TIDMENW
RNS Number : 2807Y
Enwell Energy PLC
13 January 2022
13 January 2022
Enwell Energy plc
("Enwell" or the "Company")
Ukraine Update
Enwell Energy plc (AIM: ENW), the AIM-quoted oil and gas
exploration and production group, provides an update on its
operational activities in Ukraine, where it operates the
Mekhediviska-Golotvshinska (MEX-GOL), Svyrydivske (SV) and
Vasyschevskoye (VAS) gas and condensate fields, as well as the
Svystunivsko-Chervonolutskyi (SC) exploration licence .
Production - Q4 2021
The average daily production of gas, condensate and LPG from the
MEX-GOL, SV and VAS fields for the period from 1 October 2021 to 31
December 2021 was as follows:-
Field Gas Condensate LPG Aggregate
(MMcf/d) (bbl/d) (bbl/d) boepd
Q4 2021 Q4 2020 Q4 2021 Q4 2020 Q4 2021 Q4 2020 Q4 2021 Q4 2020
-------- -------- -------- -------- -------- -------- -------- --------
MEX-GOL
& SV 15.3 17.4 588 614 295 309 3,501 3,908
-------- -------- -------- -------- -------- -------- -------- --------
VAS 2.4 2.7 24 29 - - 463 536
-------- -------- -------- -------- -------- -------- -------- --------
Total 17.7 20.1 612 643 295 309 3,964 4,444
-------- -------- -------- -------- -------- -------- -------- --------
Overall production volumes in Q4 2021 were lower, both compared
with Q4 2020 and the previous quarter, predominantly as a result of
the shut-in of the SV-2 and MEX-109 wells during the quarter, after
these wells suffered water ingress (see announcement dated 29
November 2021). While the shut-in of these wells has had a material
impact on overall production rates in the quarter, remedial work on
these wells is ongoing, as outlined below, in order to seek to
restore production from these wells.
The significant increase in European gas prices in the quarter
has fed through to Ukrainian gas prices, which has benefited the
sales prices being achieved by the Company for its gas, as well as
condensate and LPG. These continued high hydrocarbons sales prices
have helped to offset the impact on revenues during the quarter due
to the lower production volumes.
Production - Full Year 2021
The average daily production of gas, condensate and LPG from the
MEX-GOL, SV and VAS fields for the year ended 31 December 2021 was
as follows:-
Field Gas Condensate LPG Aggregate
(MMcf/d) (bbl/d) (bbl/d) boepd
2021 2020 2021 2020 2021 2020 2021 2020
----- ----- ------ ----- ----- ----- ------ ------
MEX-GOL
& SV 18.9 17.6 681 641 308 295 4,237 3,960
----- ----- ------ ----- ----- ----- ------ ------
VAS 2.6 2.9 26 32 - - 493 581
----- ----- ------ ----- ----- ----- ------ ------
Total 21.5 20.5 707 673 308 295 4,730 4,541
----- ----- ------ ----- ----- ----- ------ ------
Overall production volumes for the full year 2021 increased by
approximately 4.2% compared with the 2020 year.
Operations
At the SV field, testing operations on the SV-29 development
well were delayed for a period due to local shortages of materials
required in the operations, but supplies have now improved and work
on initial testing of the well has resumed. The well was spudded in
February 2021 and drilled to a final depth of 5,450 metres. The
primary target of the well was the V-22 reservoir within the Visean
formation, and to date, one interval within this reservoir, at a
drilled depth of 5,246 - 5,249 metres, has been perforated. Testing
of this interval was undertaken using a variety of choke sizes, and
initial results showed gas flows and an unexpectedly high, but
somewhat variable, proportion of condensate. The higher than
anticipated condensate rates from this interval required that a
longer period of initial testing be conducted. However, a
mechanical issue connected to the perforating of the well caused a
further delay, but this issue has now been rectified. It is now
intended to perforate and test a further interval, at a drilled
depth of 5,228 - 5,232 metres, in the V-22 reservoir. Thereafter,
the well output will be run through the gas processing facilities
to allow longer-term production testing to be conducted in order to
optimise the operating parameters of the well.
Drilling of the SV-31 well is ongoing, with the well having
reached a depth of approximately 5,100 metres. This well was
spudded in September 2021, and has a target depth of 5,250 metres.
The well is a development well, targeting production from the V-21
and V-22 reservoirs in the Visean formation, which have
demonstrated good productivity in an existing nearby well. Drilling
operations are scheduled to be completed by the end of the first
quarter of 2022, and, subject to successful testing, production
hook-up is scheduled during the second quarter of 2022.
