RNS Number : 2915A
Anzon Energy Limited
31 July 2008
ANZON ENERGY LIMITED (CODE: AEL)
31 JULY 2008
ANZON ENERGY LIMITED ANNOUNCES THAT ITS SUBSIDIARY
ANZON AUSTRALIA LIMITED ("ANZON" OR "THE COMPANY")
(ASX CODE:AZA) HAS TODAY MADE THE FOLLOWING
ASX ANNOUNCEMENT
QUARTERLY REPORT TO 30 JUNE 2008
HIGHLIGHTS
PRODUCTION
* Oil production from the Basker and Manta fields (100%) during the second quarter averaged 7,550 barrels of oil per day, which
includes scheduled maintenance downtime and logistical downtime during crude sale offtakes.
* In the second quarter of 2008 the BMG Joint Venture sold approximately 567,000 barrels of crude oil, resulting in US$67 million in
gross sales revenue with an average realised price of US$118 per barrel.
* On 30 July 2008, total production from the Basker-Manta fields exceeded 5 million barrels (including EPT production).
DEVELOPMENT PROJECTS
* In July 2008, the Basker Manta Gummy (BMG) Joint Venture (JV) announced its intent to move forward on a major expansion of its Oil
& Gas Development in the Gippsland Basin (Vic L26, L27 and L 28).
* In July the BMG JV signed a Letter Of Intent (LOI) with BW Offshore AS (BWO) for the design, conversion, installation and
operation of a purpose built Floating Production Storage and Offloading vessel (FPSO) of Suezmax size (850,000 barrels), which will have the
capability to handle higher oil, water and gas rates than the present Crystal Ocean and Basker Spirit system.
* The BMG JV entered into a LOI to contract the semi-submersible drilling rig Songa Venus for commencement of drilling in Dec this
year for between 120 to 150 days.
* As at July 29, the installation of the flowline to connect Basker 6st to the Basker manifold has commenced. Additional production
is expected from the end of August.
CORPORATE ACTIVITIES
* Anzon and Nexus terminated the merger implementation deed and agreed not to proceed with the Merger. This decision has been
mutually agreed and the termination was implemented at no cost to either party
* On 16 June 2008, Roc Oil Company Limited ("ROC") announced a takeover offer for all of the ordinary shares in Anzon Australia
Limited. The independent directors of Anzon advised shareholders to take no action until the independent directors have had an opportunity
to consider the offer and make a recommendation to shareholders.
A. PRODUCTION & DEVELOPMENT ACTIVITIES
Basker-Manta Oil Development (VIC/L26)
(i) Project Update
Oil production for the quarter amounted to 687,009 bbls, an average daily production rate of 7,550 bopd, which includes scheduled
maintenance downtime and logistical downtime during crude sale offtakes.
On 30 July 2008, total production from the Basker-Manta fields exceeded 5 million barrels (including EPT production).
(ii) Oil Marketing
In the second quarter of 2008, the BMG Joint Venture sold approximately 567,000 barrels of crude oil, resulting in approximately US$67
million in gross sales revenue with an average realised price of approximately US$118 per barrel.
In July 2008, the BMG sold a further 597,000 barrels resulting in net sales to Anzon of around A$32.5 million.
At this point in time marketing of the crude has continued on a "spot" basis. Longer term "firm" off take arrangements continue to be
reviewed. Crude Oil sales remain at a premium to the APPI Tapis Oil marker, which continues to be at a premium to the WTI marker.
B. DEVELOPMENT PROJECTS
On 7 July 2008, the Basker Manta Gummy (BMG) Joint Venture (JV) announced its intent to move forward on a major expansion of its Oil &
Gas Development in the Gippsland Basin (Vic L26, L27 and L 28).
On Friday 4 July the JV signed a Letter Of Intent (LOI) with BW Offshore AS (BWO) for the design, conversion, installation and operation
of a purpose built Floating Production Storage and Offloading vessel (FPSO) of Suezmax size (850,000 barrels), which will have the
capability to handle higher oil, water and gas rates than the present Crystal Ocean and Basker Spirit system. This new single vessel will
replace the combination of the mini FPSO and shuttle tanker that has been the trademark of the innovative Basker Manta development since it
started up 2.5 years ago and has now produced nearly 5 million barrels of oil.
Since the original development was conceived (Crystal Ocean/Basker Spirit) in 2005 the BMG oil reserves have increased plus a
substantial gas resource has been delineated. This has enabled the JV to justify a larger facility, capable of processing gas and providing
a more optimal, unconstrained development including:
1. a forecast doubling of current oil rate to around 20,000 bopd
2. the offshore processing of gas (capacity 120 MMscfd) to sales quality for transport by high pressure pipeline 90 km to the onshore
Eastern Gas Pipeline (EGP) or reinjection into the reservoir for later production
3. the offshore ship to ship transfer of liquids, eliminating logistical downtime
4. an environmentally responsible development with zero flare discharge and nearly zero onshore "footprint"
5. improved reliability including redundant equipment
The operating Lease Contract for the FPSO is expected to be finalized before the end of September 2008, and commissioning in Bass Strait
is expected 2nd quarter 2010.
