Stratic Energy Share Discussion Threads

[bristokoe7] 21/5/2009 14:15

Hey Steely. What's happening at Investorvillage? Can't access the BB without signing up to a monthly subscription. How can we keep up with OJ and Co?

[rathkum] 15/5/2009 11:43

Looks like the only oil junior showing signs of distress. Wonder why the market sentiment is so weak.Financing I guess

[steelwatch] 15/5/2009 07:42

Friday, 15 May 2009

PETROFAC LIMITED

INTERIM MANAGEMENT AND AGM STATEMENT


Petrofac, the international oil & gas facilities service provider, is publishing its Interim Management Statement for the period from 1 January 2009 to 15 May 2009, as required by the UK Listing Authority's Disclosure and Transparency Rules, ahead of its Annual General Meeting today. At the meeting, Chairman, Rodney Chase, will make the following statement:


'I am pleased to report that we have made a good start to the year and we are confident that 2009 will be another year of strong growth.

Our largest business, Engineering & Construction, has been very successful in converting last year's high level of bidding activity, securing US$5.0 billion of new contract awards in the first quarter of 2009 in Abu Dhabi, Saudi Arabia and Algeria, which gives high revenue visibility through to 2011. Mobilisation activities on these new awards are progressing well with full project management teams now established, many significant subcontracts agreed and early progress made in procuring materials and equipment.

Our Offshore Engineering & Operations, Engineering Services, Training and Production Solutions businesses have performed broadly in line with expectations in the year to date, although, in the current lower oil price environment, we are starting to see some early evidence of customers adjusting their discretionary spending plans.


In Energy Developments, we were delighted to announce last month that we had commenced production from the West Don field in the UK North Sea. This represents a very significant milestone in the development and has been achieved in less than a year from field development programme approval. The productivity of the first production well on West Don has been good and in line with our expectations. Drilling of two production wells in the Don Southwest field has now been completed and production is expected to commence towards the end of this quarter. A second production well and two water injection wells in Don Southwest, and a water injection well in West Don, are expected to be completed and brought on-stream during the second half of the year. Our other producing assets continue to perform well and despite lower average oil prices in the year to date, have made a positive return. We believe our financial and operational strength, combined with a difficult financing environment for some asset developers, should lead to additional investment opportunities.

[steelwatch] 11/5/2009 17:13

Bowmore Drill when the Ocean Guardian ss rig returns from West of Ireland, probably latter part of June.

[steelwatch] 11/5/2009 16:39

Thanks to OJ on the IV bb for digging these out:

Stratic Energy Corporation has again confirmed plans for the UK Crawford field development with the intention to submit a plan for government approval this summer, with sanction to be sought later this year.

In its annual report for 2008, which has just been published, Stratic said work on Crawford in the last year has involved interpreting and integrating data from a field appraisal well drilled in late 2007 into the field development plan. "This work is nearing completion," Stratic states in the report, reviewing progress over the last year.

Submission of the development is however subject to all partners concluding satisfactory funding arrangements for the project.

Crawford is due to be developed via subea tieback to a host platform with a subsea manifold and four wells. The field, in UK block 9/28, is estimated to contain remaining reserves of 27 m boe.



Partners in the Breagh gas find - described as the biggest dry gas discovery in the UK for 10 years - have decided to sell most of the find to a company which is better placed to foot the estimated US $1 Bn field development bill.

One of the Southern North Sea field partners Stratic Energy says the partners have agreed to sell off up to 70% of Breagh because of the challenge of raising the necessary development finance among junior oil companies.

After two appraisals on Breagh, the first proving up the eastern extent of the field and the second well demonstrating increased production capacity with horizontal wells, Stratic stated: "It is clear that Breagh is an outstanding discovery in the North Sea – the largest dry gas discovery in the last 10 years."

Continuing, in its just-published annual report, Stratic says: "But it comes at a time when raising development finance by junior oil companies is particularly challenging."

And it adds in the report: "Against this background the five company partnership has taken the pragmatic decision to sell 70% of the discovery to a larger, financially robust participant which is able to fund development costs in excess of US $1 Bn."

Stratic is selling its 10% equity in Breagh and initial bids from potential buyers of the 70% stake on offer are already being considered by Stratic and its four other Breagh partners, .

Breagh is operated by Sterling Resources which holds 45% field equity. Others partners are Faroe Petroleum, and Encore Oil and Gas.

Discovered in 1997 with the 43/13-2 well which hit a 121 m (400 ft) gas column, Breagh was subsequently appraised in 2007 with 42/13-3 which tested at 17.6 Mmcf/d of gas and the 42/13-4 East Breagh well which concluded last November and tested at 10.2 Mmcf/d.

London-based analyst Evolution Securities has suggested the field could contain at least 600 Bcf of recoverable reserves of gas.

[lord santafe] 09/5/2009 15:21

I said 6,000 and oil on IG Index is 5910 to buy. Compared to other undervalued oil shares, SE. must be one of the best.

