Speaking at the company’s annual general meeting yesterday, chairman John Armstrong said he expects Drillsearch’s production volumes to have doubled to around 300,000 barrels per annum by end-2007.
Armstrong said if the oil price maintains its level of $US60 per barrel, the group’s revenue in 2007 should increase to around $24 million with net operating revenue of around $15 million.
He said the Sydney-based company’s future development is proceeding across a “broad front”.
At the AGM, Armstrong announced a “third round” 22-well delineation and development drilling campaign on the Endeavour field in the northeast corner of the Tintaburra Block.
He said Endeavour-21, the first well in this round, had been cased as a new oil producer.
“This field has been very significantly extended by a number of step-out wells and development drilling will continue until at least March 2007,” Armstrong said.
The rest of the Cooper Oil Project in the Tintaburra Block will continue through 2007. Drillsearch expects to participate in around 80 wells in the block, including the 22 Endeavour wells.
Armstrong also announced that the Turtle/Barnett retention leases have been extended and Drillsearch has committed to drill two wells in the Bonaparte Gulf in late 2007 with the new jack-up rig, Wilcraft.
One well will test the major 230 million barrel (MMbbl) potential Marina Prospect within WA 318P. A second well will further appraise the Turtle/Barnett leases where there are indications of 90MMbbl of oil-in-place and potential recoverable oil of 15-20MMbbl.
The company will also participate in around six new wells including a new well at Kakwa, central Alberta, in the last few days.
But Armstrong admitted that while DrillSearch’s development program will add to its revenue, profitability and reserve position, it would place “significant demands” on its cash.
“We expect the southwest Queensland projects, obviously dominated by the Cooper Oil project, to require capital expenditure during calendar 2007 of $15.1 million,” he said.
“This will be funded by our loan facility and net operating revenue.”
Armstrong also announced that after some 17 years, yesterday was his last day as a director and chairman of Drillsearch.
“I am happy with the progress that the company has made, although not without a few ups and downs,” he said.
“We all must remember that many of Australia’s great energy companies developed from companies like Drillsearch Energy.”
Armstrong will be replaced by deputy chairman Peter Simpson.