A rising oil price, increased production, good drilling results and expansive exploration programs have meant strong profit earnings for the smaller oil and gas producers.
A rising oil price, increased production, good drilling results and expansive exploration programs have meant strong profit earnings for the smaller oil and gas producers.
ARC Energy this week announced a record full year net after tax profit for 2003-04 up 129 per cent on the previous year to $20.1 million.
ARC’s oil production was up 217 per cent for the year with its Hovea production facility producing more than 1.05 million barrels for the year (it has produced 3 million barrels of oil from the field to date), while its gas sales were up 56 per cent.
The company reported sales proceeds were up 93 per cent for the year to $67.5 million, while operating cash flow prior to capital expenditure was up 222 per cent to $38.9 million.
Hartleys resources analyst Jonathan Battershill said ARC’s result was “excellent”, being more than double the previous years and the outlook was good given its fairly extensive exploration program.
That program has discovered two payable gas deposits that are anticipated to be in production by January 2005.
“They are also about to undertake the Denison 3D survey, which we expect to generate significant oil targets,” Mr Battershill said.
ARC’s current drilling program means it will drill one hole a month for the next 9 months. The current outlook includes full development of the Jingemia oil field in the Perth Basin.
In a statement to the Australian Stock Exchange announcing its results, Arc Energy says the installation of an artificial lift at Hovea and the Xyris, Tarantula and associated gas developments will continue to boost production and revenue.
ARC managing director Eric Streitberg said the final results were an “outstanding result for the company and demonstrates again the impact of ARC’s aggressive development of the Perth Basin”.
Tap Oil Limited has also reported an interim net profit of $23 million after tax for the six months to June 30.
Tap managing director Paul Underwood said the company’s results would have been better “but for some downtime from the Woollybutt Floating Production Storage and Offtake facility during the first half of 2004”.
“However, on the positive side the field has been back on stream since 6 May 2004 and the recent step-out well has provided encouragement for more oil in the Woollybutt area,” he said.
Voyager Energy is another player whose star is on the rise. The cashed-up company has spent the past six months consolidating its position as the largest player in the Perth Basin in terms of turf.
It is now in a secure financial position and expects production to reach 1,200 barrels of oil a day from Cliff Head and Jingemia by next August.
Voyager’s offshore exploration program in October and November should also prove fruitful for new oil prospects.
“Their performance this year has been excellent,” Mr Battershill said.
He said in addition to exploration and drilling programs, the producers had benefited from a high oil price.
“When any commodity price starts to come under supply pressure the speculators enter the market and push up prices,” Mr Battershill said.
“Despite current global instabilities, $US50 a barrel is unsustainable.”
