FTSE 250 Oil and Gas company Melrose Resources plc (LSE: MRS) provided investors with an operational update on its activities in Bulgaria, Romania and Egypt. The update highlights a series of government approvals in Eastern Europe and the progression of development work in Egypt. Investors appear to have welcomed the update – shares in the mid-tier oil and gas company rose almost 3% this morning on the London Stock Exchange (‘LSE’).
Melrose revealed that the Bulgarian Government has issued a Certificate of Commerciality for the company’s Kavarna gas field, a similar application for the Kaliakra field has now been by Melrose submitted also.
The government approval effectively commences development at the Kavarna field. According to Melrose the field contains estimated reserves of 24 billion cubic feet (Bcf) of natural gas and is located 8 kilometres east of Melrose's Galata field platform. The Kavarna field will be produced using a single subsea well completion tied back to the Galata facilities using a 6 inch flow line and is expected to be on stream by 1 July 2010.
The Kaliakra field, which contains 57Bcf of reserves, is located 14 kilometres east of Galata, is expected to producer first gas by 1 October 2010.
The two field flow lines will be laid by Grup Servicii Petroliere, a Black Sea based drilling and oil field services company, using the Bigfoot lay barge. The total capital expenditure for the two developments is expected to be $59 million which equates to $0.73 per thousand cubic feet of gas (Mcf).
Separately Melrose is also in active discussions with the Bulgarian Ministry for Economy and Energy to finalise the terms of an Amendment to the Galata Production Concession which is required for the Galata gas storage project.
In neighbouring Romania, Melrose took an ‘important step towards’ receiving government approval to complete it farm-in transaction with Sterling Resources at the Pelican XIII and Midia XV Blocks in the Black Sea. In October Melrose received approval formal from the Romanian National Agency of Mineral Resources to conduct petroleum operations in the country under new administrative guidelines.
During October Melrose achieved several milestones in Egypt too. In the Nile Delta, the South Khilala field, was successfully brought on stream on October 16th 2009. The field is located in the Mansoura concession and was discovered in April, according to Melrose the Khilala field which contains estimated reserves of 36Bcf of natural gas. The field has been tied back to the West Khilala production facilities using a 10 kilometre, 6 inch flow line. The combined South and West Khilala production rate is currently 114 million cubic feet of gas per day (MMcfpd).
At its Egyptian processing facilities, Melrose has also revealed that it has completed the commissioning the West Dikirnis LPG Fractionation Towers and Vapour Recovery Plant.
Construction on the Gas Reinjection facilities are now expected to be completed in early January due to delays related to the delivery of equipment from the Far East. Upon completion, production volumes from the field are expected to increase by approximately 30 MMcfpd.
In Egypt Melrose is also undertaking a number of exploration and development drilling programs. The company’s EDC9 drill rig is currently completing the fourth West Dikirnis horizontal development well and will then commence a four well drilling program in the Nile Delta.
The first exploration well will be drilled to test the North West Nabourah prospect, which is located on the same Qawasim geologic trend as the South and West Khilala fields. The second well will test the Tall Rak structure, a Sidi Salim prospect on the same geologic trend as the Tamad oil field in the South East Mansoura concession. The third well will drill the South Damas Sidi Salim prospect.
In 2010 Melrose plans to conduct exploration drilling in Upper Egypt on the Mesaha exploration concession, Melrose intends to assist the program with the anticpated acquisition of a 2,000 kilometre 2-D seismic survey of the concession area. The EDC9 drill rig will be mobilised to the Mesaha concession to spud the first well once the Nile Delta drilling is complete. Melrose operates and holds a 40 percent working interest in the Mesaha block.