[csboyd] 06/5/2009 15:58

Encore making a bit of a spike maybe some news on Bregah which might help out here ..

[steelwatch] 06/5/2009 15:57

When production reaches 4300 bopd net to Stratic from West Don in the coming few months, each $1 movement in the oil price is worth c.$1.4m

[lord santafe] 06/5/2009 15:49

The price of oil is now nearly high enough for SE. to become a major profitable company. I think to ensure this happening, oil needs to be north of 6000.

[steelwatch] 01/5/2009 18:35

ifu - another farm out to share costs (I think), - or sell?.

[ifudrillittheywillcome] 01/5/2009 15:19

Yes --Bowmore too. But I'm not betting on a Syria Drill this summer until I see actual news of a rig date.

What's you opinion re the deal to get 100% of Cairngorm. Could be a positive move ---long term.

ifu

[steelwatch] 01/5/2009 01:06

ifu - and the (15%) Bowmore Drill late June, plus Syria - see post 396 above.

Ocean Guardianis on it's way to West of Ireland for Serica, and then straight back for Bowmore.

[ifudrillittheywillcome] 30/4/2009 22:44

With the possible exception of a Breagh sale announcement.....it looks like it got rid of ALL the news for the time being. That ain't good with Juniors. the 2nd W. don well going into production is what it appears we have to look forward to this summer.

ifu

[steelwatch] 30/4/2009 15:42

ifu - the only good thing is that should get rid of all the bad news for the time being.

[ifudrillittheywillcome] 30/4/2009 15:36

Crawford moved back.

Bowmore moved back (and did they lessen their 30% interest??)

No date for Syria and they have had plenty of time to secure one.

No asset sales.

a very disappointing report. No way it could build on yesterday's performance.

ifu

[steelwatch] 30/4/2009 12:09

Apparently not!

Await the TSX reaction.

[steelwatch] 30/4/2009 11:15

Large buy order filling?

[rathkum] 30/4/2009 11:14

All sells this morning yet the price has held up well, so far.

[jotoha2] 30/4/2009 09:20

I would say risk is on the downside , they are now producing , dump some valuable assets to keep the bankers happy and then proceed to greater heights or be taken out at a fat premium !

[steelwatch] 30/4/2009 09:07

...unless, of course, some sodding great magpie gets to it first!

[steelwatch] 30/4/2009 09:05

rathkum - major transitional struggle. Hopefully a beautiful butterfly will emerge and dazzle the world.

[rathkum] 30/4/2009 08:43

Steelwatch

How do read the statement?. I guess a lot depends on the sale of assets going forward and the oil price of course.

[steelwatch] 30/4/2009 08:23

OVERALL PERFORMANCE

Stratic is an international oil and gas business engaged in the appraisal, development and production of its existing petroleum and natural gas discoveries, supplemented by a moderate risk exploration programme. Its principal current interests are in the United Kingdom ('UK') and Netherlands sectors of the North Sea, Italy and the Mediterranean area, including Turkey and Syria. Production is currently from the Company's Turkish gas business, supplemented by the West Don oil field in the UK which just commenced production in April 2009. Stratic has undeveloped reserves in the Crawford oil field in the UK, and the Longanesi gas field in Italy.

Stratic's overall business performance at this early stage in its development is best measured in terms of the progress made on its key development projects and its success in exploration and appraisal activity. It is too soon in the industry cycle to judge progress in financial terms, although meaningful measures such as cash flow and earnings will become increasingly important as the Company moves into the production cycle.

The economic outlook for the oil industry has changed radically during the course of 2008. The year started with North Sea oil prices at $98 a barrel, having already risen by approximately 70% in the previous year, and continued to rise throughout the first half of the 2008, eventually peaking at $147 in early July. This upward trend in oil prices led to an increase in demand which pushed the costs of drilling rigs and other services to near all-time highs and led to a severe shortage of available drilling slots. A standard semi-submersible rig operating in the North Sea throughout 2008 cost in excess of $400,000 a day, with a typical spread of support vessel and services costing another $300,000 a day. This meant that wells were significantly more expensive to drill and that companies were forced to take on rig commitments up to 18 months in advance of drilling, and to accept winter slots in order to meet licence obligations.

The fall in oil prices in the second half of the year was dramatic. By late September, coinciding with the collapse of Lehman Brothers, the price had fallen below $100 a barrel, and was entering a period of free fall as the worst effects of the credit crisis were felt in the last quarter of the year. By year end, North Sea crude oil cargoes were changing hands on the spot market at around $35 a barrel and North Sea costs began to fall as companies cut back on activity, albeit with a lag effect as existing higher cost contracts took time to work through the system. Costs for otherwise idle rigs fell substantially - in some cases by over 50% - but few companies had the financial flexibility or the inclination to take advantage. It is too soon to predict the effect on longer term rig rates but most commentators expect them to settle at levels significantly lower than the recent peaks.

