Mediterranean Oil & Gas PLC (AIM: MOG) said he Italian ministry of economic development has now awarded the production concession for the Guendalina gas field, and it expects operator ENI SpA to start development activities on field in January/February 2010.
Based on the last information received from ENI, construction and installation of the production platform is scheduled to be completed in 2010, drilling of two development wells is planned in the first half of 2011, and gas production and associated revenues are expected to commence prior to the end of June 2011.
ENI is currently completing the review of the required development capital expenditure for the project and has informed MOG that it expects an increase in costs compared to previous estimates provided by ENI. The company expects that ENI will confirm the updated development capital expenditure to MOG by the end of January or early February 2010.
Based on studies performed by ENI, the aggregate gas production from the field is expected to be around 20 million cubic feet of gas per day. MOG has a 20 percent interest in the Guendalina gas field which has independently certified proven and probable gas reserves of 22 billion cubic feet.
CEO Sergio Morandi commented: “The company continues to achieve milestones in its progress towards the corporate goal of becoming a medium sized oil and gas producer. The Guendalina field's gas production will allow MOG to triple in 2011 its current annual rate of net gas production."
MOG is also aiming to wrap up the environmental approval process for the Ombrina Mare oilfield in Italy by the third quarter of 2010 and secure the full production license by the end of that year after submitting the environmental impact assessment study to the ministry of environment. The group said in December 2009 that results from the currently ongoing several key post-drilling studies had been encouraging and that it planned to request a review and update of the independent certification of the field’s oil reserves and publish the full certification report in Q1 2010.