I'll just start by saying that I was over-optimistic for the 2011 financials, with the out-turn numbers coming within the range of analysts' estimates at:
Revenue $234.2mn, EPS 26.2 cents - with entitlements production currently at 17,300 bopd. Production and revenue were lower than I'd hoped but were above consensus, whereas EPS was pretty well on consensus.
Moving through the results announcement:
Phase II development drilling on TGT got underway from the H4 platform in the third quarter of last year. It continues on track with a further five development wells due on production during the third quarter of 2012..........
The Group saw 2011 out with net entitlement volumes of approximately 14,700 barrels of oil equivalent per day (BOEPD) compared with approximately 2,600 BOEPD at the end of 2010. [nb doesn't agree with figure in headline].........
Company was able to benefit from the record high average oil price during 2011 realising nearly $113 per barrel of oil sold compared with approximately $84 per barrel in 2010......
Due to the following factors: the early stages of production from TGT Phase I, continuing work on the Phase II development and another extensive exploitation cycle, extensive pre-drill expenditures associated with continued exploration activities along with the expectation of adding several new ventures during the year, the Board of Directors are not recommending the payment of a dividend.....
The field has now demonstrated performance in excess of 40,000 barrels of oil per day (BOPD) with no significant impact on the main reservoir performance parameters. Although there remain alignment issues with Petrovietnam over the rapidity of raising production levels, the evidence from the field is compelling in support of that agreed by all partners in the Government approved Field Development Plan. Accordingly, we are confident that full Partner concurrence of a field production rate of at least 55,000 BOPD will be achieved by Q3 2012......Production from the H4 platform is projected to commence in July or August of 2012.
As suggested previously, they need PV to pull their fingers out. The above statement is less positive than I would have hoped to see.
TGT is a highly complex field with three main reservoir horizons-the upper and lower Miocene 5.2 and the Oligocene "C"-with approximately 55 individual producing intervals. Well performance to-date has demonstrated the ability of all wells to produce oil at high rates with minimal drawdown and field productivity from the reservoir intervals perforated to date has met or exceeded pre-development model prognoses. Stable flowing pressures of the initial producers indicate a strong level of aquifer pressure support, importantly deferring the need for water injection. Similarly, initial interference tests confirm a high degree of connectivity within the main sands. Clearly we need information from more than the seven intervals that have been perforated to date in the eight producing wells in order to obtain the information necessary to establish the most efficient and effective way to fully exploit the field. Thus, 2012 will be about accelerating the programme in step changes in order to establish the most efficient rates at which to drain the field.
It is my expectation that they will convert some of the water-handling capacity of the FPSO (75,000bopd) into oil handling. Note the reference to "all" wells capable of production at high rates. Plainly they are keen to expand production from unperforated intervals - not least to gain more info.
Entitlements production was over 40% higher than working interest production as the contracting partners recovered those pre-field certification costs carried on behalf of Petrovietnam.
The relationship between entitlements and WI is quite a bit lower than I had assumed (obviously this depends on details in the PSA, but the company had previously indicated 50%+ quite recently), and accounts for most of my over-estimation of revenue. What this means is that cost recovery (and high entitlements) will persist for longer than I had assumed (probably into 2013?).
I'll stop there in the header and post again in the thread.