Falklands : Hydrocarbons Daily Record (01/02/07)
Submitted by Falkland Islands News Network (Juanita Brock) 02.02.2007 (Article Archived on 16.02.2007)
Declines in the natural gas industry are the main factor that helped to lower the price of crude today.
HYDROCARBONS DAILY RECORD: THURSDAY, 01 FEBRUARY 2007
By J. Brock (FINN)
At 1800 LMT on Thursday, 01 February 2007 Light Sweet Crude lost .84 Cents to settle at $57.30 on the New York Mercantile Exchange and Brent Crude decreased .68 Cents to settle at $56.72 on London’s ICE Futures Market.
TRENDS:
In the wake of declines in the natural gas industry with storage declining by 186 Billion Cubic Feet to 2,571 Billion Cubic Feet as well as clarification about OPEC’s production cuts the price of crude declined today.
THE MARKETS:
FTSE 100 closed at 6,282.20 up 79.11
FTSE 250 closed at 11,221.50 up 121.20
FTSE Small Cap closed at 3.967.90 up 20.46
DJI closed at 12,673.68 up +51.99
NASDAQ closed at 2,468.38 up +4.45
S&P500 closed at 1,445.94 up +7.70
WORLD-WIDE DEVELOPMENTS:
(From a Press Release)
Tullow Oil plc ("Tullow") issues this Trading Statement in respect of its financial year to December 31, 2006 and this Operational Update in respect of recent Production, Development and Exploration activities. The Trading Statement is in advance of the Group's Full Year Results, which are scheduled for release on Wednesday, March 21, 2007. The information contained herein has not been audited and is subject to further review.
HIGHLIGHTS
Production and Development
* Working interest production averaged 64,720 boepd for 2006, 11% higher than 2005, and reached 75,000 boepd by year end;
* Significant production and development activity is planned for each of our core areas in 2007. Key development projects include Schooner and Ketch (UK), Okume (EquatorialGuinea), Chinguetti (Mauritania), West Espoir (Cote d'Ivoire), M'Boundi (Congo Brazzaville) and Bangor (Bangladesh);
* Working interest production is expected to average in excess of 80,000 boepd in 2007.
Exploration and New Ventures
* In 2006 the Group drilled 12 exploration wells, seven of which discovered hydrocarbons;
* Five oil discoveries in the Albertine Basin in Uganda have significantly enhanced the prospectivity of the region. An accelerated program of exploration and appraisal activity across the Group's acreage in Uganda is scheduled for 2007;
* An active new ventures program resulted in seven new exploration licenses in 2006. Further awards are expected in Africa during 2007;
* Drilling plans for 2007 include over 20 exploration wells, with highimpact programs focused on three key campaigns in Uganda, Namibia an India.
Acquisitions
* On September 25, 2006 Tullow announced a proposal to acquire Hardman Resources Limited ("Hardman") for US$1.1 billion. Following regulatory and shareholder approval, the transaction became effective on December 20, 2006;
* The acquisition materially enhances Tullow's portfolio by adding both exploration and production assets in Mauritania, establishing operational control in Uganda's Albertine Basin, and significantly extending Tullow's prospective acreage position in Africa and South America.
Commenting today, Aidan Heavey, Chief Executive of Tullow said:
"During 2006, we consistently demonstrated our ability to deliver focused growth from our portfolio with seven successful exploration wells, seven new exploration licenses, a major acquisition and a significant increase in annual production. The integration of the Hardman assets is progressing well and 2007 is expected to be a year of further progress, with strong production performance and three major drilling campaigns in Uganda, India and Namibia. We are continuing to build a substantial international oil and gas business."
Conference Calls
In conjunction with this announcement Tullow has scheduled two conference calls. Details are included at the end of the release.
Trading Statement
Production
Group working interest production for 2006 averaged 64,720 boepd, 11% higher than the 2005 average. Sales volumes for 2006 averaged 57,300 boepd. A further breakdown of these figures is provided in the Operational Update for each core area. Production figures remain subject to final reconciliation and do not equate to sales volumes. This is due to variations in lifting schedules and because a portion of the production is delivered to host governments under the terms of Production Sharing Contracts. Average working interest production for 2007 is expected to exceed 80,000 boepd.
