Bridge Resources keeps Durango well shut in
2009-11-10 21:03 ET - News Release
Mr. Edward Davies reports
BRIDGE RESOURCES CORP. PROVIDES CORPORATE UPDATE
Bridge Resources Corp. is providing the following corporate update (all amounts in U.S. dollars unless specified).
Gas prices remain low in the United Kingdom North Sea, averaging 25 pence per therm ($4 per 1,000 cubic feet) and, due to the continued low prices, Bridge has kept its 100-per-cent interest Durango well shut in. Prior to the shut-in on July 2, 2009, Durango had produced 4.67 billion cubic feet of natural gas equivalents. An interim reserves calculation by GLJ Petroleum Consultants, Calgary, effective Sept. 30, 2009, in accordance with National Instrument 51-101, standards of disclosure for oil and gas activities, assigns Bridge 23.16 billion cubic feet of natural gas equivalents remaining proved and probable reserves with an undiscounted value of $226-million based on NBP-ICE U.K. prices. Senergy, Aberdeen, is representing Bridge in current discussions with the other LAPS Pipeline producers to reach agreement on production profiles net of gas back-out.
Bridge has continued to receive significant net revenue during the shut-in period as a result of its financial put in effect from July 1, 2009, through June 30, 2010. This financial put pays Bridge the difference between actual gas prices and 50 pence per therm ($8 per 1,000 cubic feet) on an average 13 million cubic feet of natural gas per day without Bridge physically having to deliver any gas. This put revenue is further supplemented by repayment to Bridge of back-out gas from other fields producing into the LAPS Pipeline. For the four months July through October, 2009, Bridge has received revenue of $7.2-million and projects additional revenue of $15.4-million through June, 2010, should it continue to leave the well shut-in. Bridge does intend to resume production should U.K. gas prices increase for the winter 2009-2010 period as anticipated.
With regard to corporate financing, the RBS-KBC-NAB 34.2 million pounds sterling ($54-million) senior debt facility interest payments have steadily reduced with the decline in LIBOR (London interbank offer rates). The current rate paid by Bridge is 3.1013 per cent per annum. Interest payments on the secondary K2 $20-million (Canadian ) facility of 10 per cent per annum are paid in Bridge shares with a deemed minimum share price of 83 cents.
Even though Bridge's debt interest payments are low, Bridge has the corporate goal of reducing its debt level. Bridge has appointed a financial institution to achieve both debt reduction and increased working capital through monetization of assets. North Sea drilling costs have reduced commensurate with the decline in commodity prices and Bridge plans to drill two wells in 2010.
Onshore United States, the TSX Venture Exchange has approved the acquisition of the Boise basin assets and Bridge has formed a new wholly owned subsidiary, Bridge Energy Inc., to operate its 50-per-cent interest. Bridge and its 50-per-cent partner, Paramax Resources Ltd., have agreed on locations for the first five wells with planned drilling commencement in January, 2010.
We seek Safe Harbor.