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Pursuing potential: ERHC in Kenya

Steve Marshall

06 May 2013 14:23 GMT

US independent ERHC has inked a letter of intent to farm out part of a Kenya block to an unidentified multinational company.

The Houston-based company has been looking to farm down its 100% interest in Block 11a as it seeks to move forward with exploration after finalising a production sharing contract with the authorities last year.

ERHC said it would now start to hammer out definitive terms of a farm-out deal with the potential suitor, which it described as “an international oil and gas company” with “exploration and production interests spread across several continents”.

The block operator is currently evaluating bids from service companies to carry out an airborne full tensor gravity gradiometry survey of the 11,950 square-kilometre tract in north-west Kenya, near the South Sudan border with Lake Turkana to the east.

ERHC is pursuing the block’s rift margin play that is believed to be similar to recent major onshore discoveries made by the likes of Tullow Oil in East Africa.

Lundin posts steady quarter

Steady result: Lundin chief executive C Ashley Heppenstall


Josh Lewis

07 May 2013 06:44 GMT

Swedish company Lundin Petroleum posted steady profits in the first quarter of the year as lower expenses helped offset a dip in revenue.

The company posted a net result of $47 million for the first quarter of 2013, almost on par with the $47.2 million profit booked during the same quarter last year.

This came despite a more than 10% drop in revenue to $327.6 million, compared to the $364.6 million generated during the first quarter of 2012.

Offsetting the fall in revenue however was a nearly 62% fall in financial expenses, to $10.5 million, with the company suffering a $18.6 million impairment in the first quarter of last year.

Tax expenses were also down in the first quarter of 2013, totalling $103.7 million compared to $184.2 million a year earlier.

The fall in revenue came despite a slight rise in production, to 3.2 million barrels of oil equivalent, with increased gas production helping offset a fall in oil output.

Despite having higher production during the quarter, sales volumes actual fell more than 2% year-on-year, to just under 3.3 million boe.

Compounding the effect of lower sales volumes was a decrease in prices, with Lundin achieving an average of $101.58 per barrel of oil equivalent, compared to an average of $107.40 during the first quarter of last year.

Looking ahead, Lundin chief executive C Ashley Heppenstall said exploration would remain a key focus for the company with its 2013 exploration work programme including the drilling of 18 exploration wells with a budget of close to $500 million.

“We firmly believe that in the upstream oil and gas business the major value creation is through access to resources and the best way to do this is through successful exploration,” he said.

Lundin maintained its production guidance for output of between 33,000 barrels of oil equivalent per day and 38,000 boepd for 2013, with existing projects expected to double the company's production by the end of 2015.

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