Melrose Resources ramping up production

19th May 2009 08:15

Oil and gas firm Melrose Resources has raised its production forecast for 2009 by around 5%, reflecting continued strong performance of its Egyptian assets and the earlier than expected start of production at its South Zarqa and North East Abu Zahra projects.The net entitlement production forecast for 2009 has been raised to 15.7m barrels of oil equivalent per day (boepd), despite first quarter output levels running 13% below last year’s levels.The company said that the production shortfall is largely due to the termination of gas production at the Galata field in Bulgaria at the end of January 2009 in order to prepare the field for gas storage.Average daily production in the quarter was 32,661boepd on a working interest basis. On a net entitlement basis, first quarter production totalled 6.4bn cubic feet of gas and 420m barrels of oil and condensate, giving an average daily rate of 16,552 boepd.The group remains well funded with little change in its balance sheet position since the publication of its 2008 results in March. Group net debt at the end of March was $443.8m.Discussions are taking place with its existing syndicate banks and HSBC to increase the size of its senior debt facility by up to $40m from its current level of $440m; the group also has a subordinated debt facility of $70m.The group said it generates enough cash and has enough capital head room to finance its planned investment programme even if the price of oil were to head back down to the lows seen earlier this year, since the majority of Melrose’s output is gas sold at fixed prices.‘Melrose has started the year well and our increased production expectation, coupled with the recent improvement in oil prices, should help to boost our annual revenues,’ said Melrose’s chief executive, David Thomas.