www.aurelianoil.com
Aurelian Oil & Gas PLC, was founded in December 2002, and is focused on the re-emerging Central and Eastern European oil and gas markets, the oldest producing oil province in the world.
Current projects span the region from Poland to Bulgaria, with production in Romania, a deep appraisal well drilled on a large structure in Poland in March 2007 to be developed with a further horizontal well to be drilled in 2010, together with exciting exploration prospects including projects in four countries, Romania (4 blocks), Slovakia (3 blocks), Bulgaria (2 blocks) and Poland (14 blocks). Aurelian is the operator in all of these except Bulgaria.
Aurelian Oil & Gas aims to unlock 'substantial value' at Siekierki gas project
Aurelian Oil & Gas (LON:AUL) told investors that there is “substantial value to unlock” in its flagship Siekierki tight gas project despite recent disappointing drilling results.
Earlier this month, Aurelian reported that initial data from the Trzek-3 well at Siekierki indicated that the recoverable resource could be between 4-8 billion cubic feet (bcf) rather than the 16-20 bcf that the company was expecting.
The combined flow rates from this well and the previously drilled Trzek-1 and Trzek-2 wells stood at around 6-8 million cubic feet per day.
This was due to “more complex geology than initially thought”, which Aurelian said means that it now has to find the optimum way to produce and commercialise this gas.
Siekierki currently has a mid-case gas-in-place (GIP) estimate of 1.6 trillion cubic feet (tcf).
Aurelian now aims to fully evaluate test results from Siekierki as well as results from the Krzesinki exploration well, which was spudded six kilometres away from the Trzek wells in June, before the end of the year.
The company today reassured investors that it will not allocate any further capital to this project until it is clear on the optimum way forward.
“In the coming months we will be fully evaluating the information we have on this project, including integrating the pressure build up data, the results from the Krzesinki exploration well and the seismic surveys we shot earlier in the year,” said chief executive of Aurelian Oil & Gas Rowen Bainbridge.
“These first two wells set the baseline of performance and we are in the process of identifying a number of areas in relation to well design, productivity and cost where we can improve in the future.”
At the end of the period, Aurelian had €95.3 million in cash after investing €23.94 million into its assets with the majority of these investments related to its activities in Poland, primarily exploration at Siekierki.
The cash balance decreased to €77.7 million by 22 September, however, Aurelian noted that it is expecting VAT repayments of €3.55 million.
During the first half of the year, Aurelian posted a pre-tax loss of €2.46 million, roughly in line with a loss of €2.55 million for the same period of 2010.
Besides the evaluation of Siekierki, Aurelian’s plans for the near term also include drilling the Horodnic-1 appraisal well in Romania, which is planned for October.
The well is targeting gross 52 bcf mid-case gas-initially-in-place (GIIP) and seeking to establish the commerciality of the Voitinel field.
In Slovakia, Aurelian is preparing to drill the Cierne-1 exploration well targeting 100 bcf mid-case GIIP with the aim of de-risking further gross resources of 400 bcf.
Both the Cierne-1 and the Sosna-1 well on Aurelian’s Cybinka/Torzym concessions in Poland are expected to spud in the first quarter of 2012.
Earlier this month, broker finnCap said that investors overreacted to the Trzek-3 test results, upgrading its recommendation for Aurelian from “hold” to “buy”. However, finnCap reduced its target price for the stock from 62 pence to 31pence.
Shares in Aurelian traded at 19 pence this morning, down 2.5 percent from Thursday’s close. The company currently has a market cap of £93.9 million.
