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Tuesday, April 16, 2019
MX Oil revealed that production from Aje field has remained broadly consistent at 3,150 bpd since its last update in early-February. This led to the operating partners successfully concluding the 10th lifting from the field in March 2019.
Current operating costs remain as forecast and there is no planned or required capital expenditure anticipated in the short term. As a result, it is expected that the project will only require two further liftings and sales of the oil to repay the liabilities at project level and to start generating free cash flow for the investors.
MX’s assumption is based on normal operating conditions, the current price of oil and continued production from Aje remaining stable.
The company also said that the technical work being carried out by RPS is now mostly complete with some further scenario-based evaluation still to take place. This study is expected to complete in Q2 2019.
Production modeling of the two Aje wells by both AGR Tracs and the RPS Group demonstrates that both wells are exceeding expectations as the rate of decline in production is less than anticipated. The result of this work is that the 2P reserves of the producing wells are expected to increase and AGR Tracs are working on an update to the CPR.
Based on revenue assumptions MX anticipates that the Aje investment should start producing positive cash flow from Q1 2020 and move the company into profitability.
Stefan Oliver, MX Oil’s CEO commented: “I am pleased to be able to update the market with regards to the most recent cargo sale and Aje’s operations more generally. Aje has now completed 10 cargo sales, the cash flow from which has enabled the partners to repay material amounts of debt held at partnership level. Assuming normal operating conditions, current production rates and oil price, we estimate that two further liftings of similar size and value to our last, should result in project level debt being repaid or significantly reduced Once this debt is repaid, assuming the factors above, our investment should generate free cash flow from each cargo sale which are estimated to cover all the company’s operating overheads at current levels, allowing the company to move to profitability. It has been a difficult journey and I would like to thank shareholders for their continued patience. I am optimistic that we will shortly be in a position to provide regular updates from this point onwards.”
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