In addition, the BMG JV has entered into a LOI to contract the semi-submersible drilling rig Songa Venus for commencement of drilling in
Dec this year for between 120 to 150 days. This rig will supplement the Maersk Kan Tan IV which will commence in May 2009, a 135 day
drilling program. In total, between the two rigs, some 4 development wells (Basker, Manta and Gummy) targeting both Intra-Latrobe and Golden
Beach sands, and possibly 1 or 2 appraisal/exploration wells, will be drilled. These wells are planned to be connected via manifolds and
risers to the FPSO via a newly installed disconnectable Submerged Turret Production (STP) buoy and mooring attached to the New FPSO.
In aggregate the Joint Venture is planning to spend up to A$1230 million dollars on drilling, completing and subsea connections
including manifolds and pipeline, while the new FPSO, in which BWO is investing approximately US$400m inclusive of its gas processing
facilities, will be leased for an initial period of 5 years plus options to extend the contract for up to a total period of 15 years. BWO
will effectively provide all services; including the vessel, operations and maintenance.
The BMG Project is a Joint Venture between:
Anzon Australia Limited 40% (Operator)
Beach Petroleum Limited 30%
CIECO Exploration and Production (Australia) Pty Limited 20%
Sojitz Energy Australia Pty Limited 10%
C. EXPLORATION ACTIVITIES
(i) PEP 38259
The company advised the ASX in November 2006 that drilling of the Cutter-1 exploration well was completed on 9 November 2006. The well
was drilled to a total depth of 2,930 meters before being plugged and abandoned. Further feasibility studies are continuing in this
exploration acreage.
Joint Venture interests in PEP 38259 are:
AWE New Zealand Pty Ltd (Operator)* 25%
Tap (New Zealand) Pty Ltd 40%
Beach Petroleum (NZ) Pty Limited 20%
Anzon New Zealand Limited 15%
*Upon Tap resigning as Operator, AWE was appointed effective December 31st 2007.
(ii) VIC/P56, VIC/P49
Anzon farmed in to these Nexus operated exploration project areas, which are adjacent to the Basker-Manta fields. Further studies are
continuing within the VIC/P49 exploration acreage.
During the quarter Anzon relinquished its interest in VIC/P56.
Joint Venture interests in these Permits are as follows:
- VIC/P49: Nexus Energy Limited 80% / Anzon 20%
(iii) VIC/L26, VIC/L27, VIC/L28
The BMG Joint Venture holds three production licences in the Gippsland Basin. Oil production commenced from VIC/L26 in 2005, with the
Full Field Development coming on line in December 2006. VIC/L27 and VIC/L28 provide for the development of the known gas resources and
exploration of further hydrocarbon potential in the acreage.
Potential exists for additional hydrocarbon accumulations in the intra-latrobe and Golden Beach formations within the company's
production licences. Geophysical and geological studies by Anzon have identified at least 4 leads which are presently being matured for
potential drilling in 2009 or later. Reprocessing of the 1996 Basker-Manta 3D seismic survey has been completed and is being used to mature
the leads previously identified.
(iv) Summary of Permit Interests
A summary of Anzon's interests in its respective permit/lease areas as at 30 June 2008 are set out below:
Permit Interest Operator Location
VIC/L26, L27 & L28 40% Anzon Australia Bass Strait
VIC/P49 20% Nexus Energy Ltd Bass Strait
PEP 38255 15% AWE New Zealand Pty Ltd* Canterbury Basin (NZ)
Operatorship was passed from Tap Oil Ltd to AWE New Zealand Pty Ltd in the period
D. CORPORATE MATTERS
(i) Merger with Nexus Energy Limited
On 23 January 2008 Anzon and Nexus Energy Limited ("Nexus") announced their intention to merge by way of Scheme of Arrangement
("Merger"). As previously announced, the scheme meeting to vote on the Merger was adjourned from its original date of 18 April 2008 to allow
Anzon Australia and Nexus to assess the results of the Basker 6 and Basker 6 ST1 drilling program.
Anzon and Nexus were unable to agree on the impact the Basker 6 and Basker 6 ST1 drilling programs had on Anzon's Basker oil field and
therefore were not able to agree on appropriate terms to allow the Merger to proceed. As such, Anzon and Nexus terminated the merger
implementation deed and agreed not to proceed with the Merger. This decision has been mutually agreed and has been effected at no cost to
either party.
(ii) Takeover offer from Roc Oil Company Limited
On 16 June 2008, Roc Oil Company Limited's ("ROC") announcement of a takeover offer for all of the ordinary shares in Anzon Australia
Limited. The independent directors of Anzon advised shareholders to take no action until the independent directors have had an opportunity
to consider the offer and make a recommendation to shareholders.
(iii) Investment in Nexus Energy Limited
Anzon holds 65.7 million shares in Nexus representing approximately a 10% interest in its share capital.
(iv) Woodside Claim
During the reporting period no further formal communication has occurred in relation to this matter.
