Oil and gas company Melrose Resources plc (MRS.L) Friday said it expects a 24% rise in average daily production rate in 2011 compared with its estimated production level for 2010. The company also announced its capital spending plan for 2011.
The company currently forecasts the 2011 average daily production rate to be 21.7 Mboepd (thousand barrels of oil equivalents per day) on a net entitlement basis. This is comparable with the company's 2010 average production rate of approximately 17.5 Mboepd.
Melrose said the 2011 outlook comprises 87% gas and 13% hydrocarbon liquids, assuming a Brent oil price of $75 per barrel.
On a working interest basis, the company's 2011 production is projected to be 44 Mboepd, about an 8% increase from the current 2010 market guidance of 40.7 Mboepd.
Melrose said the 2011 production guidance is based on the production from its existing oil and gas fields in Egypt, Bulgaria and East Texas USA. These fields contribute 65%, 34% and 1% of the company's total production, respectively.
The company also stated that the outlook excludes any contribution from its Permian Basin assets in the U.S. If the company does not go ahead with its plans to divest these assets, the 2011 production forecast would be increased by 0.8 Mboepd.
Further, Melrose said an active work program has been planned for 2011, with an estimated total capital spending of $112 million. The company has allocated 47% of the capital spending for seismic acquisition and exploration drilling.
The company also stated that approximately $77 million of the capital forecast is considered to be firm with the remaining $35 million contingent. On a country basis, Egypt accounts for 61% of the total capital spending forecast while Bulgaria and Romania account for 16% each and Turkey accounts for 7%.
In addition, Melrose plans to secure one or more new business development opportunities in 2011. The company expects to complete the seismic survey on the Rhone Maritime concession within approximately three months.
In Turkey, the company will commence the drilling of the South West Kanun well in March, which has gross mean prospective resources of 85 MMbbls with a 20% chance of success. The company also plans for two wells in Egypt in the second half of 2011.
MRS.L is trading at 230 pence on the LSE, up 12 pence or 5.50%, on a volume of 96,237 shares.
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