The workover operations on the SV-2 well are progressing
satisfactorily, with the removal of the existing production string
nearly completed. It is then planned to install a new production
string, and to lift the well using coiled tubing. This well is
operated under a joint venture agreement with PJSC Ukrnafta, the
majority State-owned oil and gas producer, pursuant to which the
gas and condensate produced is sold under an equal net profit
sharing arrangement between the Company and PJSC Ukrnafta.
At the MEX field, the workover operations on the MEX-109 well
are also continuing, and after logging identified the source of the
water ingress, r emedial work was undertaken to seal the water
ingress. The well is currently under observation and further
operations to attempt to remove the remaining water in the well are
planned.
Construction work on the upgrades to the gas processing
facilities at the MEX-GOL and SV fields is progressing well and
remains on schedule. In total, the upgrade works are scheduled to
take approximately three and a half months to complete. T hese
works involve an upgrade of the LPG extraction circuit, an increase
to the flow capacity of the facilities, and a significant increase
to the liquids tank storage capacity, which are designed to improve
overall plant efficiencies , improve the quality of liquids
produced and boost recoveries of LPG, while reducing environmental
emissions.
At the SC licence, drilling of the SC-4 well is continuing, with
the well having reached a depth of approximately 5,260 metres. This
well was spudded in August 2021, and has a target depth of 5,565
metres. The well is primarily an appraisal well, targeting
production from the V-22 horizon, as well as exploring the V-16 and
V-21 horizons, in the Visean formation. Drilling operations are
scheduled to be completed in Q2 2022.
Also at the SC licence, the acquisition of 1 50 km(2) of 3D
seismic is progressing well and is expected to be completed by the
end of January 2022. Processing and interpretation of the acquired
seismic data will then be undertaken.
VAS Licence Order for Suspension
The Company does not have any further information to report in
relation to the Order for suspension relating to the production
licence for the VAS field since the announcements made on 12 March
2019 and 19 March 2019 respectively, other than to report that the
legal proceedings issued in the Ukrainian Courts to challenge the
validity of the Order are ongoing, and the Com pany remains
confident that it will ultimately be successful in such legal
proceedings.
Cash Holdings
At 31 December 2021, the Company's cash resources were
approximately $92.5 million, comprised of $29.0 million equivalent
in Ukrainian Hryvnia and the balance of $63.5 million equivalent in
a combination of US Dollars, Pounds Sterling and Euros. The cash
resources have been significantly boosted by the high hydrocarbon
prices achieved during the quarter, despite the lower production
volumes.
COVID-19 Pandemic
The Group continues to monitor the situation relating to the
COVID-19 pandemic, and to take any steps necessary to protect its
staff and operations. However, as of the date hereof, there has
been no operational disruption linked to the COVID-19 pandemic, and
no material impact is currently envisaged on the Group's prospects.
Nevertheless, the Group remains acutely aware of the risks, and is
taking action to mitigate them where possible, with the safety of
individuals and communities continuing to be the priority.
Sergii Glazunov, Chief Executive Officer, said : "Although we
have continued to generate strong revenues and benefit from the
high prevailing gas prices, the water ingress issues with the SV-2
and MEX-109 wells have been frustrating, as have the supply
constraints experienced in Ukraine. However, we are now making
progress with the remedial work being undertaken on these wells, as
well as with the testing of the SV-29 well, and look forward to
making further progress in the near future. We are also pleased
with the good progress we are making in the drilling of the SV-31
and SC-4 wells, the acquisition of 3D seismic at the SC licence and
the construction works at the MEX-GOL and SV gas processing
facilities."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014, which forms part of United
Kingdom domestic law by virtue of the European Union (Withdrawal)
Act 2018, as amended.
For further information, please contact:
Enwell Energy plc Tel: 020 3427 3550
Chris Hopkinson, Chairman
Sergii Glazunov, Chief Executive Officer
Bruce Burrows, Finance Director
Strand Hanson Limited Tel: 020 7409 3494
Rory Murphy / Matthew Chandler
Arden Partners plc Tel: 020 7614 5900
Ruari McGirr / Elliot Mustoe (Corporate
Finance)
Simon Johnson (Corporate Broking)
Citigate Dewe Rogerson Tel: 020 7638 9571
Ellen Wilton
Dmitry Sazonenko, MSc Geology, MSc Petroleum Engineering, Member
of AAPG, SPE and EAGE, Director of the Company, has reviewed and
approved the technical information contained within this press
release in his capacity as a qualified person, as required under
the AIM Rules.
Definitions
bbl/d barrels per day
boepd barrels of oil equivalent per day
cf cubic feet measured at 20 degrees Celsius and
one atmosphere
km(2) square kilometre
LPG liquefied petroleum gas
MMcf/d million cubic feet per day
% per cent
$ US Dollars
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