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Afren records advancement in Ebok project

BY NNENNA EZEAH

Afren Nigeria has recorded a significant advancement in its Ebok project where production is ramping up, even as the Phase 2 development is on track for production by year end.

The update was made following a visit to Lagos and the company’s Ebok project by a delegation of international analysts including those from Morgan Stanley, Merrill Lynch and Alliance Bernstein, who were escorted by Afren Plc Chief Executive Officer, Mr. Osman Shahenshah, and Afren Nigeria Managing Director, Mr. Adebayo Ayorinde.

Speaking in Lagos, Afren Chairman, Mr. Egbert Imomoh, expressed delight on the visit of the analysts from some of the world’s leading investment houses. He said, “Production at Ebok Phase1 is responding in line with prognosis to water injection’ and is being steadily increased,” adding that “a number of additional production wells will be brought on-stream by year end.

“The company remains in a strong position financially, with significant cash resources available and a profitable and growing production base underpinning an internally funded forward work programme.”

He further explained “A total of four out of the five planned development wells have been drilled and completed as part of Ebok development Phase 2, developing the West Fault Block area of the field.

“The company expects to have completed drilling operations and have the fifth production well available shortly and for all five wells to have been commissioned and bought on-stream during December. Production tests on available wells have yielded rates that exceed expectations and the company expects fully developed production capacity of the five wells to be greater than initially forecast.”

Imomoh also said production at Ebok Phase 1, was steadily increasing towards the upper end of the targeted range. “Having achieved a strong production test rate from the D1 reservoir in the Central Area of the field during the first half of the year, the company subsequently prioritized full development of the reservoir at this location and is in the process of batch drilling three additional production wells. It is expected that these wells will be commissioned and bought on stream by end 2011.”

Over all, about $312.2 million was generated during the period, reflecting higher price realizations from the Okoro field and increased lifting in the third quarter of the year.

Oil and gas inventory at September 30, 2011 was $49.2 million (December 31, 2010, $14.2 million), representing approximately 600,000 barrels at Ebok and 300,000 barrels at Okoro net to Afren.

Profit from continuing activities before tax in the period was $113.0 million (2010: $75.3 million). This reflects an increase in gross profit of $39.3 million compared to the prior period, but also includes the effect of gains on derivative financial instruments of $5.2 million (2010: loss of $3.6 million); finance costs of S$36.8 million (2010: $8.7 million); and a share of gain of an associate of $17.4 million (2010: share of loss of $0.6 million).

Normalized profit in the period was $49.1 million (2010: $58.8 million). Normalised profit excludes the effect of unrealized hedge movements, share related costs, the cost of early debt repayment and the share of gain on an associate.


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