Realized prices and oil discount
Average prices realized during 2006 were significantly higher than those for 2005. Realized oil price was approximately US$62/bbl (pre hedges) and US$53/bbl (post hedges) and realized UK gas price was approximately 46p/therm. During 2006 the Group's oil production sold at an average discount of approximately 5% to Brent and this level of discount is expected to continue in 2007.
Overlift position
At December 31, 2006, Tullow was in a net overlift position amounting to an estimated 130,000 barrels. Such overlift positions are valued at market value and, combined with stock movements during the year, give rise to a charge of approximately 2.4 million pounds Sterling to Cost of Sales.
Exploration Write-Off
Tullow's exploration write-off for 2006 is expected to be of the order of 30 million pounds. This write-off is principally associated with unsuccessful exploration activities in the UK, Gabon, Pakistan and Angola and new ventures activity during the year.
Capital Expenditure
During 2006 Tullow invested approximately 330 million pounds in
development and exploration activities. In addition, the Group acquired a package of assets in Gabon and purchased 4.25% of the share capital of Hardman Resources ahead of deal completion at a total cost for both transactions of approximately 40 million pounds.
Based on current estimates and programs, total capital expenditure for 2007 is expected to amount to approximately 370 million pounds.
Net Debt
Net Debt at December 31, 2006 was 169.1 million pounds, exclusive of Hardman cash balances of $89.8 million (45.8 million pounds).
Derivative Instruments
At December 31, 2006 the Group's derivative instruments had a netnegative mark to market value of approximately 21.0 million pounds.Commodity Hedging While all of the Group's commodity derivative instruments currently qualify for hedge accounting, a credit of approximately 9.8 million pounds (9.1 million pounds after taxation) will be recognized in the income statement for 2006. Most of the credit relates to the improved effectiveness of the hedges, which is largely due to a better correlation between the underlying oil revenues and the hedges arising from factors such as narrower crude oil discounts to Brent and the timing of oil liftings.
Foreign Exchange Hedging
A credit of 5.9 million pounds (4.1 million pounds after taxation) willbe reflected in the income statement arising from the foreign exchange derivative instruments entered into in respect of the Hardman acquisition. The foreign exchange hedges do not qualify for hedge accounting under IAS39and consequently the credit reflects the mark to market value of the foreign exchange hedges as at December 31, 2006.
Contact: Aidan Heavey, Tom Hickey, Chris Perry - Tullow Oil plc+ 44-20-8996-1000
or - Brian J. Rafferty at Taylor Rafferty - 212-889-4350
REGIONAL DEVELOPMENTS:
(Venezuela)
As announced by Venezuela’s President in early January, Venezuela's national assembly has unanimously agreed to grant Hugo Chávez special temporary powers (18 months) for the regulation of hydrocarbons and their derivates as well as gas, electric power, telecommunications and other industries. President Chávez can proceed to nationalise the industries by decree without the need to consult the legislature. The government is to take over the four remaining private electric power companies in Venezuela - AES's EDC, Eleval, CMS Energy's Seneca and Genevapca, also owned by AES. The government will nationalise natural gas E&P projects and the four Orinoco extra-heavy crude projects in which state oil firm PDVSA already has a stake of about 40%. The list also contains fixed line telecommunications company Cantv. The special powers bill "authorises President Chavez to dictate decrees with strength, rank and force of law," allowing him to advance socialism and "deepen the Bolivarian revolution," named after independence hero Simón Bolívar.”
(Bolivia)
The Latin American press reports that Bolivian protestors have blockaded oil pipelines in the city of Camiri, cutting off deliveries to Santa Cruz. They also shut down the only road to Paraguay and Argentina. The protestors demonstrated against President Evo Morales’ national policies, saying they doubted the president’s motives. Last year, Morales had promised to nationalise the country’s oil and natural gas resources but the nationalist plan has not been completed. The protestors will continue the blockade until YPFB, takes control over all oil resources. The blockade will disrupt Bolivia’s natural gas and oil supplies as well as the supply of natural gas and oil to Paraguay and Argentina.
(Falkland Islands)
Relevant Share Prices for Thursday, 01 February 2007:
Tullow Oil up 5.00 to stand at 403.50
Desire Petroleum up 0.25 at 32.25
FOGL Up 1.50 to stand at 95.00
Rockhopper Exploration unchanged to stand at 42.25
Borders & Southern unchanged at 34.00
|
