Columbus Energy Res - Business, Operational and Financial Update - Q1
("Columbus" or the "Company")
Business, Operational and Financial Update - Q1 2019
Columbus, the oil and gas producer and explorer focused on onshore
The Company's Executive Chairman,
Key Focus of Company in Q1 2019:
During Q1 2019, the Company was seeking to achieve the following objectives. The Company is pleased to announce that it has significantly achieved these objectives.
· Progress the detailed technical work on the
· Progress M&A opportunities sufficiently to enable Columbus to announce the establishment of a footprint in another South American country in 1H 2019 and which will enable the Company to grow production and commercial returns within that country within a short (1-2 year) timescale. Any opportunities should be complementary to existing assets and fundable from existing resources or new funds which are not dilutive for current shareholders.
· Optimise profits from operations and manage costs from the Company's producing assets, in a lower oil price environment where the impact of Special Petroleum Tax ("SPT") on cashflows is very real, not necessarily through continual production growth but through a programme of maximising commercial returns on each asset, through implementing cost reductions, where necessary, and managing well work activities. Focus has been not to simply grow production (for growth's sake) but to improve commercial returns on the assets through more effective well work and operational activities.
· To progress discussions for renewing the Company's Incremental Production Service Contracts, in particular for the Inniss-Trinity field and Goudron field. The Company is keen to ensure that the IPSC terms motivate operators to invest funds to grow production including at times of lower oil prices and notwithstanding the effect of SPT on cashflows.
Key Highlights in Q1 2019:
o Company has chosen a well location for the SWP, to be funded from available resources, and is undertaking the necessary pre-drill activities to commence drilling in Q3 2019, subject to receiving relevant Governmental approvals.
o Detailed technical work undertaken by
· Inniss-Trinity CO₂ Project:
o Company continues to progress the Inniss-Trinity CO₂ project with its partner Predator Oil & Gas Holdings plc ("Predator") and has commenced site preparation activities.
· New Country Entry:
o Company is in exclusive discussions for award of a concession in a South American country, after a successful three-month tender process. Potential for low-cost entry into a discovered onshore oilfield with a detailed work programme for 2019-2021 submitted as part of the Company's bid. Announcement of new concession forecast for late Q2/early Q3 2019.
o A number of additional M&A opportunities being considered, consistent with Company's strategy roadmap.
o Net cashflows from operations increased marginally during quarter despite lower production and lower average oil prices. Average production of 602 barrels of oil per day ("bopd") in Q1 2019 (Q4 2019: average of 670 bopd).
o Peak production of 1,000 bopd achieved in late January, production exceeding 860 bopd on three occasions during quarter confirming the combined field potential when economic and commercial conditions allow a more aggressive well work programme.
o Rig usage and opex costs being managed carefully to reflect current commercial circumstances and oil price environment. Focus remains on profit and not production growth.
o Cash balance of
o Average realised sales price from operations in Q1 2019:
o Increased cashflow positive position achieved from operations, delivering
o Outstanding Lind debt facility reduced to
o The initial stages of decommissioning of the La Lora Concession has recently commenced, consisting of removal of above ground facilities. Costs expected to be met from sale of equipment and scrap.
"It has been a very busy few months on many fronts as we have sought to ensure we are in a position to start unlocking the exciting SWP opportunities, expand our footprint into other countries, whilst managing our operations in
Nearly two years since I started with Columbus, we are now almost ready to start unlocking the huge potential that exists in the SWP, an asset located just a few miles from
At the same time, we have been working to secure a concession in a new country for over a year and have recently successfully come through a three-month tender process. This would be a low-cost entry into an established hydrocarbons province. The Company has submitted a proposed three-year work programme for the concession and we hope to announce the signing of that contract late Q2/early Q3 2019. This entry into another country will start the process of expanding our footprint and reducing our exposure to just one country of operation. We believe our team have the skills to enable us to unlock a number of opportunities in that country and the region.
As I mentioned in early January, we have been managing our operations in
The next quarter will be busy as we prepare for the SWP drilling campaign and progress other M&A opportunities. In Q1 2019, we made a number of offers for interesting opportunities in four countries and will seek to unlock those opportunities still in play if they make good sense for our shareholders. We believe we can bring new funding for the right opportunities in a manner which will be value-accretive for our shareholders, should these funds be required. These are exciting times and I believe Columbus is in a good place to take advantage of the various opportunities that our team have identified through our extensive networks."
· The Company has continued to progress the key strategic pursuit of exploration drilling in the SWP. A risked portfolio has been generated consisting of over a dozen shallow and deep prospects and leads. These range in size from an estimated 20mmbbl up to 400mmbl with the potential for stacked vertical targets. The Company intends to drill a risked portfolio of prospects commencing with a well in Q3 2019.
· The first planned well targets a Middle Cruse reservoir quality test within the area covered by existing Certificate of Environmental Compliance approvals.
· Following the completion of the first well, the Company may seek third parties to farm-in to the SWP when justified by cost and/or risk sharing.
· Heritage confirmed in
Operations & Production:
· Producing field operational decision making has employed the strategy of assigning well work priorities based on short payback times for remedial and incremental workover rig jobs. This was carried out whilst maintaining momentum on targeted water injection in Goudron and planning for the CO₂ pilot project in
· Lower production was due to significantly reduced well work activity. A single workover rig was utilised continuously in Q1 2019 compared to up to 4 units simultaneously in Q4 2018. Oil prices in the quarter remained in the
· Company prioritized preparations for the CO₂ pilot project in
· The water injection Pilot A implementation in the Goudron field that commenced in
· An inventory of incremental stimulation workovers was generated for future implementation based on rig availability and hurdle economic returns being met. Peak instantaneous rates continue to demonstrate the upside potential of all the producing fields.
· The operational management of the Icacos Field was taken over by the Company on
· The Company continues to remain focussed on producing profitable barrels of oil rather than volume.
· Snowcap-2ST1 testing proved the existence of flowing oil from the equivalent reservoir unit to Snowcap-1. The Company will review whether the expected Snowcap levels of production justify continued investment in the field.
Health, Safety & Environment:
· No Lost Time Incidents were recorded during the quarter on any of the field operations.
· Company progressed Certificate of Environmental Compliance ("CEC") covering the planned Inniss-Trinity CO₂ injection pilot facilities.
· Gross Revenues of
· Group is forecast to remain operationally cash flow positive in 2019.
· Effective as of
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
Qualified Person's statement:
The information contained in this document has been reviewed and approved by
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Notes to Editors:
Columbus is guided by the following core values; safe and sustainable, stronger together, creative excellence, positive energy, totally trusted and personally responsible.
The Company is led by an experienced Board and senior management team with supportive shareholders and intends on leveraging its expertise and experience to build an attractive and diversified portfolio of assets across
Barrel of oil
Barrels of oil per day
barrels of water per day
Lost Time Incident
Million barrels of oil
This information is provided by RNS, the news service of the
Quick facts: Columbus Energy Resources PLC
Market Cap: £20.51 m
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