Oil and gas producer Melrose Resources plc (LSE: MRS) increased its production outlook for next year, with a 4% increase in daily production from 2009’s guidance. The FTSE250 constituent expects to produce 40 thousand barrels of oil equivalent per day (Mboepd). The company intends to utilize the resulting increase in cash-flows to advance its development projects. In 2010, Melrose is planning an active exploration and development work programme with capital expenditures of approximately US$169 million.
The group’s Egyptian operations will account for approximately 78% of the projected production; in the US its mature oil fields in the Permian basin are expected to contribute 5% of total production in 2010. In Bulgaria the Kavarna and Kaliakra field developments are scheduled to come on-stream in the second half of the year and will contribute the remaining 17% of the group’s total production.
“During the year we expect to generate significant operating cash-flow which will provide us with a platform to re-focus on exploration and business development initiatives”, Melrose Chief Executive, David Thomas commented, “Key investment areas for the year will be our development projects in the Western Black Sea
and progressing high potential frontier exploration programmes in the Mesaha concession in Egypt and the
South Mardin blocks in Turkey."
The group’s budgeted capital expenditure consists of $114 million in its ‘firm’ budget, with a further $55 million contingent upon the government approval of planned work in Romania and Bulgaria. The Edinburgh headquartered group intends to spend 33% of the budget on exploration work in Egypt, Turkey, Romania and Bulgaria. The planned exploration programme comprises both seismic and drilling campaigns.
The remaining budget will be used to upgrade facilities and the completion of the West Dikirnis gas re-injection project in Egypt, which is scheduled in January. Minor water-flood investments will be made at its American facilities also.
The contingent budget comprises $20.6 million for the Romanian Ana and Doina field developments and $27.0 million to complete Phase 1 of the Galata gas storage project in Bulgaria.