Canadian Overseas Petroleum Limited (LSE:COPL, CSE:XOP, OTC:VELXF) described a period of important transition in all aspects of its business, as the AIM-quoted oil and gas producer reported on its third quarter.
Production (before royalties) averaged 1,029 barrels of oil per day (bopd), from 1,193 bopd in the preceding quarter, with the company noting the impact of downtime for some its higher productivity wells.
Works to repair and upgrade certain infrastructure, facilities and site access took place during the quarter and are expected to improve performance and efficiencies.
At the same time, the company began an increased well injection protocol at the Shannon miscible flood project. This started in mid-October and the company said early responses to oil production are being monitored closely.
Petroleum sales amounted to US$5.8 million, versus US$5.6 million in the prior quarter, thanks to the support of stronger prices. The company incurred a US$2.2 million hedging loss, under arrangements put in place back in December – and last month it exited commodity swap contracts.
The company meanwhile also undertook a phase of cost cutting to bring down G&A spending, which was trimmed to US$1.7 million from US$1.9 million in the previous quarter. It expects to have removed more than US$2.5 million of annualized costs by the end of this calendar year.
COPL said it had a cash position of US$2.2 million at the end of September.
"The third quarter represents a period of important transition in all aspects of COPL,” said chief executive John Cowan.
“In the third quarter, G&A was reduced as an ongoing process in accordance the company's previously announced commitments, with significant and required field infrastructure upgrades completed.
“Oil production remained stabilized, and importantly, the permitted gas flaring program has ceased."
He added: “Since the third quarter in 2023, COPL was able to use working capital to increase NGL injection at the BFSU at double the rate compared to recent periods.
“This miscible flooded field requires injection of NGLs to enhance oil production and field recovery factors as capital restraints in earlier periods restricted the rates of NGL injection. A technical review of the oil response to increase NGL injection will be monitored closely this quarter, and it will form the basis for future production guidance and 2024 plans."
"The negotiations regarding a possible joint venture announced by the company in July 2023 are ongoing and the parties are working to agree all outstanding matters."