Oryx Petroleum has cut operating expenses by 21% and is focused on slimmed down operations in Kurdistan for the near future.
This is despite not knowing when it may be paid for production between November and February in the region and having shut in the Banan field, on poor economics, it announced in its first quarter results.
Oryx’s majority owners have announced plans to transfer control of shares to Zeg Oil and Gas. This will see Oryx focusing exclusively on operations in Kurdistan and transferring control of its West African stake to its original parent company, Addax and Oryx Group (AOG).
Operating expenses were $9.11 per barrel, with an average realised sales price of $34.03 per barrel. The company reported a netback of $11.28 per barrel in the first quarter.
Oryx took an impairment of $238mn on its Hawler licence, with the company reporting a loss of $249.6mn for the period. It generated $6.8mn in cash in the first three months.
Working interest production was 9,300 barrels per day in the period, but this fell to 2,800 bpd in Aprild and 2,500 bpd in May.
Oryx has cut capital expenditure from $53mn this year to $11mn.
The company shut-in the Banan field on April 2. Realised prices for Banan’s output are lower, owing to oil quality discounts and higher costs.
“In response to the lower oil prices and deferred payments, we implemented steps to reduce expenditures including shutting-in uneconomic production from the Banan field, reducing personnel costs and limiting near term capital expenditure activity,” said Oryx’s CEO Vance Querio.
Oryx plans to install a pump on the Banan-4 well in the next few weeks. This will reduce costs and it will resume production in the third quarter.
Spending this year will go to the Banan pump and some infrastructure works at Hawler, plus some studies on its AGC Central licence, offshore Senegal and Guinea Bissau.
Plans for the Hawler licence in 2021 are contingent on receiving revenues owed for oil production in Kurdistan. The government owes Oryx $39mn for November to February. The company said it did not expect to receive this money in 2020 but when it may be paid is “undefined”.
This money is also required to settle debts currently owed to suppliers.
Zeg in, AOG out
Following the deal with AOG, Zeg will own 90% of the shares in Oryx.
Privately owned Zeg, based in Kurdistan, had owned 22% of Oryx. It has reached an agreement with AOG to buy shares and warrants, increasing its stake for around $16.4mn. This deal should close in the third quarter.
This will see Oryx focusing on Kurdistan exclusively. The company will transfer its stake in the AGC Central licence to AOG in order to settle a $79.8mn loan. Jean Claude Gandur, the godfather of AOG, will also resign from his position on Oryx’s board.
The parent AOG company has historically focused on operations in Africa. This deal creates a way ahead for operations in the MSGBC Basin, which has proved attractive in recent years. Discoveries such as Sangomar and Tortue have proved the existence of major fields.
It is unclear when work may go ahead in the AGC Central licence. Oryx had planned to drill an exploration well in 2021, assuming the licence was renewed or extended in 2020.
Oryx shot 1,921 square km of 3D seismic in 2017 on the AGC Central area. It has identified 23 prospects in six structures.