Gas Field Issues Hit Egdon's Sales
UK-based Egdon Resources has said that while it has increased sales from 2011, it is performing under expectations due to long-running issues with two of its gas fields.
The company increased its sales by 71 per cent for the six months leading to the 31st of January 2012 on the same period the year before, bring sales from £0.9 million to £1.54 million. It also increased production from 17,671 barrels of oil equivalent (boe) to 29,624 boe a year, or 161 boe a day, an increase of 67 per cent.
Despite this, Egdon says that is falling short of expectations owing to issues with two gas fields, the Ceres and Kirkleatham gas fields.
The Ceres field has been shut in following continuing problems with production infrastructure, particularly a methanol injection system. Egdon says that this field has only contributed minor amounts of production during the six-month period leading to 31 January 2012.
When not facing issues, Egdon says the field performs well, with pre-back-out rates of 20 million cubic feet of gas per day and post back-out of 1.2 million cubic feet of gas per day net to Egdon (about 200 boepd). The company says it does not expect the value of the field to be affected in the long term.
The second field, the Kirkleatham field in which Egdon has a 40 per cent interest, was also been shut in awaiting a work-over in November of last year. Work began to clear water from the tubing in the well and production began again in December and January. However, an unexpected shutdown of the GT2 gas turbine caused production to cease again in February. It will remain shutdown until the partners in the project can resolve the the water production issue.
The company says it will place a precautionary impairment of that asset of £1 million at its interim reporting.
"Our production volumes during the period, whilst showing significant improvement on the same period last year, are below our expectations," Managing Director of Egdon Mark Abbott said.
"Given the problems being experienced at the moment we expect reduced production and cash flow over the coming period. We anticipate that the current issues with Ceres will be resolved in a timely manner and are actively working on the issues at Kirkleatham.
"We remain committed to our planned drilling programme in the UK and are making good progress with site agreements and submission of planning applications across these projects."