As part of its interim management statement, Afren plc has issued an update on its operations in Iraqi Kurdistan. The shares are up 11% since the statement:
On 2nd November, the Company announced completion of the acquisition of a 60% operated interested interest in the Barda Rash PSC and 20% non-operated interest in the Ain Sifni PSC together with the completion of an up to US$200 million corporate credit facility in connection with the acquisition. The total acquisition cost is US$588.25 million (inclusive of approximately US$81 million back costs and US$14 million 2011 capex related to Ain Sifni), of which US$388.25 million has been paid and US$200 million is due six months from closing.
The acquisition represents a highly complementary extension of the Company's existing portfolio, and offers a combination of near term development upside and substantial low risk exploration potential. Independently certified net 2C resources at Barda Rash and Ain Sifni are 890 mmbbls with total net unrisked resources estimated to be 1,074 mmbbls.
Barda Rash PSC
The Company has prepared a first draft of the proposed Field Development Plan which it intends to submit to the authorities for review and approvals end 2011. The Company plans to undertake a phased development of the field with production start-up from the three existing wells scheduled for H1 2012. Initial work will focus on developing 506 mmbbls recoverable light oil resource that is anticipated to deliver gross production of 125,000 bopd by 2017 (giving five year line of sight on 75,000 bopd net to Afren). Production will initially be trucked to nearby export pipeline entry points, and ultimately exported via the planned Taq Taq to Ceyhan pipeline. Ongoing development would then focus on the development and production of 964 mmbbls of recoverable heavier oil resource, offering further large scale production growth potential over the medium to longer term.
Ain Sifni PSC
The operator, Hunt Oil, spudded the Jebel Simrit-2 exploration well at the end of October. The well will seek to prove and test the western extent of the Jebel Simrit anticline structure. In 2010, the Jebel Simrit-1 discovery well was drilled on the crest of the structure and logged continuous oil pay from 1,110 m to 3,070 m in Cretaceous and Jurassic reservoirs. Triassic reservoir targets were not penetrated by the well and no oil water contact was established. Subsequent exploration wells are also planned on the low risk Maqlub, Betnaar and East Simrit structures.
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