UPDATE / Carmanah's Operations Continue in Indonesia
CALGARY, ALBERTA--Carmanah Resources Ltd. ("CKM" - TSE) announced
today its offshore operations in Indonesia are continuing and are
presently unaffected by current political and social unrest in the
country. As a precautionary measure, last week the families of
expatriate employees were evacuated to Singapore and early this
week most of its remaining expatriate staff were either moved to
offshore facilities or temporarily relocated in Singapore.
Developments will be monitored and appropriate actions will be
taken with a view to the continuing safety of the Company's staff
and assets.
Carmanah's principal assets and activities are at the Camar Field,
located sixty miles offshore Java. A major development drilling
and facilities installation program is underway at Camar. All
necessary hardware and supplies, including fuel, food and water,
are in hand and shortages are not presently anticipated. The
Company's office in Jakarta remains secure and is under
appropriate protection.
In the immediate future, Carmanah will continue to sell its crude
oil production to Pertamina, the Indonesian state oil company.
While payment for an earlier lifting has been delayed, Carmanah
anticipates this will be remedied shortly. Should this not occur,
the Company has the ability to secure an export permit enabling it
to sell its production in international markets.
In the past week, Carmanah's common shares have been under
pressure as a result of recent events in Indonesia, including the
political, economic and social unrest and disappointing results
from the first exploratory well drilled on its Northeast Natuna
Production Sharing Contract ("Natuna PSC"). Additionally, crude
oil price weakness has persisted, raising concern among investors.
The management and Board of Directors of Carmanah wish to reassure
its shareholders that, despite recent share price weakness, the
Company remains in a strong and viable financial condition with a
healthy level of cash and working capital, no net debt, an
established available $40 million credit facility with CIBC and a
significant proven crude oil and natural gas reserve base
estimated as at January 1, 1998 by McDaniel & Associates
Consultants Ltd. of Calgary to be 32.2 million BOE's (proven and
probable) with a 15 percent present worth exceeding $200 million.
Carmanah's 1998 capital program totaling $64 million was developed
to realize the productive capacity of its reserve base.
Additionally, the Company embarked on its initial exploratory well
on the Natuna PSC, financed entirely by an affiliate of Exxon
Corporation pursuant to a Farmout Agreement negotiated in 1997.
The Camar Program entailed the drilling, completion and tie-back
of a minimum of four wells located within established field
boundaries. Also, certain production facilities were to be
installed to connect wells to current facilities. The first well,
CN-3, was drilled from WPP, the northern platform in the Camar
Field. This well was originally spudded in 1997 and suspended at
an intermediate casing point. Following the arrival of the Pride
Pennsylvania jackup rig in April, 1998 this well was re-entered
and drilled to basement. Hole conditions prevented running
open-hole logs to total depth. Based on drilling results,
however, five-inch casing has been run and the well will be
completed. Once the well is placed on production, likely during
the next week, stabilized flow rates will be determined.
Later this week, the Pride Pennsylvania will be moved to Camar-6,
where a monopod is presently being installed. Camar-6, which was
drilled in 1997 and tested at cumulative rates of 3,700 BOPD of
light-gravity crude with no water, will then be completed and tied
back. Oil will be produced through a new 8-inch flowline to
existing production facilities. Immediately thereafter, Carmanah
plans to drill MPA-1, a development well, from the monopod. This
well should be placed onstream in early-July, 1998. Subsequently,
the fourth budgeted well, Camar-8, a vertical test, will be
drilled. This well, if successful, could lead to two additional
unbudgeted locations that can be drilled later this year. With
all wells in this region onstream by year-end, Carmanah forecasts
Camar production could exceed 10,000 BOPD by early-1999. Future
drilling at Camar and on the Bawean PSC within which the field is
located will be determined when 1999 budgets are formulated later
this year.
Carmanah's second major development project in Indonesia is at
Langsa in the Strait of Malacca, offshore northern Sumatra. As
operator and with an 80 percent working interest, Carmanah is
scheduling the commencement of production from 3 wells which have
been drilled and tested. An initial production rate of 15,000
BOPD of light-gravity crude is anticipated. Shortly, the Company
will review bids submitted in response to a tender for the
offshore production and storage facilities. Thereafter, a
drillship or semi-submersible rig will be contracted to complete
the wells and install subsea wellheads in preparation for the
arrival of the storage vessel in early-1999.
Carmanah's third major development program is underway at Onado,
onshore Venezuela. Carmanah is a 23.4 percent participant in a
scheduled program to reactivate, rework and recomplete numerous
existing wells. Also, two new wells in the Onado Field are
scheduled for 1998 and a rig contract has been awarded. Initial
reactivations have resulted in daily production in the 1,000 to
1,700 BOPD level, which exceeded expectations. The operator is
targeting an exit rate for the field of around 9,000 BOPD.
At Natuna, the Durian Besar-1 well was abandoned after failing to
encounter hydrocarbons. While disappointing, the well evaluated
only one prospect out of several which have been identified and a
small portion of this large 736,000-acre PSC. As previously
mentioned, Carmanah incurred no financial cost and approximately
US$15 million remains to be invested in the block by Exxon to earn
its interest under a Farmout Agreement. Further studies and
interpretation of new seismic acquired in February, 1998 over
numerous other prospects and leads will be required before a
second location is selected. The next well will be drilled prior
to May, 1999.
In summary, Carmanah is continuing with its scheduled program.
The Company is targeting a budgeted Q4 exit rate of 8,000 net BOPD
in 1998, after deducting Pertamina's share of production and
Venezuelan royalties. Average production for the year is forecast
at around 4,000 BOPD with the majority of anticipated 1998 cash
flow generated in the second half of the year. In 1999, with the
impact of Langsa and continued expansion of Camar and Venezuelan
production, an average daily production rate of 15,000 net BOPD
and an exit rate approaching 17,000 BOPD is achievable. This
level of production would result in significantly higher revenue,
cash flow and earnings than in any prior year in the Company's
brief history, which should contribute to the restoration of
investor enthusiasm for Carmanah's future.
Carmanah is a Calgary-based international oil and gas exploration
and production company. Its strategy is to secure low-cost,
underdeveloped oil and gas reserves in selected jurisdictions and
then to apply capital to realize the productive potential of these
assets. Exploration programs will be financed by farmout or other
forms of third-party capital to reduce financial risk. There are
40.5 million common shares outstanding.
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FOR FURTHER INFORMATION PLEASE CONTACT:
Carmanah Resources Ltd.
Mr. R. A. Gusella
Chairman & Chief Executive Officer
(403) 266-4975
(403) 266-5042 (FAX)
carmanah@cadvision.com
or
Carmanah Resources Ltd.
Mr. A. F. Badwi
President & Chief Operating Officer
(403) 266-4975
(403) 266-5042 (FAX)
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