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Cove Energy's portfolio expenditure funded into 2012

Published: 05:45 23 May 2011 EDT

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Cove Energy (LON:COV) released its final results for 2010 today, calling it a remarkable year that saw “world class exploration successes”, which transformed the assets it acquired in 2009.

Drilling at the Rovuma offshore area 1 in Mozambique resulted in three major gas discoveries, Windjammer, Barquentine and Lagosta. Contingent Gas Resources for the three discoveries have been estimated at 12 trillion cubic feet (tcf) of gas.

The combined gas resources are sufficient to support monetisation through Liquefied Natural Gas (LNG) development, said Cove.

The company has also expanded its portfolio with exploration positions in 7 deep and shallow water blocks in Kenya, 2 of them acquired in 2011.

Appraisal programme of Palma Gas Area of Rovuma Offshore has started, while an extensive coring programme at the Windjammer discovery has been completed and the rig has moved on to the Lagosta wellsite.

“Cove's participation in the Rovuma Offshore Area 1 gas discoveries has positioned the company in a leading LNG project,” said chairman of Cove Michael Blaha.

“The Rovuma Offshore Area 1 partnership has commenced an aggressive appraisal, development and commercialisation programme; which aims for investment sanction of the LNG project in Q3 - 2013.”

“We continue the exploration programme on the numerous high priority oil and gas targets which will be supported by the additional 4,000 sq km 3D seismic that will be integrated with the existing 3,000 sq km 3D seismic.”

“We aim to search for additional gas resources to support an ever expanding LNG project and we are hopeful of discovering an oil resources in the south following the oil encountered in Ironclad well  during 2010.”

“I and the Cove board are confident that the combined exploration and appraisal programmes, currently underway on our East Africa portfolio, will achieve continuing significant growth for shareholders in what promises to be an exciting future,” said Blaha.

On the corporate front, Cove raised £136 million in new equity, taking the cash balance to US$199.3 million. Cove said that current portfolio expenditure commitments are funded into 2012.

In the full year report, the company also noted that there has been a marked increase in interest from potential gas buyers, including some of the offshore partners, to acquire future LNG.

The gorup's losses reached US$5 million in 2010, compared to US$1.6 million in 2009.

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