Production Outlook The Company currently forecasts an average daily production rate in 2011 of 21.7 Mboepd on a net entitlement basis, assuming a Brent oil price of $75 per barrel. This represents a 24 percent increase compared to the 2010 production level which is expected to average approximately 17.5 Mboepd for the year. The forecast comprises 87 percent gas and 13 percent hydrocarbon liquids.
The forecast is based on production from Melrose's existing oil and gas fields in Egypt, Bulgaria and East Texas USA which contribute 65 percent, 34 percent and 1 percent of the total, respectively. It excludes any contribution from the Company's Permian Basin assets in the USA and in the event that the Company does not proceed with plans to divest these assets the 2011 production forecast would be increased by 0.8 Mboepd.
On a working interest basis, the 2011 production forecast is 44.0 Mboepd, some 8 percent higher than the current 2010 market guidance of 40.7 Mboepd.
Capital Work Programme Melrose is planning an active work programme during 2011, with an increased emphasis on exploration initiatives and with investment tailored to allow a reduction in the Company's financial gearing towards 100 percent by year end. The total capital expenditure is forecast at $112 million of which approximately 47 percent is allocated to seismic acquisition and exploration drilling on a number of potentially high impact exploration plays. On a country basis, Egypt, Bulgaria, Romania and Turkey account for 61 percent, 16 percent, 16 percent and 7 percent of the forecast, respectively.
The work programme retains some flexibility and approximately $77 million of the capital forecast is considered to be firm with the remaining $35 million contingent. The contingencies relate to the optimisation of incremental development projects on the Company's main producing fields in Egypt and finalisation of the concession agreements and other approvals required to commence seismic operations offshore Romania.
In parallel with the implementation of the capital work programme, the Company plans to secure one or more new business development opportunities during 2011 with the potential to add material reserves and value. Consistent with the Company's strategy, the focus will be on assets with term development and exploration activity located in low cost operating areas where the Company has, or can create, a competitive advantage.
Exploration The seismic acquisition programme will evaluate several of the Company's exploration licences including the Rhone Maritime offshore southern France (where Melrose is carried for the costs of a 2D survey), Mesaha in southern Egypt, South Mardin in Turkey, Block Galata offshore Bulgaria and the Muridava (EX-27) and Est Cobalcescu (EX-28) blocks offshore Romania.
On the Rhone Maritime concession, a 7,500 kilometre 2D seismic survey commenced on 1 December 2010 and is expected to complete within approximately three months. The survey is designed to evaluate a number of exploration plays which have been successful elsewhere in the Mediterranean region including a shallow Pliocene channel sand system and structural Miocene plays beneath the Messinian salt layer. On Mesaha it is planned to acquire up to 1,500 kilometres of 2D data over the southern area of the basin. This survey will be acquired using modified acquisition parameters in an attempt to enhance the seismic imaging deep in the section and is expected to complete late in the second quarter. On South Mardin a provision has been made to acquire a 250 kilometre 2D data over the large Ceylanpinar structure in the third quarter of the year.
Elsewhere, in Bulgaria a 500 square kilometre 3D survey is planned on Block Galata to ascertain whether the Galata-Kaliakra gas play extends into the centre of the block and in Romania some 900 kilometres of 2D and 1,300 square kilometres of 3D data acquisition is planned on the Muridava and Est Cobalcescu concessions. The latter surveys are contingent on finalisation of the Concession Agreements for the blocks and timely receipt of the regulatory approvals required to commence seismic operations.
The drilling programme includes a number of key wells. In Turkey, the South West Kanun well will commence drilling in March to test a structure which lies to the east of the South Mardin concessions and has gross mean prospective resources of 85 MMbbls with a 20 percent chance of success. In Bulgaria, the Company plans to drill the East Kaliakra prospect which is on the Galata-Kaliakra field trend and has prospective resources of 59 Bcf and a 34 percent chance of success. In Egypt, two wells are planned in the second half of the year to test the undrilled Cretaceous oil play in the South East Mansoura concession. The resource potential estimate for this new play will be refined once the data from the 3D seismic survey which is currently being completed on the block have been processed and interpreted. For the latest updates PRESS CTR + D or visit Stock Market news Today
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