Edinburgh-based Melrose Resources has said that the opening of new fields in Bulgaria will boost the company’s production by 7,500 barrels of oil equivalent per day.
The first of two Bulgarian fields—Kavarna—is expected to begin production in September. Kavarna and Kaliakra are both being developed as single well subsea tiebacks to the Melrose-operated Galata field platform. Kaliakra will follow, beginning production in October.
Announcing the oil and gas group’s first half results, chairman Robert Adair said: “We anticipate increasing our production levels when our new Kavarna and Kaliakra gas field developments come on stream in Bulgaria and these fields will drive a period of very strong growth in the company's cash generation.
“At the same time we will re-engage our Nile Delta exploration programme, with an active seismic and drilling campaign, and we have confidence that this will yield further growth for the company."
Melrose, which has operations in Egypt, Bulgaria, Romania and Turkey, said it produced an average of 40,000 barrels of oil equivalent per day in the first half of this year, driven by its offshore Egyptian operations.
The company said the Bulgarian fields were now crucial to further increasing the company’s cash flow. It plans to maintain current production levels in Egypt, bring two Romanian fields on stream within two years and divest assets in North America.
Money raised from the US asset sale will go towards paying down debt, which currently stands at £294 million net.
For the six months to the end of June, pre-tax profits at Melrose leapt by a third to $26.2 million (approximately £16.8 million), on sales of $110 million (approx. £70.8 million).
Adair added: "The first half of 2010 has been a very active period for Melrose, during which the company delivered strong production performance, averaging over 40,000 boepd, completed the West Dikirnis Phase II and South Damas development projects in Egypt and achieved two exploration successes.
“We were also particularly pleased with the award of two new high quality exploration blocks in the Romanian 10th Licensing Round which, in conjunction with our planned interests in the Midia and Pelican concessions, will help establish the country as a core investment area for the company.”
