Erin En­ergy eyes new well for lift af­ter re­port­ing $98.6m loss

The Star Early Edition - - NEWS - Sandile Mchunu

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.

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