Alliance Oil Released Quarterly Operational Update and Outlook
OREANDA-NEWS. January 17, 2012. Alliance Oil Company's total upstream volumes for 2011 increased by 12% to 17.9 mbbl (49,100 bopd) from 16.0 mbbl (43,800 bopd) in 2010. The full year development and exploration program resulted in 56 new wells. The preliminary refining volumes in 2011 increased by 13% to 26.9 mbbl (73,700 bopd) from 23.7 mbbl (64,900 bopd). Preliminary oil product sales amounted to 27.4 mbbl (24.4 mbbl).
The total oil production for the fourth quarter of 2011 increased by 38% to 5.8 mbbl (62,700 bopd) compared to 4.2 mbbl (45,600 bopd) in the third quarter of 2011. Preliminary refining volumes at the
Supported by macroeconomic factors and improved financial performance, the Company plans to increase its drilling activities in 2012 and budgets capital expenditures of 380-450 MUSD for the upstream segment, primarily in the
The upstream production guidance for 2012 is an average daily production of 63,000-69,000 barrels (2011: 49,100 bopd) and the average daily refining guidance for the downstream segment volume is at 68,000-73,000 barrels (2011: 73,700 bopd).
Operational update Oil production in the Timano-Pechora region increased by 107% to 3.1 mbbl in the fourth quarter of 2011 compared to 1.5 mbbl in the third quarter of 2011. Oil production in the Volga-Urals region and
In 2011, 52 production and 4 exploration wells were drilled. All production wells were completed and put into operation. Exploratory tests in the Volga-Urals region and
The Kolvinskoye field in Timano-Pechora was launched in the third quarter of 2011, following completion of the pipeline and other infrastructure facilities. This field currently produces around 24,000 bopd. In the fourth quarter of 2011 oil production from the Kolvinskoye oil field amounted to 2.1 mbbl.
In December 2011, the Company and Repsol Exploracion S.A. reached an agreement to form a joint venture for exploration and production growth in
Preliminary
Outlook for 2012
Upstream The strategic objectives for the upstream segment in 2012 are to gradually increase oil production and further grow the reserve base through development of the existing assets and the joint venture with Repsol.
The upstream capital expenditures are planned at 380-450 MUSD and primarily targets further development of the Kolvinskoye field in the Timano-Pechora region and the Puglalymskoye field in the
The upstream production guidance for 2012 is an average daily production of 63,000-69,000 barrels. The previously stated target of 90,000 bopd at the end of 2012 will no longer apply as a target and will be replaced by guidance on average daily volumes. Following the formation of the joint venture with Repsol and the incorporation of the Eurotek assets in 2012, the total asset base will provide the basis for significantly higher production levels in coming years.
The current upstream capital expenditures plan and production guidance reflect continued consolidation of the Volga-Urals assets which are to be contributed to the joint venture and excludes the Eurotek assets.
Downstream The upgrade of the
Downstream capital expenditures are planned at 490-540 MUSD. Planned 2012 capital expenditures are primarily related to the modernisation of the
The average daily refining guidance for the downstream segment is at 68,000-73,000 barrels in 2012. Following the modernisation of the
"In 2011, the Company's performance was supported by macroeconomic factors, primarily high crude prices and strong demand for oil products, and operational performance, primarily the launch of the Kolvinskoye oil field. This will be reflected in improved financial results for 2011 and for the fourth quarter in particular. For 2012, we plan a capital program aimed at long-term reserve and production growth in the upstream segment and increased capacity and efficiency in the downstream segment. Current operational performance and the new joint venture should support our growth oriented investment plans with higher levels of cash flow from operations in coming years", says Arsen Idrisov, Managing Director of Alliance Oil Company.
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