Fionn Field development on track; first production anticipated for the middle of 2013
- Completed sale of Antrim Argentina to Crown Point Ventures Ltd.
Overview of Continuing Operations
On November 12, 2012, Antrim announced that first oil production from Causeway had commenced with initial gross production of approximately 4,500 barrels of oil per day ("bopd") on a 53% choke. Initial production rates are currently being impacted by longer than anticipated clean-up and commissioning due to the long horizontal nature of the well. The installed electric submersible pumps are anticipated to contribute to increased production rates in the first half of 2013.
The Causeway Field includes one production well with a planned water injection well to be completed in early 2013. Oil is transported by pipeline to and processed at the North Cormorant production platform operated by TAQA Britani Limited ("TAQA") before being exported to the Sullom Voe terminal via the Brent Pipeline System for sale to BP Oil International Limited ("BP"). Antrim's remaining development costs for its 35.5% working interest are estimated at $19.1 million in 2012 and $13.8 million in 2013.
As part of the sale of the 30% working interest in the Causeway Licences to Valiant Petroleum plc ("Valiant") in October 2011, Antrim entered into a DLA giving Valiant the right to produce and sell 6.25% of Antrim's share of oil produced, without liability for operating costs and expenses. Antrim's share of oil produced will be reduced to 29.25% until a cumulative value of $8.9 million of oil is received by Valiant.
Fionn Field first production is anticipated for the middle of 2013. Valiant has completed the early installation of subsea infrastructure for the development of the Fionn Field. A field development plan ("FDP") for the Fionn Field was approved by the Department of Energy and Climate Change ("DECC") in August 2012. Fionn Field production will be combined with the Causeway Field production and transported for processing to the North Cormorant platform. Antrim's share of the development costs for the Fionn Field, including the pre-investment costs, is estimated to be approximately $22 million.
On October 22, 2012, Antrim announced the discovery of oil at well 211/21-N94 (the "Contender Well") in UK Northern North Sea Licence P201 Block 211/22a Contender Area (the "Contender Block", Antrim interest 8.4%). The Contender Well was drilled to a total drilling depth of 16,903 feet (11,550 feet true vertical depth). Revised estimates indicate a net oil pay of 73 feet (true vertical), with greater than expected porosity and hydrocarbon saturation. TAQA is in the process of filing an FDP with DECC under the name 'Cormorant East.' Production would be processed through the North Cormorant platform with an anticipated start date of late 2012. Under the terms of the farm-out agreement with TAQA, 100% of the drilling, completion and tie in costs will be completely funded by TAQA. Antrim's working interest share of the completion costs and tie in will be recovered from production revenue.
With the successful drilling of the Contender exploration well, TAQA also earned a 35% working interest in the adjacent Licence P201 Block 211/22a Kerloch Area, reducing Antrim's working interest from 21% to 13.65%.
On November 12, 2012, Antrim signed a Heads of Terms agreement with Hummingbird Production Limited, a subsidiary of Teekay Corporation ("Teekay") to lease the "Hummingbird Spirit" Floating Production, Storage and Offloading vessel ("FPSO") for the development of the Fyne Field. Based on the Heads of Terms, fully termed agreements will be developed, which will be subject to approval of an FDP by DECC. Antrim expects to submit the Fyne FDP to DECC for approval in January 2013. First oil would be anticipated in the fourth quarter of 2014, contingent on the timing of the redeployment of the Hummingbird Spirit from its current location.
A reserves estimate for the Fyne Field was recently updated by McDaniel and Associates Consultants Ltd. ("McDaniel"), incorporating the results of well 21/28a-11 drilled earlier this year in the East Fyne area. Proved plus Probable reserves in the Fyne Field are estimated by McDaniel as at September 30, 2012 to be 11.7 million barrels of oil.
Antrim continues to seek financing and/or joint venture partners to participate in the development of Fyne and the other Greater Fyne Area licences.
In June 2012, Antrim received approval from DECC to acquire a 39.9% working interest, associated reserves, and operatorship from Premier and an additional 25% working interest and associated reserves from First Oil at no cost. This follows notice from both Premier and First Oil of their intention to withdraw from the Fyne Licence. Antrim's increased ownership in Fyne of 100%, on execution by all parties of the final completion documents, will allow Antrim sole control over development; however, increased ownership could increase the risk that the development of Fyne will not proceed as expected.
If Antrim is to continue with the Fyne Licence, an FDP for the Fyne Field will need to be submitted ready for approval by the January 11, 2013 extended deadline. Approval of the FDP by DECC is required for Antrim to proceed with the development and first oil production by November 2014. If an FDP is not submitted ready for approval by January 11, 2013, the Fyne Licence could be revoked.
Greater Fyne Area Licences
On October 2, 2012, DECC agreed to waive the seismic and contingent well obligations on Licence P1563 Blocks 21/28b & 21/29c which allows the Company to relinquish the licence in its entirety. Accordingly, the Company plans to relinquish the Licence in its entirety in the fourth quarter of 2012. The Licence was a 25th round licence issued February 12, 2009 and is scheduled to expire February 12, 2013.
