| Mon 4 Nov 2002, 17:29 | | Energy Africa Limited - Operational Update |
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Energy Africa Limited - Operational Update
Energy Africa Limited
Registration number: 1995/007140/06
(Incorporated in the Republic of South Africa)
JSE code: ENR ISIN code: ZAE000010427
ENERGY AFRICA LIMITED - OPERATIONAL UPDATE
The Board of Energy Africa announces an operational update. The purpose of this
announcement is to inform all shareholders of the current status of the
Company`s exploration and production activities prior to 12 November 2002, the
closing date of the Petronas` Offer. Significant developments and events are:
Exploration & appraisal
1. In the Northern Block G area ("NBG") in Equatorial Guinea where six
discoveries had been made, the excellent results of the Elon-2 and Elon-3
appraisal wells which have been previously reported to shareholders have been
integrated into the geological model and confirm an increased reserve base with
good potential for further additions. The results also confirm the low risk
potential of other prospects in the NBG area, which will be tested in 2003.
2. Exploration drilling has continued in the southern platform area of Block G
in Equatorial Guinea. The G11 well resulted in a non-commercial discovery with
20m of gas and 3m of oil in Tertiary sandstone with excellent reservoir
properties. This result significantly upgrades the potential for oil
accumulations at the Tertiary level, which has hitherto been accorded a
relatively low priority. The G-12 well has just been completed but was
unsuccessful.
3. The G13 well, which is being drilled in the southern toethrust belt in the
Rio Muni Basin some 18 km south west of the Ceiba field, is still in progress.
Indications are that a potentially significant hydrocarbon column has been
intersected in the Cretaceous target interval. To date strong indications of
hydrocarbon saturations have been observed over a gross thickness of 150m and
preliminary interpretations suggest that certain intervals have good reservoir
properties. This could be a very significant discovery but drilling operations
are still in progress and, until a full suite of logs are available, no
conclusions can be drawn regarding the nature of the hydrocarbons or their
commerciality. Nevertheless, at the very least, the results confirm a working
hydrocarbon system over an extensive vertical thickness and significantly
enhance the prospectivity of the previously unexplored southern toethrust area.
4. In Uganda the Turaco-1 well in the Albertine Graben has progressed
satisfactorily and has reached a depth of 1 670m. It is expected that the
target intervals between 2 000m and 2 500m will be penetrated by end-November.
Production
5. Production from the Ceiba field for 2002 and 2003 is expected to be lower
than previously forecast. However, this is due to a combination of temporary
production problems and a reservoir management decision, and therefore
represents a deferral of production. This has an insignificant impact on the
valuation of Energy Africa.
6. The positive trend in the reduction of the discount of Ceiba crude to Brent
has continued with recent cargoes being sold at significantly lower discounts
than those for the first half of Energy Africa`s current financial year.
7. In the Alba Field in the UK North Sea, the Extreme South development was
brought onstream as planned on 1 October, and by 3 October gross production was
92 000 barrels oil per day. However, due to malfunctioning of certain equipment
on the Alba North platform, average production for October will be below the
monthly forecast. The operator has made significant progress in addressing
these issues and production for the balance of the financial year is expected to
average between 80 000 and 100 000 barrels per day.
Conclusions
As a result of temporary production problems at Alba and Ceiba, which are being
addressed satisfactorily, the forecast average production for the current
financial year is likely to be some 5% below the 25 000 barrels per day
previously forecast.
As stated in paragraph 5 above, the reduction in forecast represents a deferral,
rather than a loss of, production and therefore has little relevance in relation
to the value of the Company, its excellent prospects, or the ability to finance
its future development and exploration programs.
We are very encouraged by recent drilling results in Equatorial Guinea, which
confirms our view that further discoveries will be made during the course of our
exploration program in that country.
Directors` responsibility: The Energy Africa Directors, apart from Engen and/or
Petronas nominated directors, have considered all statements of fact and opinion
in this announcement. They accept, individually and collectively, responsibility
for the information contained in this announcement, and acknowledge that to the
best of their knowledge and belief (having taken all reasonable care to ensure
that such is the case) the information contained in this announcement is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
Forward looking statements: This update contains certain forward-looking
statements, including statements regarding Energy Africa`s plans, objectives and
expected performance. Such statements relate to events and depend on
circumstances that will occur in the future and are subject to risks,
uncertainties and assumptions. There are numerous factors which could cause
actual results and developments to differ materially from those expressed or
implied by such forward-looking statements; more information concerning these
risks can be obtained from Energy Africa. These forward-looking statements speak
only as to the date of this announcement.
4 November 2002
Date: 04/11/2002 05:11:58 PM Produced by the JSE SENS Department
