Increased sales of oil and gas fro 2nd quarter
Austral Pacific has increased sales of oil and gas for the second quarter, earning $4,386,717.
Production from Austral’s Cheal oil field hit 42,812 barrels, with 29,754 barrels Austral’s share.
The field is currently producing 400 barrels per day. The recently drilled A7 well has the potential to increase production to 650 barrels per day.
Austral Pacific chief executive Thompson Jewell said it was a milestone for the company.
“This is the first time our revenue has exceeded operational costs. We have turned a corner.”
Austral posted a loss of $2.529m, compared with a loss of $3.243m for the same quarter in 2007.
This calculation includes depletion of the reserves and depreciation of the production facilities at Cheal and the impact of oil hedged at $65/barrel for April and May.
From June 1 the company received full world oil price; averaging approximately $US136 per barrel for its June crude sales, having closed out its forward oil sale contracts at the end of May this year.
This required Austral Pacific to borrow a further $18 million, but the increased revenue adds positively to the bottom line. Austral is not exposed to penalties for production volumes not meeting contractual levels.
The company has made successful steps during the quarter to implement its stated goals for 2008 of reducing debt, focusing activities on its New Zealand assets and reduce operating costs.
Austral sold its Douglas and Stanley permits in Papua New Guinea for $8.5 million cash.
The drilling of two wells in and near the Cheal oil field resulted in a sub-commercial field extension well at A6 and the drilling of the successful A7 appraisal well in early July. The A7 well is expected to be on stream by the end of August 2008.
The Wellington office has been restructured and some staff positions consolidated.
Austral signalled an aggressive approach to reduce compliance activities and costs by delisting from AMEX.
Mr Jewell said the discoveries at Cheal A6 and A7 will not only add to Austral’s revenue stream but will also advance understanding of the field size and production capability.
“This will guide our production enhancement studies to increase the recovery from the existing wells, and help identify the best well locations to expand the play trend over the remainder of the company’s permits area,” he said.
Austral’s focus on the fundamentals is showing results, Mr Jewell said.
“The company will continue its approach throughout 2008 with the intention of building its production through enhanced recovery and drilling programs in early 2009.”
Austral Pacific owns 69.5 per cent of the Cheal field, with TAG Oil holding 30.5 per cent of the field.