Paladin Resources PLC
12 May 2004
PALADIN RESOURCES plc
("Paladin", "the Company" or "the Group")
The following statement was made by Paladin's Chairman, Malcolm Gourlay, at the
Company's Annual General Meeting held today:
"I am pleased to report that 2003 was another excellent year for your Company.
The combination of record levels of Group production, 44 per cent higher than in
2002, and continuing high commodity prices resulted in another set of very
strong operating and financial results and a robust year-end financial position.
2004 will see the Company making further good progress: production from the
existing portfolio is set to rise, we have started an aggressive capital
investment programme on our operated UK fields and, consistent with our stated
strategy, our exploration programme is growing in proportion to our size.
In May 2003, the Group took on its first major operatorship of producing fields
when it acquired BP's and Amerada's interests in the Montrose, Arbroath and
Arkwright Fields in the UK sector of the North Sea. Integration of this package
into the Company's portfolio has gone extremely well. This could not have
happened without considerable efforts on the part of our staff in Aberdeen and
our alliance partners, Petrofac and Helix RDS. All of those involved deserve
much credit. We have now embarked on a significant capital investment programme,
which will last several years, to realise the full potential of these assets for
the benefit of our shareholders.
This programme has already borne fruit; as announced earlier this week, our
first operated well in the North Sea has proven a significant extension of the
Montrose Field to the northwest. The rig which drilled the well has now been
moved to drill the Brechin exploration prospect 3.5 km to the east of the
Arkwright Field. We also announced that we have entered into a Letter of Intent
with Prosafe to restore drilling capability on the Montrose platform by
installing a modular hydraulic drilling unit this summer. This will allow us to
start a multi-well infill and stepout drilling programme by year-end, some six
months earlier than anticipated when Paladin assumed operatorship in May 2003.
A heavy duty jackup drilling rig has also started operations to drill two new
wells on the Arbroath Field. The second of these wells will be deepened to
appraise the Carnoustie oil discovery in Zechstein carbonates and then completed
in such a way as to allow production from both reservoirs. We also plan to
workover two existing wells with a view to further boosting production from the
Engineering studies on a potential development of the Wood oil and gas discovery
to the east of the Montrose Field are now well advanced, with the aim of
sanctioning a development project by early 2005 and achieving first production
by 2007. This development would have the additional benefit of providing an
export route for associated gas from the Arbroath, Montrose and Arkwright
Whilst the MonArb area is the primary focus of our investment programme, good
progress has also been made elsewhere in the portfolio. In the UK, all five of
the Goldeneye production wells have now been completed and the development is on
track for first production in the third quarter; on both Blane and Enoch we are
progressing development plans with a view to having projects sanctioned in early
In Norway, ongoing infill drilling and well intervention programmes on the
Veslefrikk, Brage and Njord Fields are progressing as anticipated and, in
Denmark, the Stine-1 development is due on stream in the very near future.
Year-to-date, net production has averaged approximately 44,000 boepd. Subject to
achievement of this year's capital investment programme, and in particular to
the timing of first oil from planned infill wells and of first gas from
Goldeneye, we anticipate that production for the year will be some 10 per cent
higher than the 42,006 boepd achieved in 2003.
With regard to exploration, this year should see the Company participate in up
to eight exploration wells, seven of which will be evaluating prospects adjacent
to existing Paladin-owned infrastructure. The eighth, a well to test the
higher-risk Beluga prospect in Norway, was drilled recently and was
unsuccessful. Wells to evaluate the lower-risk Brechin and Skate prospects in
the UK and the Dalia prospect in Tunisia are scheduled to spud shortly.
In 2003 the Company set challenging new targets for continued growth, namely to
increase production and reserves to 100,000 boepd and 250 MMboe respectively by
2008, through a combination of organic growth and further acquisitions. We
anticipate that up to 50 per cent of that growth should come from the existing
portfolio as a result of incremental investment projects such as those now
underway on the Montrose and Arbroath Fields. On that basis, I remain confident
that these targets can be met without compromising the discipline shown to date
both in the evaluation and pricing of acquisition opportunities and in the
ranking of capital investment projects in the existing asset base.
In summary, Paladin and its shareholders have another excellent year in prospect
- high commodity prices and increased production augur well for financial
performance, and we have attractive development and exploration programmes
underway which will stand the Company in good stead for the future."
12 May 2004
Paladin Resources plc Tel: 020 7024 4500
Roy A. Franklin, Chief Executive
Cuth McDowell, Finance Director
College Hill Tel: 020 7457 2020
James Henderson/Nick Elwes
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