Energean Oil & Gas, Greece’s only hydrocarbon producer, will seek financing from the nation’s lenders to boost domestic production and expand internationally despite low crude prices, Chief Executive Officer Mathios Rigas said.
Energean has begun a $200 million investment plan for 2015-2018 aimed at raising production at the Prinos basin in the north Aegean Sea to 10,000 barrels a day by the end of 2017 from 3,000 today, Rigas said in an interview in Athens. The company is seeking support from local lenders, with a foreign bank taking the lead, he said.
“Energean is continuing to invest despite the ongoing problems in Greece and the low oil price operating environment,”
Rigas said. “Following their recapitalization, Greek lenders must start deploying capital to boost investments in the real economy.”
Brent, the international oil benchmark, is down about 11 percent this year to about $33.17 a barrel amid volatile global markets, brimming U.S. crude stockpiles and the prospect of increased Iranian exports. BP Plc, Europe’s third-largest oil company, reported a 91 percent decline in fourth-quarter earnings Monday after average crude oil prices dropped to the lowest in more than a decade.
"Investing in the exploration and production sector in a $30 oil environment is extremely challenging, but smart investors will take advantage of the opportunities and invest at the low point in the cycle," Rigas said. If the company does get local financing support, it wants 70 percent of the planned $100 million infrastructure expansion for the Epsilon oil field to be built in Greece, he said.
The first of 15 wells planned by Energean in Greece to develop 30 million barrels of proven and probable reserves in the Prinos, Epsilon and Prinos North oil fields started up at the end of December, he said. The drilling of a second well in Prinos has started while five more wells are scheduled for 2016. The company signed a six-year contract in January 2014 for BP to buy all current and future oil production from Prinos.
"Our view is that oil prices will stay low before rebounding to a healthier level sometime in 2017," Rigas said. "We aim to be at peak production in Prinos when the price of oil rebounds," he said.
Internationally, Energean has jointly bid with Rockhopper Exploration for three offshore blocks in Montenegro with a 60 percent share. Evaluation of the bid is expected early this year, Rigas said. The company began a $6 million investment exploration program in Egypt in March 2015 and aims to drill two wells by June.
"Israel is a key country for us and we’ve taken the conscious decision to commit to Israel even if that means we will be excluded from Iran as that country opens up," Rigas said. “We have a strong vehicle in our joint OceanEnergean deep- sea operator with Ocean Rig that can play a strong role in offshore Israel.”