RESULT COMMENT Zengas
Total 2011 revenues came in a lot better than i expected at $30.3m.
Total 2011 production was 6369 boepd
Production in Q4 up to ***6584 boepd*** against 6111 boepd Q3.
And from what they said last night -
Kazhakstan only accounted for 1581 bopd poroduction during 2011 (big impact to be made this coming month when circa 4,000 bopd is expected and then increasing to 5 - 6,000 bopd).
Oil production and revenues would have been higher but for the building the production facilities (even after accounting for bad weather - as over 1 month was lost in the summer period due to construction.)
Kazakhstan
"On Jan 30 the company announced the official inauguration of it's AOT terminal".
"The facilities are fully complete and ready to commence commercial operations and the Company anticipates that these facilities will be fully operational following the visit of a Kahzak government state commission which is planned imminently" (blamed on "extremely adverse weather conditions" with April 2012 start up expected - page 27 they say the beginning of April - so we could have an imminent announcement).
Initially planning to take 4,000 bopd via the AOT (this coming month) and increase it to 5000 - 6000 bopd later in the year quote "from existing drilled wells. Facility also being increased to handle 12,000 bopd.
If they bring on that additional 2,000+ bopd from DORIS in the next 1-4 weeks via AOT, this would lift prduction to nearly 8,600 boepd (Q4 6584 boepd) and if they then increase that AOT production again as stated yesterday to 5-6,000 bopd - then we should be looking at 9,500 - 10,500 boepd with a much bigger oil mix and before any other operations are increased. This should be achievable as the wells are already drilled.
On the gas production side, not planning to increase gas production at current prices and waiting for the Kazhak-China gas pipeline for much better competition from buyers and better prices.
Gas production was lower due to a main compressor being out in Q1 (now fixed) and again would have contributed to higher revenues.
11 gas discoveries also now made.
Around the DORIS oil field discovery, AKD07 will spud this quarter targetting the 3P reserve potential.
The Kalypso well will be tested once government approvals have been recieved and will also prioritise this relative to company cash flow. Logs indicate more than 100m gross of hydrocarbon bearing intervals. This could be similar to the Doris oilfield discovery.
Tajikistan-
The Beshtentak BST20 well is back on production but capped at under 100 bopd (instead of 500 bopd) due to affecting a nearby gas producer well required to feed the city of Kulob. Zone isolation will be carried out to increase production once the current bad weather has lifted.
3 further non producing Beshtentak oil wells are now candidates for workovers.
1-2 new high angle or horizontal crestal wells being considered to achive higher rates than the 500 bopd+ achieved in the BST20 well.
"Further workover wells are available".
The well testing programme of East Olimtoi oil discovery is planned in Q2 (needs fracced - 2 zones of good oil and gas - logs indicate several hydrocarbon bearing zones and no oil water contact).Heavy drilling mud used to control the well deemed to have restricted oil flow/formation damage. In the interval 3341m - 3500m, 'independent' petrophysical interpretation indiactes up to 32m net pay, porosities of 17% with no oil water contact.
Further look-alike salt swell domes 'nearby'to East Olimtoi for further oil potential.
The Persea prospect drilled by Persea-1 will be tested on a cash flow prioritised basis from internally generated cash flow.
---------------------------
Uzbekistan (Gross oil production 689 bopd).
Net Production under the North Urtabulak PEC has been reduced to 220 bopd from 550 bopd and the company won't do much more by the looks of things to raise levels and are waiting on the award of the Chegara group of PRODUCING oil fields which are much less exploited (it won't pursue the West Kruk field). The exploration block under MOU is also south of the Kazhakstan Doris oil discovery which are all beleived to have 'considerable' potential.
Net cash at end Dec was $11.6m (and they have loan of $10m due in the next 2 years secured against their equipment/rig section of the company).
Management say they are confident that they will have enough capital going forward on the basis of the increased production or it can curtail some of its ambitions in the short term. Capital expenditure committments are low and they say they have sufficient funds.
It's currently therefore "finalising a $5m Kazhak loan facility".
It "would also like to fund a further $8m - $10m worth of seismic work in Tajikistan in order to finalise the 1st deep sub-salt well. This is not a contractual committment but the company would like to advance its programme which would assist in bringing in a suitable farm in partner to fund the deep well drilling".
"Discussions have also been initiated with regard to reserve based lending on other corpoarte and project related financing options". The share price in the short term is imo likely reflecting those discussions.
"As at the date of this report, the company is in discussions with several parties with regard to a farm-in and/or joint ventures" - Very interesting !!!
All in all, production rising quarter on quarter and revenues much better than i hoped for ($30.3m against my expectations of $20.5m+).
This is what i now look for based on Production Q4 at 6584 boepd = Hoping to break 8500 boepd in April (over 2,000 bopd incremental from DORIS through new AOT Facility) with a further 1-2,000 bopd to follow from DORIS = targetted average production of circa 10,000 boepd. Beshtentak (Tajik) and newly awaited Uzbek fields should also be 2012 production drivers while 3 other significant potential oilfields await testing.