Afren (LON:AFR), the FTSE 250 oil and gas group, has set its sights on average production levels reaching 42,000 to 46,000 barrels of oil equivalent in 2012 as the flow of oil from its flagship Ebok field in Nigeria continues to ramp up.
With all 14 production wells in the first phase of the Ebok development now completed, the company has started the year with an ambitious exploration and appraisal programme that has already produced a major oil discovery at Okoro East, offshore Nigeria. That well – the first of 15 planned this year – discovered 549ft of net oil pay in excellent quality reservoir sands and a well test programme is under way. The discovery lies close to Afren’s existing producing Okoro field, which means it is well positioned to monetise the discovery because of its detailed understanding of the subsurface and proximity to existing infrastructure.
The news comes as Afren also pushes ahead with its project plans in Kurdistan, where it holds licences at Barda Rash and Ain Sifini. Approval has been received for the Barda Rash Field Development Plan and first oil expected there in August 2012. At Ain Sifni, the Jebel Simrit-2 exploration well was spudded at the end October 2011 and drilling is on schedule.
Afren’s acquisition last July of 60 percent and 20 percent interests in Barda Rash and Ain Sifni PSC's respectively, increased the group’s 2P and 2C resources from 136 mmboe to 1,026 mmboe. The acquisition was followed last December when its 45%-owned subsidiary First Hydrocarbon Nigeria wrapped up the purchase of a 45 percent interest in OML 26, onshore Nigeria. OML 26 includes two producing fields (2P and 2C resources of 184 mmbbls) and three proved undeveloped assets with significant exploration upside.
In 2011, Afren is expecting to have delivered sales of US$600 million, up by 50% on 2010, against a full year capital expenditure on budget of US$550 million. In 2012 the capex budget is expected to come in lower at between US$450 to US$500 million. The next well on the exploration schedule is Nunya-1x (formerly Cuda-2) exploration well in Ghana, which is due to spud imminently.
Osman Shahenshah, the chief executive of Afren, said: “In 2012 we successfully commissioned the initial phases of the Ebok development in Nigeria. We have increased our 2P and 2C resources base by 650 per cent at a cost of US$0.66 per barrel to 1,026 mmboe, with the acquisition of Barda Rash and Ain Sifni in the Kurdistan region of Iraq and saw First Hydrocarbon Nigeria complete its acquisition of OML 26 in Nigeria. We have started our 2012 exploration campaign with a significant discovery offshore Nigeria, through the Okoro East Exploration well. The multi well drilling campaign in Ghana, Nigeria, the Joint Development Zone of Nigeria São Tomé and Príncipe, Tanzania, Kenya and the Kurdistan region of Iraq, has the potential to materially transform and increase our discovered resource base.”
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