REG - Jupiter Energy - Quarterly Report <Origin Href="QuoteRef">JPR.AX</Origin>
06/09/2014 20:23
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RNS Number : 0189N
Jupiter Energy Ltd
23 July 2014
23 July 2014
Jupiter Energy Limited ("Jupiter" or the "Company")
QUARTERLY UPDATE ON ACTIVITIES FOR THE PERIOD TO 30 JUNE 2014
KEY POINTS:
· 62,460 barrels of oil was produced during the Quarter, generating
domestic oil sales of ~$US2m (~$US32 per barrel at the well head). This
compares with production of 73,000 barrels for the corresponding quarter in
the 2012/13 financial year.
· Oil sales achieved for the 12 month period ending 30 June 2014 totalled
247,500 barrels, generating domestic oil sales of ~$US7.9m (~$US32 per barrel
at the well head). This compares with production of 194,300 barrels and
revenues of ~$US5.9m for the 12 month period ending 30 June 2013 - resulting
in a year on year increase of 27.5% in terms of oil production and 34%
increase in oil revenues.
· State Approval of Preliminary Reserves Report for West Zhetybai, using
approved Kazakh methodology:
o C1+C2 reserves of 27.0 mmbbls
o C1 reserves of 4.0 mmbbls
o C2 reserves of 23.0 mmbbls
· When combined with the already approved preliminary C1+C2 reserves for
Akkar East (37 mmbbls), total approved preliminary C1+C2 reserves on the
permit area currently stand at 64 mmbbls.
· Future plans for West Zhetybai area include further testing of the
existing J-55, J-58 and J-59 wells during the Trial Production phase and
appraisal drilling in the areas between the existing West Zhetybai wells.
Jupiter Energy Limited (ASX: "JPR", AIM: "JPRL" and KASE: "AU_JPRL") presents
the following update on activities for the 3 month period ending 30 June 2014
(the "Quarter"). Also included in this report are details of subsequent events
that have occurred up to the date of this release.
The Quarter in brief:
Oil sales for the Quarter came from the J-50, J-51 and J-52 wells, with the
J-53 well shut in awaiting the installation of a new Electric Submersible Pump
(ESP). In aggregate, 62,460 barrels of oil were sold in the domestic market
during the Quarter, achieving approximately $US2m in sales at an average price
of ~$US32 per barrel. All oil was sold on a pre-paid basis.
Production for the Quarter averaged 694 barrels of oil per day (bopd). This
drop in average daily production from last quarter (754 bopd) was primarily
due to a gradual reduction of production from J-50 resulting from wear of the
current ESP resulting in a loss of efficiency. A new ESP is expected to be
installed in August 2014.
Summary of Operations:
Well Number Field Status Quarterly Production (barrels) Quarterly Revenue ($US) Average Daily Production (bopd) Water Cut Comments
J-50 Akkar North Trial Production 13,655 432,000 152 <1% Production from J-50 declined during the quarter due to wear in the ESP. The ESP will be replaced during August.
J-51 Akkar East Trial Production 22,199 702,000 246 <1%
J-52 Akkar East Trial Production 26,606 837,000 296 <2%
J-53 Akkar East Trial Production 0 0 0 N/A Well shut in awaiting new ESP to be installed. Scheduled for Q1 2015.
J-55 West Zhetybai Shut In NIL N/A N/A Preliminary Reserve Report approved. Further testing required subject to the relevant approvals.
J-58 West Zhetybai Shut In NIL N/A N/A Preliminary Reserve Report approved. Trial Production Licence application underway.
J-59 West Zhetybai Shut In NIL N/A N/A Preliminary Reserve Report approved. Trial Production Licence application underway.
West Zhetybai Preliminary Reserves Report:
On 4 July 2014 the Company announced that the Preliminary Reserves Report for
the West Zhetybai field had been approved by the relevant State Authorities.
The West Zhetybai accumulation covers the area delineated by the J-55, J-58
and J-59 wells and reserves were evaluated for the T31, T32, T2A and T2B
reservoir horizons. The State approved quantity of Oil in Place (OIP) for this
area has been estimated at ~173.5 mmbbls (from all horizons) with preliminary
recoverable reserves (C1 + C2) estimated at ~27.0 mmbbls.
