Nido Petroleum Limited – 2010 Full Year Results
Summary
- Record revenue from crude oil sales of $60.1 million, up 25.7% from the previous year
- Much improved production performance from Galoc with up time of 84% for the year anda total of 2.6MMstb (gross) produced
- Tindalo Extended Well Test (EWT) failed to produce oil at economic rates resulting in abandonment of the field at year end
- Healthy Balance Sheet – year end cash balance of $24.2 million and reduced debt of US $9.2 million (debt currently at US $3.1 million)
- Successful farm-out of 27% interest in SC 54B to Shell Philippines Exploration B.V. and 7.6% interest in SC 54A to TG World (BVI) Corporation
- SC 58 deepwater multi-beam and sea-bed coring program completed with positive results of widespread micro-seepage of mature hydrocarbons across the most prospective parts of the block
- Pre Stack Depth Migration processing of the Kawayan 3D completed in July for SC 63
- Excellent 2010 HSSE performance across all assets and activities with zero fatalities and zero Lost Time Injuries
- Positive outlook – highly-prospective 5 well exploration program with drilling to commence Q2 2011
Nido Petroleum Limited (ASX: NDO) today announced a 2010 full year loss of $43.4 million notwithstanding record revenues of $60.1 million. The loss was due largely to the Tindalo development project where a $29.7* million impairment write-down was taken as a result of the abandonment of the field and a loss of $18.0 million incurred from EWT operations. Excluding the impact of Tindalo, which has now been discontinued, profit after tax was $4.4 million for the year.
*The $29.7 million figure includes the costs of the drilling of the Tindalo-1 exploration well in 2008 and related seismic acquisition costs.
Record production and revenues
The Galoc oil field performed strongly in 2010 with production of 2.6 MMstb (gross) of crude oil with an average uptime of 84%, compared to 64% in the previous year. Galoc crude was marketed and sold throughout Southeast Asia, attracting repeat buyers in an increasingly improving price environment.
This strong performance from the Galoc oil field, together with crude oil sales from the Tindalo, Nido and Matinloc oil fields, translated to total revenues of $60.1 million, which was a 25.7% improvement over the prior year.
2010 Production Summary
Production table contained in full ASX announcement.
The failure of the Tindalo EWT to produce oil at economic rates despite the investment of a significant amount of time, money and effort, was a major disappointment for the Company and its shareholders. In this context the Company is presently undertaking a thorough, independent review of the development to enable management to understand and apply any lessons to be learned to future development activities within SC 54A and other operations.
Healthy Balance Sheet
The Company’s financial position is healthy, with cash on hand at year-end of $24.2 million and debt levels reducing significantly over the year by US$10 million to US$9.2 million. Over the first quarter of 2011, debt levels further reduced to an outstanding balance of US$3.1 million at the date of this report.
2010 Farm-out Successes
Nido was successful in securing farm-out partners during the year. This further validates the attractiveness of Nido’s acreage in the North West Palawan basin and underpins the Company’s confidence in the potential for additional farm-outs across Nido’s Service Contracts.
Of note, Shell Philippines Exploration B.V. entered into a farm-in transaction in October 2010 to earn a 45% Participating Interest in SC 54B. This farmout will pave the way for the drilling of the Gindara prospect, one of Nido’s larger prospects. The drilling of Gindara represents the start of the Company’s “big-hit” 5 well exploration program that will see Nido drill the major prospects within its portfolio.
In addition, Nido farmed out a further 7.6% of its interest in SC 54A to TG World (BVI) Corporation, a subsidiary of Canadian junior oil and gas company TG World Energy Corporation. Consideration from the transaction, which includes contingent payments based on production milestones, will total a maximum of US$6.8 million.
Exploration Activity
Subsurface work for SC 54B’s Gindara prospect continued and, as Nido has been asked to continue as operator for the drilling campaign, the Company has expanded the drilling and operations teams ahead of drilling the well in the second quarter of 2011.
In SC 58, Nido completed a sea-bed coring survey which was initiated to prove an active oil source within the block. Positive results from geochemical studies of the cores indicate micro-seepage concentrated in the central portion of the contract area. These results highlight the prospective nature of SC 58, particularly around Nido’s key drilling prospects. The forward program for this year involves further geological and geophysical work to feed into drill planning.
Processing was completed on the Kawayan 3D seismic in SC 63 showing a marked increase in imaging over the previous 2D seismic. Structural studies and interpretation of the 3D seismic data have identified a number of new prospects and leads. Further work in 2011 is aimed at progressing Aboabo and other prospects toward drilling.
Positive Outlook
Nido’s President and Chief Executive Officer, Jocot De Dios said that:
“The 2011 year promises to be exciting for Nido with the commencement of the Company’s five well exploration drilling program. Our first target is Gindara, with an upside of up to 1 billion barrels oil in place with drilling set to commence in May 2011.
We are also actively looking at Aboabo and other proximate targets within the southern portion of SC63, where we are chasing an old gas discovery by Phillips. Our largest play in the deepwater is Balyena in SC58, a 1.3 billion barrel target. Success from any of these wells would be transformational for the Company.
Moving forward, we shall continue to assess opportunities within our shallow water acreage, which could include additional farm-outs, to encourage the near-term development of further fields. We shall also look more closely at improving or increasing production at the Galoc oil field with our joint venture partners.
With the continued support of shareholders, our employees and the Board of Directors, we look forward to 2011 with enthusiasm and confidence as we seek to create significant shareholder value through our big-hit exploration drilling campaign.”
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