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Every US$10 price drop takes US$2-3 off T&T oil
The first, and so far the only, locally operating oil company to disclose how much it loses with the fall in the price of oil, London-listed LGO Energy plc said the reduction in cash margin would only be US$2-3 for every US$10 price drop.
LGO CEO Neil Ritson said in a statement: “We are delighted with the success of our drilling programme in Trinidad and the resulting increase in group production. We continue to make significant progress and anticipate reaching total depth on GY-671 within the next few days and completing Pad-3 for production by end-year.
“Whilst we can’t ignore the recent fall in the oil price, the impact on bulk of our production is largely offset by our contract terms. At Goudron a fall of US$10 per barrel in the oil price translates to approximately a US$2 to US$3 per barrel reduction in our long run cash margin, and as such there no material impact on our Goudron field development plans, which remain unchanged.”
LGO also announced to the London Stock Exchange that its production has exceeded 1,250 barrels of oil per day (bopd), with over 85 per cent derived from its operations in T&T. LGO said production on December 2 totaled 1,272 bopd, with five new production wells in the Goudron field contributing over 800 bopd.
All five new Goudron wells remain on constrained flow rates to protect the reservoir and are producing oil without water, LGO said. Wells GY-664, GY-665 and GY-667 are free flowing whilst wells GY-666 and GY-668 have recently been completed with downhole pumps in order to obtain further improved production rates and are still subject to further work intended to stimulate additional production.
Well GY-671, the eighth well in the 2014 drilling programme, is currently drilling ahead at 2,733 feet measured depth in 8 1/2-inch hole after setting an intermediate 9 5/8-inch casing at 2,434 feet MD. The well is now in the upper C-sand interval and is drilling in reservoir sandstones with the expected hydrocarbon indications.
Wells GY-669, GY-670 and GY-671 are being drilled from the third pad (Pad-3) and are anticipated to be completed as C-sand production wells by end year. After drilling GY-671 it is expected to release Well Services Rig 2 and to then construct two further drilling pads (Pad-4 and Pad-5) for the 2015 drilling programme which is planned to commence with Well Services Rig 70 in March, LGO said.
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