The approved C1 reserves have been estimated at ~4.0 mmbbls and C2 reserves at
~23.0 mmbbls with the recoverable reserves are calculated from the OIP using
individual recovery factors for each horizon. The weighted average recovery
rate approved by the authorities was ~15.5%. The best recovery is expected
from the T2B horizon and when estimating C1 reserves in this horizon, a
recovery factor of 21.8% was used. This rate was based on production data
from nearby fields that have been producing for several years.
The proportion of approved C1 to C1+C2 reserves indicates the need for (i)
further testing of the J-55 and J-59 wells and (ii) drilling of additional
appraisal wells on the field. The Company currently plans, subject to receipt
of additional funding, to drill at least two more wells on the area before
submitting its Final Reserves Report for West Zhetybai. Completion of this
work should see existing C2 reserves moved into the C1 category as well as the
identification of further C1 and C2 reserves.
Comment on the Reserve Figures:
Almost all the decrease in the reserves approved for West Zhetybai results as
compared to the initial reserves submitted to the authorities for approval in
September 2013 result from the reduction in the C2 reserves from ~58.9 mmbbls
to ~23.0 mmbbls.
The reduction in the C2 reserves was as a result of a number of factors:
· A weighted average recovery factor of ~15.5% used for calculating C2
reserves as compared to a 27.2% recovery factor used when the initial report
was prepared in 2013. The 27.2% recovery rate was based on modelling carried
out by local Kazakh institute Reservoir Evaluation Services LLC and the
production data obtained from Jupiter's operations since 2010.
· The authorities taking a view that there was insufficient test data from
J-55 and J-59 wells to demonstrate recoverable reserves from the area around
these wells.
· The need for further appraisal drilling between the existing J-55, J-58
and J-59 wells; the distance between each well is ~4km and a distance of ~2km
between wells (as is the case on the Akkar East field) is generally expected
by the authorities.
In addition, more recent Pressure Volume Temperature (PVT) analysis indicated
a less favourable oil volume (shrinkage) factor that also resulted in a
reduction in the reserves that were approved.
The key point to note is that the approval of the Preliminary Reserves Report
for West Zhetybai enables the Trial Production Licence (TPL) application
process to begin and during the three year TPL phase further appraisal work on
West Zhetybai will be carried out before a Final Reserves Report is prepared.
Summary of status of West Zhetybai Wells:
J-58 and J-59 are both currently suspended awaiting approval of their
respective Trial Production Licences (TPL). After the TPLs are granted wells
J-58 will be put on production from the T2B horizon, and J-59 will be used to
test the potential of the shallow Jurassic horizon before being completed for
production from the T2B horizon.
Further remedial work will be carried out on J-55 to determine if commercial
production can be established and this work will require separate approvals
from the relevant bodies.
Forward Plan - Operations:
When funding is in place, the Company expects to drill at least two additional
wells; one well on Akkar East will be the first 'production' well after the
previous exploration and appraisal wells and will be named well 19 (the J-xx
nomenclature being used for exploration and appraisal wells only). The other
well will be an exploration well on the north east area of the permit (J-54).
Well 19 will be located between the J-51 and J-52 wells and (assuming success)
will be placed on Trial Production as soon as it has been drilled.
The J-54 prospect is a large structural closure mapped using 3D seismic to the
north of the producing Akkar East field. The Company believes the prospect is
a separate field and the prognosis is that it is structurally up dip of Akkar
East.
The Company considers that the main risk associated with the J-54 well is the
presence of an adequate top seal to trap oil. Assuming success, the Company
believes that the reservoir quality and flow rates should be similar to that
found in the Akkar East field.
Oil Production and Sales:
The outlook for oil sales in the first quarter of the 2014/15 financial year
is for continued sales from wells J-50, 51, 52.
The Company continues to investigate how to best achieve sales directly into
the Kazakh pipeline system or sales that can be made to a refinery nearer the
field. Both of these strategies would reduce transportation costs and
therefore improve the price that local traders are prepared to pay the Company
for the oil from the wellhead.
