Erin Energy eyes new well for lift after reporting $98.6m loss
ERIN Energy Corporation said yesterday it would commence drilling of the Oyo-9 well in the Pacific Bora within the week after the group reported a net loss of $98.6 million (R1.32bn) for the second quarter to end June.
JSE-listed Erin Energy is an independent oil and gas exploration and production company focused on energy resources in sub-Saharan Africa.
The well is expected to add an additional 6 000 to 7 000 barrels of oil a day from the field.
The addition of barrels will go a long way to increasing the volumes after the company reported a decline in second quarter production volumes.
Erin Energy daily production was down 5.56 percent to 5 100 net barrels of oil from 5 400 net barrels, as compared with the same quarter in 2016.
During the quarter, the group produced 390 000 net barrels of oil, down from 508 000 net barrels produced in the same quarter last year.
Femi Ayoade, the group’s chief executive, said during the second quarter, the company produced more than 390 000 net barrels of oil and generated revenues of $15m.
“We closed on our farm-out with FAR Limited in The Gambia and completed preparations for our drilling campaign, which we plan to commence this week.
“We are excited to begin our drilling campaign, increase Oyo production, and look to turn to the exploration of the Miocene in Nigeria,” Ayoade said.
The company added it had the option to drill up to two additional wells with the Pacific Bora, subject to capital availability.
Erin Energy’s asset portfolio consists of seven licences across four countries, including current production and other Nigerian offshore exploration projects, as well as offshore exploration licences for Ghana and The Gambia, and onshore Kenya.
Erin Energy has its headquarters in Houston, Texas, and is also listed on the New York Stock Exchange.
In the quarter, the company said it lifted and sold 309 000 net barrels of oil at an average price of $47.15 per barrel, as compared with about 508 000 net barrels of oil at an average price of $45.58 a barrel during the comparative period last year.
The company reported a net loss of $98.6m, which is translated to a loss of 46c per basic and diluted share – primarily as a result of a non-cash impairment of its oil and gas properties of $78.7m.
Last year, the group reported a net loss of $22.6m, or a loss of 1c per basic and diluted share.
Adjusted losses for asset impairment costs and non-recurring costs came to $3 per share.
The company also revealed it has the option to drill up to two additional wells with the Pacific Bora.