Chairman's Statement
Enterprise Oil PLC
18 May 2000
ANNUAL GENERAL MEETING
The following is the text of the statement given by Sir Graham Hearne,
Chairman of Enterprise Oil, at today's Annual General Meeting, held at the
Glaziers Hall, London.
For further information please contact:
Patrick d'Ancona, Head of Public Relations 020 7925 4160
Peter Reilly, Head of Investor Relations 020 7925 4476
Chairman's Remarks at
The Annual General Meeting
18 May 2000
I am delighted to be able to welcome you all to this, Enterprise Oil's
seventeenth Annual General Meeting. It is a pleasure to see so many familiar
faces again, and I can't emphasise enough how greatly the Board values your
continuing loyalty and interest in the company.
I won't dwell long on last year's performance as it has been fully covered
both in my preliminary statement and in the Annual Report. However, it is
satisfying to be able to report that 1999 was a year of significant recovery
after the difficulties the group faced in 1998. Of course, the oil price
helped a great deal. Enterprise recorded its highest ever post-tax profit,
replaced reserves by 212 per cent and made progress in all its core areas of
business, in addition to establishing a new business area of great potential
in Brazil.
The group's output has continued to rise since year end, allowing us to
extract increasing value from our production portfolio, with output in the
first three months of 2000 already averaging 266,300 barrels of oil equivalent
per day, with an average realised oil price of $27.45. It is indeed fortunate
that we are at a historical production high during a period of strong oil
prices. We are using this greatly enhanced cash flow and earnings to pay down
debt and strengthen the balance sheet.
But we all know how quickly things can change in this business and we have put
the foundations in place to build a company that can be competitive even at
the lowest end of the likely oil price spectrum.
Our strategy is based on skills, quality assets and building a balanced
portfolio of interests. We aim to exploit our core competencies, allowing us
to build where we have an existing presence, regional experience and a genuine
competitive edge, whilst remaining alive to opportunities for new business as
different parts of the world open up to investment. We only seek to do
business in places where we can have an influence by employing our skills to
best effect, be it as operator, or as a constructive and active partner.
Current drilling activities include two wells West of the Shetlands, a well in
Norway, and the appraisal wells on the Llano oil find in the US Gulf of Mexico
and our Corrib gas field in Ireland. Further wells are planned in the UK,
Ireland, Norway, the US Gulf of Mexico, Brazil and Greece.
In Norway, the Valhall co-venturers have agreed to press ahead with their
plans for water injection on the field, which will see first injection by
2003. We have obtained valuable new acreage through the recent licensing
round, and we have also enjoyed exploration success with two discoveries. One
of these, the Svale oil find, has opened up a potential new exploration play
in the Norne region.
In Italy work is progressing on the development of our Val d'Agri fields in
the country's Southern Apennines. The expansion of the oil centre is under
way, with the first phase of increased production anticipated next year.
In our new Brazilian venture, the group recently finalised details of its
assumption of operatorship of the Bijupira-Salema fields, while in Ireland we
are conducting further appraisal of the Corrib gas field and drilling two
wells as potential producers. Detailed engineering design work is now being
undertaken, and a target has been set for project sanction towards the end of
the year.
Our production continues to grow, and this year has already seen two new
fields on stream. Both the Bittern field and our third operated field Cook,
which came on stream on budget and ten weeks ahead of schedule, produced first
oil in April.
The increasing importance to the group of development skills and project
management has led to one addition to the Board at the start of this year,
with the appointment of Ian Craig as the group's Technical Director. Ian has
specific responsibility for development projects and the performance of the
group's production portfolio.
He joins an executive team that I am convinced has the right blend of skills
and understanding to grow your company significantly in the long term. I would
like to take this opportunity to thank the Enterprise management and staff for
their hard work and enthusiasm. I have absolutely no doubt that they are the
right people to fulfil the group's aim of providing you, our shareholders,
with an attractive mix of current returns and growth.