Drillsearch Energy (DLS) yesterday lifted its guidance for annual production by around 30% and saw its share price jump by more than 11% at one stage during trading.
Drillsearch shares finished up 6.3% at $1.52.
Drillsearch is the second oil producer to lift its guidance. Earlier this week, the considerably larger Oil Search (OSH) surprised with a statement more positive on production levels than the market had been expecting.
Drillsearch told the ASX yesterday that it had increased its 2014 production guidance by around a million barrels.
That would see annual output around the 3 million to 3.3 million barrels for the year, a new high and around three times 2012-13’s level.
The new figures compare to previous guidance of 2.3 million to 2.5 million barrels.
Drillsearch’s increased production is being driven by the better-than-anticipated performance of its operations in Queensland’s Cooper Basin, in particular the Bauer field.
"This record performance is being driven by the continuing better-than-anticipated performance of the PEL 91 permit in the Western Flank Oil Fairway of the Cooper Basin, and in particular the Bauer field, as well as by an increased share of production from the Tintaburra block in the Eastern Margin following the transaction announced in mid-2013 with Santos Limited," Drillsearch said in yesterday’s statement.
"The significant additional revenue being generated will be used to strengthen the company’s balance sheet, with funds also reinvested in an active exploration and development program across the portfolio, with around 20 wells to be drilled in the second half of FY2014 under the current work schedule.
"This program includes numerous high return prospects and discoveries that are expected to help maintain current production within our oil business, as well as support the ongoing commercialisation of existing discoveries within our wet gas business, and high impact exploration of our unconventional acreage, where an initial drilling campaign is underway," the company told the ASX.
DLS 1Y – Drillsearch joins Oil Search in 2014 upgrades
In a statement released yesterday Drillsearch managing director Brad Lingo described the Bauer field as a prolific producer.
"The revenue generated by our oil business continues to strengthen our cash position, as well as to underpin our broader exploration and development programs, as we pursue our strategy of increasing reserves, production and cash flow," he said.
On Tuesday Oil Search lifted 2014 guidance from a range of 10 to 13 million barrels of oil equivalent (mmboe) to between 12 and 15 mmboe.
Oil Search produced 6.74 mmboe last year, it said, slightly above its guidance range of between 6.2 and 6.7 mmboe.
Revenue in 2013 was $US766.3 million ($A877.3 million), up 6% from 2012, as global oil prices strengthened.
"Oil Search closed the 2013 financial year on a very positive note, with strong production in the second half resulting in full year production above guidance," Oil Search managing director Peter Botten said.
As of December 31, the PNG LNG project was more than 90% (which is led by ExxonMobil) complete, on budget, and on track for first LNG sales in the second half of this year.
