Cabot Energy (AIM: CAB), the AIM quoted oil and gas company focused on production led growth balanced with high impact exploration and appraisal opportunities, provides an update on the Company’s operations for the second quarter ended 30 June 2018.
Group highlights
- New executive management team appointed on 18 June 2018 with significant prior experience of working together in operational and senior executive roles in the oil and gas industry
- Management has initiated a comprehensive strategic, operational and financial review whilst implementing essential systems to assess the overall position of Cabot Energy and to deliver the best growth strategy for the benefit of all shareholders (the “Operational Review”)
- In advanced discussions to appoint replacement experienced independent non-executive Directors
- Mr Hugo d’Apice appointed as (a non-Board) Business Development Director to increase the Italian focus and strengthen government relationships
- Consolidated group cash balance as at 30 June 2018 of US$6.2 million; only critical operating and capital expenditures are planned for the remainder of 2018 whilst the Company’s working capital position is robustly examined as a work stream within the Operational Review
Group production & activity
- Production for the second quarter of 2018 averaged 781 barrels of oil per day (“bopd”)
- Production for the year to date ending 30 June 2018 averaged 761 bopd
- Canadian activity for the second half of 2018 will be focussed on the following areas:
o High-grading sufficient high value sub-surface well targets to enable a cost-efficient 2019 drilling programme
o Targeting cost savings of new wells by 30% through simpler designs, lower cost drilling rigs and continuous programme supply chain efficiencies
o Implementation of strengthened capital project reporting and control processes - Italian activity for the second half of 2018 will be focussed on the following areas:
o Completion of the Rockhopper transaction, which includes the Civita gas production asset, following confirmation this month from the Italian authorities that all approval submissions had been duly received
o Farm-out process for the Adriatic and Sicily Channel prospects (over 1 Bn bbls Prospective Resources), following Environmental Impact Assessment (“EIA”) approvals being received for 3-D seismic and drilling, respectively - Depending on the scope of the 2019 Canada capital programme and outcome of the Operational Review, the Company will evaluate its ongoing capital requirements in Q4 2018
Operational Review
Following the appointment of the new executive management team, Scott Aitken, the new Chief Executive Officer, is leading a comprehensive strategic, operational and financial review of the business to generate a deeper and more robust understanding of the business opportunities that are deliverable by Cabot Energy. The objective of the Operational Review is to fully understand the poor performance of the business in order to substantially improve future capital investment decisions and outcomes. Critically, the data collection, analysis, reporting and capital expenditure control functions will be overhauled, to provide the board and shareholders with greater confidence in the forward-looking targets. As part of this, there will be a full review of the balance sheet ahead of the interim results.
Following the completion of the Operational Review, management expects to achieve by the end of Q3:
- A clear and deliverable strategy for its key target regions, Canada and Italy
- Efficient allocation of resources, ensuring tight cost controls, and a clear assessment of capital requirements to fulfil the Company’s growth plans
Scott Aitken, Chief Executive Officer, said: “Since my appointment on 18 June, I have visited and worked with our teams and assets in the UK, Italy and Canada. Importantly, in these meetings I have set the tone across the Company and informed everyone that the critical first task is to upgrade the financial planning, reporting and controls procedures to the standard expected by shareholders of a publicly quoted company. Whilst we remain excited by the potential of the Canadian reservoirs, the results of the winter drilling programme were short of our expectations. The new executive management team has therefore implemented more robust work streams in subsurface and operational planning, which we are confident will lead to improved performance of the 2019 work programme activities.”
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