Licence Information:
As is required under ASX disclosure rules, the Company confirms that it
currently holds the following licence.
Country Block / Licence Interest held as at 31 March 2014 Interest acquired / disposed of during the quarter Interest held at 30 June 2014
Kazakhstan Block 31 100% Nil 100%
Capital Management:
The Company continues to closely manage its on-going funding requirements for
2014/2015 until a funding initiative can be completed. Progress is being made
in terms of various sources of funding and the Company will provide a further
update as soon as it is appropriate to do so. In the meantime, revenue from
oil sales will be used to fund the Company's Kazakh operations.
Capital Structure and Finances:
As at 30 June 2014, the Company had 153,377,693 listed shares trading under
the ASX ticker "JPR", the AIM ticker "JPRL" and the KASE ticker "AU_JPRL".
The Company has no options, listed or unlisted, on issue.
The Company also has on issue $US15.5m in Series B Convertible Notes made up
of 12,400,000 Notes with a conversion price of $US1.25 per Note; interest on
the Notes is accrued at 12% per annum and will become payable when the Notes
are repaid or converted into shares.
The Company has on issue a total of 8,075,000 unvested Performance Rights.
These Performance Rights all expire on 31 December 2014 and the vesting terms
for all the Performance Rights on issue are the same.
Unaudited net cash reserves as at 30 June 2014 stood at approximately
$A1.29m.
Summary:
The Company remains focused on completing a financing package to enable
Jupiter to commence its 2014/2015 drilling program and continue its progress
towards implementing the Full Field Development of the Akkar East field.
In the meantime, revenue from oil sales continues to be used to meet the day
to day costs of operations in Kazakhstan.
If shareholders have any questions regarding this Quarterly report they are
welcome to contact the Company on +61 89 322 8222.
Geoff Gander
Chairman/CEO
Enquiries:
Jupiter Energy (+61 89 322 8222)
Geoff Gander (geoff@jupiterenergy.com)
finnCap Ltd
+44 (0)20 7220 0500
Matt Goode/Christopher Raggett (Corporate Finance)
Simon Johnson (Corporate Broking)
GMP Securities (Europe) LLP +44
(0) 20 7647 2800
Rob Collins (Corporate Finance)
Competent Persons Statements:
Keith Martens, BSc Geology and Geophysics, with over 35 years' oil & gas
industry
experience, is the qualified person who has reviewed and approved the
technical information contained in this report.
Independent Analysis - RES:
The information in this announcement which relates to the C1 and C2 West
Zhetybai reserve estimations is based on information compiled by Reservoir
Evaluation Services LLP ("RES"), a Kazakh based oil & gas consulting company
that specialises in oil & gas reserve estimations. RES has used the Kazakh
Reserve classification system in determining their estimations. RES has
sufficient experience which is relevant to oil & gas reserve estimation and to
the specific permit in Kazakhstan to qualify as competent to verify the
information pertaining to the C1 and C2 reserve estimations. RES has given and
not withdrawn its written consent to the inclusion of the C1 and C2 reserve
estimations in the form and context in which they appear in this announcement.
RES has no financial interest in the Company.
About the Company:
Jupiter Energy Limited is an oil exploration and production company, quoted on
the AIM, ASX and KASE markets. The Company is focused on developing its
onshore assets in western Kazakhstan. In 2008 the Company acquired 100 per
cent of the Block 31 permit, located in the oil-rich Mangistau Basin, close to
the port city of Aktau.
Jupiter has a proven in-country management team, led by an experienced,
international Board, together possessing the skills, knowledge, network and
attention to detail needed to operate successfully in Kazakhstan. The forward
plan will see Jupiter develop a group production facility on Block 31 to
process, store and export oil. This topside infrastructure is a key element in
moving to long-term production and the achievement of self-funding for further
development of Block 31.
