Decline in Enwell Energy production in Q4 2022 vs Q4 2021 slows to 25.7%

KYIV. Jan 13 (Interfax-Ukraine) – The British oil and gas company Enwell Energy plc, part of the Smart Energy group of Vadim Novinsky, in the fourth quarter of 2022 reduced total average daily production and production of hydrocarbons by 25.7% compared to the same period in 2021, to 2,944 barrels of oil equivalent per day (boepd).

"The ongoing war in Ukraine has caused disruption to production operations at the MEX-GOL and SV fields, where certain remedial and maintenance work was delayed and/or suspended, which meant that production volumes were materially lower when compared with Q4 2021, with the exception of LPG recoveries, which improved significantly following the completion of upgrade works to the gas processing facilities at the MEX-GOL and SV fields in mid-2022," the company said in a stock report on Thursday.

It added that in early October 2022, production at the Vasyschevskoye (VAS) field was also restored, which improved the production results of the reporting quarter.

The rate of decline in the fourth quarter – 25.7% was significantly lower than in the third – 49.5%, when production amounted to 2,588 boepd.

According to the production results published by Enwell Energy on the stock exchange, production at VAS in the fourth quarter of last year amounted to 303 boepd versus 463 boepd in the fourth quarter of 2021, while at the Mekhediviska-Golotvshinska (MEX-GOL) and Svyrydivske (SV) fields respectively 2,641 boepd versus 3,501 boepd.

Enwell Energy average daily natural gas production in October-December last year amounted to 12.4 million cubic feet (less by 29.9%), condensate – 440 barrels per day (bbl/d) (less by 28.1%), and liquefied natural gas ( LPG) – 441 bbl/d (up by 49.5%).

Overall, for 2022, combined hydrocarbon and LPG production declined by approximately 37.5% to 2,956 boepd, including gas by 40.5%, to 12.8 million cubic feet and condensate by 34.5%, to 463 bbl/d, while LPG rose 3.2% to 318 bbl/d.

"This was partially due to the Russian invasion of Ukraine in February 2022, which resulted in the shut-in of the MEX-GOL and SV fields for the period from 24 February 2022 – 11 March 2022, and the VAS field for the period from 24 February 2022 – 1 October 2022. In addition, issues with the MEX109 and SV-2 wells at the MEX-GOL and SV fields caused by water ingress into those wells, which commenced in Q4 2021, required those wells to be shut-in for remedial work," the company said.

According to Enwell Energy, production operations are continuing at the MEX-GOL and SV fields, and, currently, the production rate is approximately 2,550 boepd. Some other field operations have resumed, including workover operations on the SV-2 well and maintenance of field infrastructure, but other works have been deferred or suspended until there is an improvement in the operating environment in Ukraine.

It also reported that in December 2022, the GOL-107 well was spudded. This well has a target depth of 5,190 metres and is a development well. Drilling operations are scheduled to be completed by the end of Q3 2023, and, subject to successful testing, production hook-up is scheduled during Q4 2023.

Enwell Energy added that at the Svystunivsko-Chervonolutskyi (SC) field, the SC-4 well was successfully completed and tested. This well is the Company’s first well on the SC license area and is primarily an appraisal well and drilled at 5,585 m. "The interval at a depth of 5416 – 5419 m, which was the primary target for the well, demonstrated strong productivity and stabilised flows," the message says.

At December 31 2022, the Company’s cash resources were approximately $88.7 million, comprised of $6.9 million equivalent in Ukrainian Hryvnia and the balance of $81.8 million equivalent in a combination of US Dollars, Pounds Sterling and Euros.

"Although the situation in Ukraine continues to be extremely challenging, we are pleased that, with the resumption of production operations at the VAS field, we now have operational activity at both of our production assets. The adverse Court ruling regarding the SC license is very disappointing but we are progressing appeal proceedings to challenge that ruling," Enwell Energy CEO Serhiy Hlazunov said.