Licence P1784 Block 21/7b (Antrim 30%) is located in the Central North Sea, north of the Greater Fyne Area. The block contains the "Cyclone" and the "Typhoon" Tertiary Cromarty prospects at approximately 5,000 and 5,600 feet respectively. The licence was acquired jointly with Premier (70%, operator) with a firm well commitment. The joint venture partners have approved an exploration well on the Cyclone prospect and signed a contract for use of a semi-submersible drilling rig to drill the well. Drilling is anticipated to start in the fourth quarter of 2012.
In 2011, Antrim was awarded a Frontier Licence Option by the Department of Communications, Energy and Natural Resources of Ireland, under the Irish 2011 Atlantic Margin Licensing Round. The Licence option area covers Blocks 44/4, 44/5 (part), 44/9, 44/10, 44/14, 44/15, an area of approximately 1,409 square km located in the Porcupine Basin approximately 110 km off the southwest coast of Ireland. The option allows Antrim two years to qualify the blocks for a full Exploration Licence. Antrim has licenced 2D seismic and is currently reprocessing and interpreting the data which will continue into early 2013.
Antrim holds an option to acquire a 20% interest in the production sharing agreement for the Pemba-Zanzibar exploration licence offshore and onshore Tanzania (the "P-Z PSA") following the pre-drilling (seismic) phase and an additional 10% interest to be exercised up to 180 days following receipt of the initial drilling results. Should Antrim exercise the initial option, costs for the seismic phase associated with Antrim's acquired interests would be repaid from future production. RAK Gas, the operator, has submitted a proposal for a revised work programme to the federal government of Tanzania. Environmental impact assessment work has commenced, with seismic operations expected to proceed in the near future.
On October 29, 2012, an announcement was made of an agreement between the federal government of Tanzania and the government of Zanzibar on the sharing of any future hydrocarbon revenues, potentially ending a moratorium which has long-delayed exploration projects. The agreement has still to be ratified by cabinet and final details are still to be agreed. It is not yet known what, if any, impact this agreement will have on the P-Z PSA.
| Financial and Operating Results from Continuing Operations (unaudited) |
| || Three Months Ended |
| Nine Months Ended |
| || 2012 || 2011 || 2012 || 2011 |
| Financial Results ($000's except per share amounts) || || || || |
| Cash deficiency from operations (1) - continuing operations || 472 || 894 || 5,251 || 2,914 |
| Cash deficiency from operations per share (1) || 0.00 || 0.00 || 0.03 || 0.02 |
| Net loss - continuing operations || 5,240 || 36,800 || 67,704 || 39,749 |
| Net loss || 5,396 || 36,281 || 67,389 || 38,178 |
| Net loss per share - basic, continuing operations || 0.03 || 0.20 || 0.37 || 0.23 |
| Total assets || 148,338 || 247,259 || 148,338 || 247,259 |
| Working capital || 21,013 || 52,674 || 21,013 || 52,674 |
| Capital expenditures || 21,526 || 2,093 || 36,263 || 4,483 |
| Bank debt || - || - || - || - |
| || || || || |
| Common shares outstanding (000's) || || || || |
| End of period || 184,731 || 184,103 || 184,731 || 184,103 |
| Weighted average - basic || 184,433 || 184,100 || 184,273 || 170,590 |
| Weighted average - diluted || 185,450 || 185,419 || 185,519 || 172,004 |
| || |
| (1) || Cash flow from operations and cash flow from operations per share are Non-IFRS Measures. Refer to "Non-IFRS Measures" in Management's Discussion and Analysis. |
Production from Causeway has started with initial gross production of approximately 4,500 bopd. The installed electronic submersible pumps are anticipated to contribute to increased production rates in the first half of 2013. A planned water injection well is to be completed in early 2013. Development of the Fionn Field is proceeding with production startup expected in the middle of 2013.
On October 22, 2012, Antrim announced the successful oil discovery at Contender. TAQA is in the process of filing an FDP with DECC under the name 'Cormorant East.' Production would be processed through the North Cormorant platform with an anticipated start date of late 2012.
A well is expected to be drilled in the fourth quarter of 2012 to test the Cyclone prospect in Block 21/7b.
Antrim is actively pursuing a development plan for the Fyne Licence. The review includes an evaluation of the costs and time requirements for the engineering design process, fabrication, deployment and hook up, the ability to attract additional partners into the licence including a recognized production operator, the availability of third party financing to fund the company's share of the project costs, and the probability of delivering first production before the November 2014 extension deadline.
Antrim will continue studies on the blocks covered by the Frontier Licence Options awarded to the Company in the Irish 2011 Atlantic Margin Licensing Round. Antrim has licenced 2D seismic and is currently reprocessing and interpreting the data.