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Glencore : Sirius Petroleum announces final results for the year ended 31 December 2013

06/30/2014 | 09:25am US/Eastern
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Summary of 2013 and Current Year Update

-- The company's focus is the re-entry of the Ororo-1 well, originally drilled and flow tested by Chevron, located on the Ororo Field in OML 95. Management expects the field to be producing at an initial production rate of approximately 2,000 bopd which is expected to ramp up to 3,000+ bopd as the asset is developed.

-- Off-take agreement with Glencore, facilitating the secure marketing and sale of the Company's crude.

-- The company has constructed an exciting pipeline of Nigerian off-shore asset opportunities and has strong local relationships that are aligned with the company's success. Sirius is ideally positioned to participate in the upcoming marginal field bid round through these partnerships.

-- Technical partnership with Schlumberger, the world's largest petro-technical services company, who has completed an independent Field Evaluation Study on the Ororo Field in OML 95 and, the well development plan, and will be conducting the drilling operations for the Ororo field when they commence.

-- The financial results represent the costs of developing our strategy and reviewing interests in both potential oil and gas blocks and individual marginal field opportunities. Total comprehensive loss for the year amounted to $6,570,000 (2012: $3,867,000).

-- The Board continues to review potential project finance to bring the Ororo field into production. We will seek to conclude on funding which maximises value for shareholders.

Outlook

Sirius, with the assistance of the technical partner Schlumberger, has continued to make good progress on the Ororo field development plan and on building a pipeline of investment opportunities. We look forward to working with our partners in Nigeria as we move into the next stage of developing our portfolio of assets and taking the first of these into near term production, which remains conditional upon the completion of our financing strategy. We continue to actively review a number of funding options to complete our financing strategy and look forward to bringing news of further progress to shareholders in due course.

Jack Pryde, Chairman, Sirius Petroleum, said: "I am pleased with the progress made during the last twelve months as we continue our focus of putting the Ororo Field into production. The independent Field Evaluation Study completed by Schlumberger confirmed significant recoverable resources in the field that are higher than the Company's original estimates. The well re-entry proposal and other preliminary work done by Schlumberger and our Nigerian partners brings us closer to putting our assets into production."

Chairman's Statement

I am pleased to report on the progress of Sirius covering the twelve month period to 31 December 2013. During this period Sirius conducted a detailed assessment of the potential recoverable reserves around the Ororo-1 well, utilising existing Chevron data.

The company subsequently engaged Schlumberger to produce a well re-entry proposal based on the sub-surface analysis of the Schlumberger reserve report, with a view to putting the Ororo Field into production.

Overview

-- The company's initial focus is the re-entry of the Ororo-1 well, originally drilled and flow tested by Chevron, located on the Ororo field in OML 95. Management expects the field to be producing with an initial production rate of approximately 2,000 bopd which is expected to ramp up to 3,000+ bopd as the asset is developed.

-- Off-take agreement with Glencore for up to 60,000 bopd, facilitating secure marketing and sale of the Company's crude.

-- The company has constructed an exciting pipeline of Nigerian off-shore asset opportunities and has strong local relationships that are aligned with the company's success. Sirius is ideally positioned to participate in the upcoming marginal field bid round through these partnerships.

-- Technical partnership with Schlumberger, the world's largest petro-technical services company, who has completed an independent Field Evaluation Study on the Ororo Field in OML 95 and, the well development plan, and will be conducting the drilling operations for the Ororo field when they commence.

Well Re-entry Program - Ororo-1

The Group is focussing its initial drilling activities on the re-entry of the Ororo-1 well located in the Ororo Field (OML 95). The well flowed at approximately 2,200 barrels of crude oil per day (bopd) from a single zone, and 600 bopd from another oil-producing sand of light crude oil (43 API) when originally tested by Chevron in 1986.

Sirius acquired rights to 40% of the Ororo field in 2011 and is entitled to a preferential cash flow of 88% while it is net invested in the project, which reverts to 40% post recovery. The field is situated in shallow water offshore in depths ranging between 23 ft and 27 ft.

Summary of Independent Assessment of the Ororo Field by Schlumberger

Schlumberger has been involved in the Ororo Field from the earliest stages and, due to the results from the Field Evaluation, we are now in discussions with them to provide Project Management and Drilling Services to accelerate our development activities on OML95 in order to get it to first oil. A summary of the Field Evaluation is as follows:

-- Ororo Field hydrocarbon in place estimated at 35.2- 44.1 MMstb (P50 - P10 oil-in-place).

-- Seven oil bearing sands (D1, D2, D3, D4, D5, F and G) were identified in the Ororo-1 well.

-- The P50 - P10 Recoverable Oil from the single Ororo-1 well estimated at 10.0 MMstb - 12.8 MMstb.

-- In 1986, the Ororo-1 well flow tested at a combined production rate of approximately 2,800 barrels of oil per day (bopd) from two oil producing sands.

-- Ororo-1 well contains 125ft true vertical thickness (TVT) of net oil pay.

-- The P50 - P10 Gas Initially In Place estimated at 396.5 - 557.6 Bscf with Recoverable Gas of 276.9 - 390.66 Bscf (P50 - P10).

-- Ororo-1 well did not encounter any hydrocarbon water contact in any of the seven hydrocarbon bearing reservoirs which suggests that the contacts are located down dip of the Ororo structure.

-- The combined results from the petro-physical analysis, seismic interpretation and volumetric studies shows the exploitation potential of the field is good.

Loss of Capital

The financial statements show that the Company's net assets are less than half its called up share capital. In these circumstances, the directors of the Company are obliged by section 656 of the Companies Act 2006 to convene a general meeting for the purposes of considering whether any and, if so, what, steps should be taken to deal with the Company's current financial position. The Directors will consider this issue at the Company's forthcoming annual general meeting.

Board Changes

During the year, Sirius announced the appointments of Olukayode ('Bobo') Kuti as Chief Executive, Stephen Fletcher as Finance Director and Ajay Kejriwal as a Non-Executive Director. The new appointments align the Board and executive management team with the next stage of our strategy and the transition of the Company from an investment company to a fully fledged owner and developer of oil and gas assets. Bobo has been instrumental in both building Sirius Petroleum's business base in Nigeria and securing the Company's options to acquire oil and gas assets. As Chairman, I have also spent a significant amount of time in the past few years helping to progress the Company's plans to reach first oil and I believe that we are on the cusp of achieving this goal.

I would also like to thank Toby Hayward and Mike Hirschfield who stepped down from the Board of Directors. The Board would like to thank Toby and Mike for their significant contributions to the Company during the formative stages of its development. Kitwell Consultants, of which Mike Hirschfield is a Director, has been retained as Company Secretary to Sirius. Mr Babatunde Agboola also stepped down from the Board to pursue other interests.

Outlook

Sirius, with the assistance of the technical partner Schlumberger, has continued to make good progress on the Ororo field development plan and on building a pipeline of investment opportunities. We look forward to working with our partners in Nigeria as we move into the next stage of developing our portfolio of assets and taking the first of these into near term production, which remains conditional upon the completion of our financing strategy. We continue to actively review a number of funding options to complete our financing strategy and look forward to bringing news of further progress to shareholders in due course.

Annual general meeting

The AGM will be held at 10.00 a.m. on Wednesday 23(rd) July 2014 at the offices of Fladgate LLP, 16 Great Queen Street WC2B 5DG.

Finally, I would like to thank our shareholders for their on-going support as we continue to develop the business.

(c) 2014 GlobalData Provided by SyndiGate Media Inc. (Syndigate.info).

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