Exillon's financials exceed budget despite subdued production

Exillon Energy saw average production slip in April but the company has revealed that its financial performance has been better than expected.

The group, which is focused on two regions, Timan-Pechora (Exillon TP) and West Siberia (Exillon WS), said peak production in April reached a record 12,810 barrels a day (bbl/day), some 5.2% higher than previous historical peak of 12,177bbl/day in March.

However, average production fell from 11,785bbl/day to 11,463bbl/day over the month as the group shut in key producing wells for scheduled workovers in Exillon TP. Nevertheless, production in the four months to April 30th averaged 11,448bbl/day, up 55% on the 7,386bbl/day in the first four months of 2011.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

While the group said that all workovers were successful and current Exillon TP production is now running at a higher rate, Exillon WS production may be affected this month. Exillon said it expects to carry out planned optimisation of the pipeline in Exillon WS, which requires installation of booster pump station in the vicinity of EWS II field, and a tie in of pipeline from well pads five and six - this may require the temporary closure of some wells.

On a more positive note, the average selling price of its oil has continued to be higher than the expected level of $95 per barrel. "Our financial performance in the first three months of the year has exceeded budget [...] In addition we have benefited during the period from the way in which the export duty that we pay lags behind increases in the oil price".

The 7601 well (Exillon TP) and 38 well (Exillon WS) are expected to be completed before the end of the second quarter. These were originally anticipated to be on stream in April. The group said that the operational expenses resulting from the delays are being borne by its subcontractors.

In March, the compared pushed back its 17,000 barrels-a-day production target from June 2012 to the end of the year. "This delay has been caused by a number of operational difficulties, including slower than expected mobilisation of rigs," the company said in its 2011 full-year results. Exillon gave no mention of full-year guidance in today's statement.

Shares were trading 3.63% higher at 127.47p in early trading on Tuesday.

BC