.
Afren have announced their full year results for 2013, highlighting what they describe as record revenues and cash flows, production ahead of guidance, continued exploration success and significant balance sheet strength.
Included here are the company results for their work in the Kurdish region of Iraq. You can see more detail on the company’s 2013 results, including details of their operations in Africa, here.
· Strong production of 47,112 boepd drives record revenue (US$1.6 billion) and cash flow (US$1.2 billion); 2014E gross production expected to average 62,000 bopd (approximately 40,000 bopd net)
· Targeting double digit growth in net production over the next five years
· 201% 2P reserves replacement ratio in 2013; including Okwok 2P reserves addition of 46.6 mmbbls (26.4 mmbbls net)
· Ogo – the third largest global discovery in 2013; P50 resources estimated at 774 mmboe; moving forward with appraisal programme
· Large existing opportunity set; allocating 2014 capex (estimated US$845m) to highest cash return projects and further exploration drilling
· 12 month E&A campaign targeting over 1,200 mmboe in net prospective resources
· Net debt of US$739 million; balance sheet strengthened with extended debt maturity, lower cost of debt and improved deferred tax position
· Award of five-year tax exemption in relation to Ebok
|FY 2013||FY 2012||Change (%)|
|Gross profit (US$m)||643||791||-19%|
|Profit before tax (US$m)*||318||569||-44%|
|Profit after tax (US$m)*||475||189||151%|
|Normalised profit before tax (US$m)**||483||637||-24%|
|Cash flow from operations (US$m)||1,216||974||25%|
|Net working interest production (boepd)||47,112||43,830||8%|
|Realised oil price (US$/bbl)||106||108||-2%|
|Net debt (US$m)||739||561||32%|
|* From continuing operations.** Normalised profit before tax is reconciled to statutory profit before tax in note 8 of the attached financial information.|
Commenting today, Osman Shahenshah, Chief Executive, said:
”2013 has been another excellent year for Afren, with a combination of record revenues and cash flows, production ahead of guidance and industry leading exploration success. The highlight of our exploration campaign was the play opening discovery at Ogo, offshore Nigeria, one of the largest global discoveries in 2013. We have continued to grow and de-risk our portfolio with a 2P reserves replacement ratio of 201%. Looking ahead, we will maintain our strategy of allocating capital to the highest cash return opportunities that will provide the necessary funding to continue to de-risk our material resource base. Supported by a strengthened balance sheet, a track record of project delivery and exploration success, we are well placed to continue to create significant value for our shareholders.”
Kurdistan Region of Iraq
|Gross 2P certified reserves||190 mmbbls*|
|Gross contingent resources||1,243 mmbbls*|
|Gross production||639 bopd|
|Work programme||Production and development|
|* Source: RPS Energy. Reserves and Resources remaining as at 31 December 2012, adjusted for 2013 production.|
A world-class development project
The Barda Rash PSC is 55 km north-west of Erbil, and holds the 14,015 mmbbls STOIIP and 1,433 mmbbls gross recoverable Barda Rash oil field. The field is defined as an elongated anticline with surface expression of 20 km length and up to 7 km width. The reservoirs are fractured carbonates of various depositional settings.
In 2009, the BR-1 discovery well was drilled to 5,535 ft and successfully encountered oil in Cretaceous to Jurassic reservoirs. Well tests were carried out on the Jurassic Mus and Adaiyah formations, each yielding rates of around 3,200 bopd, with a subsequent extended test of the BR-1 well producing 440,000 barrels of 30° to 32° API oil over a three-month period. During this time, oil was trucked from onsite storage and sent to local refineries. Two further wells were drilled at the field in 2010, BR-2 and BR-3, both encountering oil full-to-base in all reservoirs. The field is defined by 326 km2 of good quality 3D seismic data.
In 2012, we commenced the phased development of the field, initially targeting the development of light oil reserves. Having begun an extensive testing programme at the BR-1 well in July 2012, and establishing oil rates in excess of 6,000 bopd of 28° to 32° API oil, as well as obtaining valuable information on the production characteristics of the Mus/Adaiyah reservoir, we initiated production operations in August 2012. In July 2013, we commenced preliminary crude oil sales from the Barda Rash PSC to the local market. Gross production at the field averaged 639 bopd during 2013.
Afren has now moved to the second phase of development on the field, which involves drilling new wells to increase production capacity and acquiring modern log and core data to better understand and delineate the field.
The Partners commenced drilling on the BR-5 well in Q1 2013 using the Romfor-23 drilling rig which is currently operating at circa 14,436 ft. They also commenced drilling the BR-4 well in May 2013, using the Viking I-10 rig. The well reached a total depth of 13,800 ft.
As part of an ongoing programme BR-4 has tested two horizons in the Triassic Kurra Chine formation at 6,100 bopd and 1,750 bopd respectively. The BR-5 well has intersected a similar hydrocarbon-bearing sequence in the Kurra Chine formation and will be tested in due course. Flow lines and facilities will be updated to bring BR-4 and BR-5 into production during 2014.
|Kurdistan region of IraqAin Sifni|
|Operator||Hunt Oil Middle East Ltd|
|Gross contingent resources||42 mmbbls*|
|* Source: RPS Energy. Resources remaining as at 9 June 2011.|
The Ain Sifni PSC is located 70 km north-west of Erbil, and is operated by Hunt Oil Middle East Limited. Drilled on the crest of the Simrit anticline in 2010, the JS-1 discovery well logged continuous oil from 3,642 ft to 10,072 ft in Cretaceous and Jurassic reservoirs. Triassic reservoir targets were not penetrated by the well and no oil water contact was established.
On 17 April 2012, the Group announced that the Simrit-2 exploration well had successfully encountered an estimated 1,342 ft of net oil in Cretaceous, Jurassic and Triassic age reservoirs. The well was initially drilled to its prognosed total measured depth of 12,139 ft but was subsequently deepened to a revised total depth of 12,467 ft to test additional zones of prospectivity.
The Partners completed drilling on the Simrit-2 exploration well in July 2012. The objective of the well was to test the western extent of the Simrit anticline, a large-scale east to west trending structure located on the northern part of the Ain Sifni PSC. Analysis of data collected over the deepened section of well indicated the continual presence of light oil shows, and extended the estimated oil shows encountered by the well to 1,509 ft throughout Cretaceous, Jurassic and Triassic age reservoirs.
Following the conclusion of drilling operations at Simrit-2, a comprehensive well test programme was undertaken. Operator Hunt Oil completed the Simrit-2 Extended Well Test (EWT) programme during the second half of 2013. Produced crude was trucked to local markets. The Simrit-3 well, exploring the eastern extent of the large scale Simrit anticline, tested a cumulative rate of 6,293 bopd. The well has been configured as a produced water disposal well.
In June 2013, operator Hunt Oil spudded the Maqlub-1 well testing the high potential Maqlub structure to the south of the block and is currently drilling ahead in the Jurassic reservoirs. To date hydrocarbons have been encountered in the Cretaceous and Jurassic reservoirs as confirmed by wireline, Logging While Drilling (LWD), cuttings and gas data.
Operator Hunt has submitted a declaration of commerciality on the block. Simrit-4 was spudded in early 2014. This well will target the Jurassic and Triassic reservoirs.
Following the success at Simrit, the Partners expect further growth in reserves and resources at Ain Sifni in 2014.