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01,
01/06/10, 17/12/10, 01/05/2013
Name of entity
Jupiter Energy Limited
ABN Quarter ended ("current quarter")
65 084 918 481 30 June 2014
Consolidated statement of cash flows
Cash flows related to operating activities Current quarter$A'000 Year to date (12 months) $A'000
1.1 Receipts from product sales and related debtors 2,239 7,606
1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration (424)-(1,131)(1,020) (3,981)-(4,959)(4,475)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature received 6 21
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (330) (5,788)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets --(41) --(255)
1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets --- ---
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other (provide details if material) - -
Net investing cash flows (41) (255)
1.13 Total operating and investing cash flows (carried forward) (371) (6,043)
1.13 Total operating and investing cash flows (brought forward) (371) (6,043)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. - 6,917
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings - -
1.17 Repayment of borrowings - (3,191)
1.18 Dividends paid - -
1.19 Other (provide details if material) - (208)
Net financing cash flows - 3,518
Net increase (decrease) in cash held (371) (2,525)
1.20 Cash at beginning of quarter/year to date 1,667 4,135
1.21 Exchange rate adjustments to item 1.20 (6) (320)
1.22 Cash at end of quarter 1,290 1,290
Payments to directors of the entity, associates of the directors, related
entities of the entity and associates of the related entities
Current quarter$A'000
1.23 Aggregate amount of payments to the parties included in item 1.2 107
1.24 Aggregate amount of loans to the parties included in item 1.10 -
1.25 Explanation necessary for an understanding of the transactions
Director and consulting fees paid for the quarter 30 June 2014
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
N/A
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest
N/A
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available$A'000 Amount used$A'000
3.1 Loan facilities N/A N/A
3.2 Credit standbyarrangements N/A N/A
Estimated cash outflows for next quarter
$A'000
4.1 Exploration and evaluation 91
4.2 Development -
4.3 Production (147)*
4.4 Administration 869
Total 813
*Net of oil sales
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current quarter $A'000 Previous quarter$A'000
5.1 Cash on hand and at bank 1,290 1,667
5.2 Deposits at call - -
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter (item 1.22) 1,290 1,667
Changes in interests in mining tenements and petroleum tenements
Tenement reference and location Nature of interest(note (2)) Interest at beginning of quarter Interest at end of quarter
6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed
6.2 Interests in mining tenements and petroleum tenements acquired or increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
Total number Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description)
7.2 Changes during quarter(a) Increases through issues(b) Decreases through returns of capital, buy-backs, redemptions
7.3 +Ordinary securities 153,377,693 153,377,693 Fully Paid Fully Paid
7.4 Changes during quarter(a) Increases through issues(b) Decreases through returns of capital, buy-backs
7.5 +Convertible debt securities (description) 12,400,000 - $US1.25 20 September 2016
7.6 Changes during quarter(a) Increases through issues(b) Decreases through securities matured, converted
7.7 Options (description and conversion factor) Performance rights 8,075,000 - Exercise price Subject to a minimum increase of 25%, the Performance Rights for each holder shall vest in proportion to the % increase in the Share price of the Company above 73.5 cents basis (Vesting Condition) Expiry date 31 December 2014
7.8 Issued during quarter
7.9 Exercised during quarter
7.10 Expired during quarter
7.11 Debentures(totals only)
7.12 Unsecured notes (totals only)
Compliance statement
1 This statement has been prepared under accounting policies
which comply with accounting standards as defined in the Corporations Act or
other standards acceptable to ASX (see note 5).
2 This statement does /does not* (delete one) give a true and
fair view of the matters disclosed.
Sign here: Date:
23 July 2014
(Director/Company secretary)
Print name: Scott Mison
Notes
1 The quarterly report provides a basis for informing the market
how the entity's activities have been financed for the past quarter and the
effect on its cash position. An entity wanting to disclose additional
information is encouraged to do so, in a note or notes attached to this
report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options
in respect of interests in mining tenements and petroleum tenements acquired,
exercised or lapsed during the reporting period. If the entity is involved in
a joint venture agreement and there are conditions precedent which will change
its percentage interest in a mining tenement or petroleum tenement, it should
disclose the change of percentage interest and conditions precedent in the
list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid
up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 6: Exploration for
and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows
apply to this report.
5 Accounting Standards ASX will accept, for example, the use of
International Financial Reporting Standards for foreign entities. If the
standards used do not address a topic, the Australian standard on that topic
(if any) must be complied with.
== == == == ==
This information is provided by RNS
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