The consequences of these events are far reaching for our business which, like most businesses, was not structured for such a major discontinuity in commodity prices and credit markets. Access to capital has become even more important to junior oil companies, with limited availability of bank finance following a number of high profile failures in the North Sea, and equity markets still reeling from massive losses in the sector. In Stratic's case, these conditions come at a time when investment in its first major project is at its maximum and it is not yet reaping the benefits of full production. Equally important is the uncertainty created by the oil price and economic conditions on the profitability of future projects and the ability of Stratic and its partners to fund these projects. The Company has therefore taken steps to re-structure its business to reduce its capital expenditure outlook and its dependency on external finance. Discretionary exploration and appraisal expenditure has been cut back or deferred, overheads have been trimmed and a disposals programme is well advanced. The latter initiative will have two positive effects: it will reduce the forward capital expenditure outlook and generate funds internally that can be re-invested in the business and used to reduce debt levels. Under this divestment programme Stratic may sell its interests in Turkey and Italy and its 10% working interest in the Breagh gas discovery in the North Sea.

Progress on Stratic's developments and potential developments has been heavily influenced by the prevailing economic conditions. Despite these challenges, the Company has been able to raise capital and bring its key project, the West Don development, successfully into production. First production was achieved on April 28, 2009, less than 12 months after the project was sanctioned by the UK government, without any significant delays or cost overruns. The operator is now concentrating on completing the second production well and a water injection well to bring production up to a peak of 25,000 bopd by the end of June. At this level, Stratic's net share of production will be some 4,300 bopd, a tenfold increase over average production levels in 2008. Stratic's share of total development costs is estimated to be approximately $59.0 million, of which $48.0 million was incurred up to the end of 2008.

Progress on the Company's other developments has been less dramatic but, in most cases, very positive. On Crawford in the UK, the main effort in 2008 consisted of evaluating the results of the successful appraisal well in late 2007, negotiating tariff arrangements with nearby infrastructure owners and preparing the field development plan. This plan, which involves drilling four development wells and a subsea tieback to nearby infrastructure, is nearing completion and will be submitted for approval later in 2009. The remaining areas to be addressed involve refining cost estimates to reflect the radically changed circumstances in the North Sea, and all partners putting in place development finance for the field.

In Italy, agreement on the field development plan for Longanesi has been reached with Eni and applications for the award of the two production concessions for the development of the field have been submitted. These applications will now be considered by the Italian regulatory authorities in a process that is expected to take 12-18 months, as a precursor to development drilling and pipeline construction proposed to commence in 2010, with first gas expected in 2011. In the Netherlands, the Company decided not to proceed with the long reach well to develop the Horizon West field against a backdrop of rising costs and risks, and is now evaluating a lower risk development scheme involving two conventional wells. In Turkey, the second phase of gas development in the Company's Black Sea Akcakoca acreage is underway. The scheme involves tying in four existing discoveries to a new platform hub, which in turn will be connected by a short pipeline to the existing offshore infrastructure. First gas from this phase is expected in late 2010.

The Company has also been successful in its exploration and appraisal activity in 2008. Stratic participated in two successful wells on the Breagh gas discovery in the North Sea. The first well proved up the eastern part of the field and the second well demonstrated the potential for higher production rates from horizontal wells. Breagh is considered to be the largest dry gas field discovered in the UK in the last ten years. Stratic also drilled a well on its Cairngorm discovery in the UK North Sea but failed to reach the granite reservoir target, abandoning the well in early 2009 at a cost of approximately $20 million. The Company has recently acquired its partner's 50% share in the discovery and has applied for an licence extension to enable a new appraisal/development drilling campaign to be conducted in a better weather window.

The Company's proved and probable reserves at December 31, 2008, excluding the Breagh discovery referred to above, amounted to 14.4 mmboe, down from 19.1 mmboe at December 31, 2007. The most material element of this change arose on Horizon West, which was previously booked at 3.6 mmboe but has been removed from year end reserves under the Canadian Oil and Gas Evaluation Handbook definitions in the absence of a firm development plan.

Financially, Stratic had a net loss in 2008 of $40.3 million (2007 - $47.3 million), which included an after-tax non-cash write down of $10.6 million in respect of the Company's investment in Horizon West as a result of a downward revision in reserves referred to above, and a deferred tax charge of $6.7 million due to a 5.5% increase in corporate tax rates in Italy. General and administrative expenses in 2008 were $8.7 million, a decrease from the $12.3 million incurred in 2007 as a result of additional non-recurring costs associated with the Grove acquisition and listing on AIM being incurred in 2007.

The Company ended 2008 with cash of $28.2 million (2007 - $4.7 million), including restricted cash expected to be used in operations within 12 months, bank debt of $58.5 million (2007 - $17.3 million) and convertible notes in aggregate principal amount (including capitalised interest) of $60.3 million (2007 - $15.0 million).