Nautical Petroleum, which specialises in the development of heavy-oil assets in the UK and mainland Europe, said yesterday it was on track to bring two North Sea fields to development.
The firm also said that, with cash of £21.4million, it had the resources to develop the fields, Mariner and Kraken, which lie south-east of Shetland. Nautical is also said to be well placed to take advantage of falling costs in the industry.
The company has a 35% interest in Kraken, where first oil is anticipated in 2012. Reserves are estimated at 37million barrels net.
It has a 26.67% stake in Mariner, which could come on stream at the end of 2014. Reserves are estimated at 67million barrels net.
Chief executive Steve Jenkins said: “Nautical is not immune to the global banking crisis and resultant recession, which have been major contributors to the falling oil price, weak equity markets and choking off credit availability.
“However, among our peers Nautical is well capitalised, having raised funds in 2007, preserved our cash through farm-outs and minimised our obligations.”
Mr Jenkins said Nautical was well placed to take advantage of falling costs, which have followed the oil price downwards.
He added: “Semisubmersible rig rates have already reduced from over $400,000 (£274,000) to less than $250,000 (£171,000) per day and have further to go when current contracts expire. Similarly, development costs are declining as steel prices fall and construction yards have gaps in their order book.
“Nautical will seek to ‘lock in’ these lower costs in the development of both Mariner and Kraken, improving the margin when oil prices rise, in response to increased demand, as the world emerges from recession.
“Furthermore, the demand for UK continental shelf heavy oil is relatively strong, narrowing or even eradicating the discount to Brent. Mariner and Kraken can meet this shortfall in supply and continue to be robust economic developments.”
Mr Jenkins said Nautical planned to drill up to four wells this year and a further three in 2010.
He added: “The company will continue to mitigate risk and share the upside with industry partners through farm-outs.
“Continuing strong cash management is a major objective to enable your company to increase production and provide value to shareholders. We will remain flexible on equity interests in development assets, depending on the availability of development funding.
“The directors of Nautical feel confident that the markets will recognise the value of our reserves, resources and exploration portfolio, resulting in the rise in the market capitalisation of Nautical.”
Nautical’s results for the second half of 2008 were released yesterday and they showed pre-tax losses of £1.83million compared with a £4.45million deficit for the second half of 2007.
Shares in the Aim-listed company finished the day up nearly 3% at 27.25p.
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