(v) Project Finance Facilities
The total project finance balance as at 30 June 2008 was US$26.58 million. Subsequent to the reporting period this balance has been
fully repaid and Anzon is now debt free.
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
Anzon Australia Limited
ABN Quarter ended ("current quarter")
46 107 406 771 30 June 2008
Consolidated statement of cash flows
Current quarter Year to date
Cash flows related to operating activities $A'000 (6 months)
$A'000
1.1 Receipts from product sales and 32,589 68,750
related debtors
1.2 Payments for (a) exploration and (1,099) (1,348)
evaluation (26,433) (34,166)
(b) development (12,494) (25,092)
(c) direct operating & (788) 17,203
production (2,548) (10,273)
(d) Repairs (SPM) 1
(e) administration2
1.3 Dividends received - -
1.4 Interest and other items of a 210 602
similar nature received
1.5 Interest and other costs of finance (876) (885)
paid
1.6 Income taxes paid - -
1.7 Professional fees (590) (1,340)
(12,029) 13,451
Net Operating Cash Flows
Cash flows related to investing
activities
1.8 Payment for purchases of: (a) - -
prospects - -
(b) equity investments (98) (339)
(c) other fixed assets
1.9 Proceeds from sale of: - -
(a)prospects - -
(b)equity investments - -
(c)intangible assets
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other development expenditure - -
(98) (339)
Net investing cash flows
1.13 Total operating and investing cash (12,127) 13,112
flows (carried forward)
1 The mooring reinstatement costs for the quarter are stated net of insurance receipts amounting to $21.3 million.
2 Administration costs include office overheads, consulting fees, and other corporate and associated costs.
3 The $4 million break fee paid to Arc Energy Limited is included in Administration costs.
1.13 Total operating and investing cash flows (brought (12,127) 13,112
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. 225 225
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings (net of fees) - -
1.17 Repayment of borrowings - (16,234)
1.18 Dividends paid - -
1.19 Other financing expenses - -
Net financing cash flows 225 (16,009)
(11,902) (2,897)
Net increase (decrease) in cash held
1.20 Cash at beginning of quarter/year to date 66,074 59,065
1.21 Exchange rate adjustments to item 1.20 (2,239) (4,235)
1.22 Cash at end of quarter 51,933 51,933
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities
Current quarter
$A'000
1.23 Aggregate amount of payments to the parties included 261
in item 1.2
-
1.24 Aggregate amount of loans to the parties included in
item 1.10
1.25 Explanation necessary for an understanding of the transactions
Payments to directors consist of aggregate amounts paid to directors including salaries and superannuation.
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a
material effect on consolidated assets and liabilities but did not
involve cash flows
-
2.2 Details of outlays made by other entities to establish or increase their
share in projects in which the reporting entity has an interest
-
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used
$US'000 $US'000
3.1 Loan facilities 26,577 26,577*
3.2 Credit standby arrangements
* The debt facility was repaid in early July 2008
Estimated cash outflows for next quarter
$A'000
4.1 Exploration and evaluation -
4.2 Development 27,400
Total 27,400
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated Current quarter Previous quarter
statement of cash flows) to the related items in the accounts is as follows. $A'000 $A'000
5.1 Cash on hand and at bank 43,343 56,625
5.2 Deposits at call
5.3 Bank overdraft
5.4 Deposits held by JV's 8,590 9,449
Total: cash at end of quarter (item 1.22) 51,933 66,074
Changes in interests in mining tenements
Tenement reference Nature of interest Interest at Interest at end of
(note (2)) beginning of quarter quarter
6.1 Interests in mining
tenements
relinquished,
reduced or lapsed
6.2 Interests in mining
tenements acquired
or increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number quoted Issue price per Amount paid up per
security (see note security (see note
3) (cents) 3) (cents)
7.1 Preference
+securities
(description)
7.2 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns of
capital, buy-backs,
redemptions
7.3 +Ordinary securities 371,046,820 371,046,820
7.4 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns of
capital, buy-backs
7.5 +Convertible debt
securities
(description)
7.6 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through securities
matured, converted
7.7 Options Exercise price Expiry date
(description and 7,900,000 - $0.45 13 December 2011
conversion factor) 1,750,000 - $0.45 13 December 2010
4,200,000 - $0.8632 20 October 2009
3,000,000 - $0.66 1 March 2012
150,000 - $1.36 1 July 2013
750,000 - $1.47 1 February 2014
500,000 - $1.19 1 March 2014
7.8 Issued during
quarter
7.9 Exercised during 500,000 - $0.45 13 December 2011
quarter
7.10 Expired during
quarter (Cancelled)
7.11 Debentures
(totals only)
7.12 Unsecured notes
(totals only)
Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations
Act or other standards acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
Sign here:
Date: 31 July 2008
Company Secretary
Print name: Gillian Nairn
Notes
1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter
and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes
attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or
lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will
change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the
list required for items 6.1 and 6.2.
3 Issued and quoted securities the issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply
to this report.
5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the
standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
== == == == ==
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