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Maha Announces Partial Restoration to 2020 Investment Plan

Source: 10/15/2020, Location: South America

Maha Energy AB announce partial restoration to the revised 2020 investment capital plan and comments on 2020 production guidance

- 2020 annual average production rate is expected to land between 3,700 – 4,000 BOEPD
- 2020 Investment Capital Plan is increased by US$ 8.7 m
- Year-end expected daily production rate of 5,200 – 5,700 BOEPD

2020 Annual Production Guidance
Due to effects from Covid-19, the Company currently expects the 2020 annual average production volumes to land at about 5% below the lower end of the previously communicated guidance of 4,000 – 5,000 BOEPD. Effects from Covid-19 still impact ‘on the ground’ logistics and personnel movements in Brazil, which in turn has a direct impact on production uptime.

“2020 has been a tough year so far and our production capacity has been affected by the Covid-19 pandemic. Although Covid-19 continues to impact all aspects of our operations, I am pleased to announce that we are increasing our investment pace to further grow production in Brazil into 2021 and beyond. With this increase in investment we expect to end 2020 with a daily production rate between 5,200 – 5,700 BOEPD.” said Jonas Lindvall, CEO of Maha Energy AB.

2020 Investment Capital Plan
In light of the higher than budgeted oil price, and the subsequent stabilization of the oil market, the Company has decided to partially restore the 2020 revised Investment Capital Plan (as communicated on 22 May, 2020) as follows:
- Drill and complete the Tie-2 well (TS-1) well during Q4.
- Drill and complete the Tie-3 well (TS-2) well during Q4.
- Resume testing operations on Maha-1 (7TTG-3D-SES) at Tartaruga in Q4.
- Undertake a recompletion of GTE-4 to restore Agua Grande (AG) zone production.
- Complete the previously announced work program in the Illinois Basin, of 1 production well plus complete a drilled-but-uncompleted well.
- Commence various facility support projects at Tie and Tartaruga.

With the completion of the revised work program described above; the Company expects to end 2020 with a daily production rate in the range of 5,200 – 5,700 BOEPD.

The additional capital projects now included in 2020 is estimated at US$ 8.7 m bringing the total 2020 capital spend to US$ 24.2 million for the year. Funding of the Capital Plan is through Company cash on hand and operating cash flow.

Investment Capital Plan Details

Tie-2 & Tie-3 – Tie Field
Tie-2 is expected to be completed by 15 November and production from this well is expected by 1 December. Tie-3 (water injector) will be drilled immediately after the Tie-2 well is completed and will provide important reservoir pressure support.

GTE-4 – Tie Field
The GTE-4 well was converted to a dual pumping well during the second quarter this year. A subsequent well test proved inflow restrictions in the AG zone which was ultimately resolved, but unfortunately during the pump installation, a blanking sleeve became stuck in the well. Depending on rig availability and associated manpower, a workover is now scheduled during November to recomplete and restore the GTE-4 well to a comingled producer.

Maha-1 (7TTG-3D-SES) – Tartaruga Field
The Maha-1 well testing operations were suspended in March due to Covid-19 impedements. The Company will resume testing operations later this month. Once tests are completed, which are expected at the end of November, the Company will communicate well test results and place the well on production.

Illinois Basin
The Company has contractual obligations to drill one production well and to complete an already drilled-but-uncompleted well before the end of the year.

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