Bengal Energy Announces Fiscal 2022 First Quarter Results

Source: 8/10/2021, Location: Not categorized

Bengal Energy Ltd. announces its financial and operating results for the first quarter of fiscal 2022 ended June 30, 2021.

The following is an overview of the financial and operational results during the three month period ended June 30, 2021. All amounts are in Canadian funds, unless otherwise noted:

Financial Summary:
Sales Revenue - Crude oil sales revenue was $1.5 million in the first quarter of fiscal 2022, which is 41% higher than the $1.1 million recorded in Q1 fiscal 2021. The higher sales revenue is due to a 90% increase in realized crude oil prices only partially offset by a 26% decline in production compared to the previous quarter.

Funds from (used in) Operations1
- Bengal generated funds from operations of $0.1 million during Q1 fiscal 2022 compared to $0.2 million of funds used in Q1 fiscal 2021. Bengal used $0.8 million of cash from operations during Q1 fiscal 2022 compared to $0.3 million of cash generated from operations in Q1 fiscal 2021.
- Net Income - Bengal reported a net loss of $0.2 million for the current quarter compared to a net income of $0.4 million in Q1 fiscal 2021.

Operational Summary:
Production Volumes - The Company's share of total production in the current quarter was 15,981 bbls, which is a 26% decline from the 21,617 bbls produced in the first quarter of fiscal 2021. The current quarter production averaged 176 bbls/d compared to 238 bbls/d produced in the first quarter of fiscal 2021. Suspended production at three wells due to workover activities resulted in aloss of approximately 30 bbls/d during the quarter. These wells were brought online in July 2021.

Capital Expenditures - Bengal completed the construction of its water injection pilot project during the fourth quarter of fiscal 2021 and completed the necessary remediation activities to commence injection by the end of June 2021.

Development drilling in Cuisinier is expected to commence during calendar 2022 following the evaluation of the recent water injection pilot.


AUSTRALIA- Cooper Basin, Queensland
PL303 and PL 1028 Cuisinier (controlling permit ATP 752) (30.357% WI)
A pilot reservoir pressure maintenance scheme (water flood pilot) is now underway. This pilot well encountered mechanical disruptions during initial attempts to commence water injection, which have been addressed through additional water filtration at the injection site. The location of this pilot is in the southeast quadrant of the Cuisinier pool, with injection of water to take place at the Cuisinier 24 well. The broad nature of the Cuisinier structure combined with variable flank aquifer pressure support has resulted in pressure depletion within the central portion of the Cuisinier pool. The injection of produced formation water is anticipated to both increase production in up to four offsetting wells and reduce water handling charges. On establishing success of the pilot, the Joint Venture will begin a multi phase water injection scheme, targeted fracture stimulation and more commercially efficient development drilling.

Bengal will participate in the 3D seismic controlled Chef exploration drilling project, which has been proposed by the Joint Venture operator (Santos) and is expected to commence in calendar Q4 2021. This target is in the northeast portion of the block which is immediately adjacent to the Cook and Cocinero fields also operated by Santos. This will be the Company's first well drilled into the Jurassic age reservoirs of the Birkhead-Hutton formations which have proven to be prolific producers in the neighboring Cook and Cocinero fields.

ATP 934 Barrolka (100% WI)
ATP 934 is the Company's 100% owned natural gas exploration block. In order to mitigate both financial and development risk, Bengal conducted extensive state-of-the-art geophysical work that has not been widely applied in Australia which gives a higher degree of confidence in the block and high grading prospects.

Bengal received special amendment approved for ATP 934 in March 2021 which relinquished 50% of the existing ATP area and extended the term of the ATP by entering into an outcome based Later Work Program (LWP) for another 6 years. The LWP includes the drilling of up to 3 wells and 260 km2 of 3D seismic.

Bengal entered into an agreement with Santos in July of 2020 to farm-in on a portion of the ATP 934 block. This farm-out finances and de-risks the initial field exploration by the basin leading gas explorer, with whom Bengal has an existing and successful partnership at the Cuisinier field. Additionally, and of equal importance, the partnership offers extensive operating experience backed by Santos' recent exploration success in neighboring fields analogous to the joint venture's exploration targets.

Santos will carry the drilling costs of one well to earn a 60% operated interest in the ATP 934 southern farm-out block, which represents 57.8% of the total block post April 2020 relinquishment. This well is currently scheduled for drilling in calendar Q4 2021 and if successful, Bengal would pay its 40% share of any well tie in costs to nearby gathering infrastructure.

PL 1110 (previously 114) Wareena, PL 1109 (previously 157) Ghina, PL 188 Ramses, PL 411 Karnak, PPL 138 pipeline (100% WI)
The Company is currently finalizing a schedule of development plans for its recently acquired 100% working interest in four PLs near to ATP 934. While not currently producing, all PLs have existing wells indicating log pay, drill stem test ("DST") results and or gas production from the Permian formation. Bengal has identified four wells to be tested and re-completed for production in its first phase of development.

Specifically, this program is expected to include the following development activities; (a) recommissioning of a 26km pipeline to tie two previously producing Wareen a liquids rich gas wells into a nearby compression station accessing the Eastern Australia local and export market; (b) work-over of the Ramses well that demonstrated both a Permian gas discovery and oil-zone completion in a cased well, which recovered 588 bbls/d of light crude oil, based on a 105-minute drill stem test. Upon completion of a successful test, this well is expected to be immediately equipped for production and the oil sold into the regional market; (c) work-over of the Ghina well to evaluate the previous Permian liquids rich gas discovery and assess the economics of tie-in and field recovery; and finally (d) twin drilling of the existing Karnak well that showed a liquids rich gas pay zone in the Permian formation. Bengal expects that with the application of advanced underbalanced drilling techniques now common place in the Cooper Basin, a successful new well could be immediately tied into nearby gathering infrastructure.

The 100% ownership of these assets presents an appraisal and development opportunity that will be operated by the Company and is seen not only to be complementary to our proven producing, non-operated Cuisinier asset, but also as a key stepping stone for Bengal's natural gas platform with immediate market access to an existing pipeline upon which future exploration growth through ATP 934 can be undertaken.

ATP 732 Tookoonooka (100% WI)
In June 2019, the Company applied for an amendment to the Later Work Program (LWP) for the third term of ATP 732 permit. On October 22, 2019, the Company received approval from the Queensland regulatory authority for an amended LWP for the third, four-year term commencing April 1, 2019 to March 31, 2023. The approved LWP was revised to minimum activities of reprocessing seismic and inversion work with an estimated cost of $50K and geological and geophysical investigation at an estimated cost of $50K during the four-year term.

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