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CAMAC Energy Inc. (CAK)
Q3 2012 Earnings Call
November 9, 2012 11:00 AM ET
Jason Lee – Corporate Finance Manager
Kase Lukman Lawal – Chairman, Chief Executive Officer
Michael Robbins – Wells Fargo
Gary Singer – Private Investor
Anthony Elumelu (ph) – Independent Investor
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At this time, for opening remarks and introductions I would like to turn the call over to Jason Lee, Corporate Finance Manager. Please go ahead, sir.
Thank you very much. Before we get started, I want to highlight that this conference call includes forward-looking statements and estimates of future performance. There are numerous risks associated with forward-looking statements and forward estimates, and there can be no assurance that the statements and estimates will be realized.
A listing of many of the risk factors of future consider as part of material discussed in this conference call has been outlined in our earnings release and in CAMAC Energy’s periodic filings with a Securities and Exchange Commission. And we incorporate these materials by reference for all discussions in this call.
All statements in this conference call relating to oil and gas resources, prospects and potential are not references to proven reserves as defined in their applicable SEC regulation and are not permitted in CAMAC Energy filings with the SEC.
At this time for opening remarks and introductions, I would like to turn the call over to our Chairman and CEO, Dr. Kase Lawal.
Kase Lukman Lawal
Thank you, Jason. Good morning everyone, thank you for joining us today for CAMAC Energy’s third quarter 2012 earnings conference call.
On the call today, I would provide an update on the company’s recent development and near term outlook. I would then turn the call over to our Interim Chief Financial Officer, Earl McNiel to provide the financial review of the quarter. After this remarks, we will open the line for questions.
During the third quarter of 2012, CAMAC Energy made significant progress to all the drilling of Oyo well #7 along side apartment and affiliate Allied Energy PLC. As previously announced, over the past several months our partner Allied have engaged the drilling project manager Axxis, the sea development consultant Halliburton and the subsea engineering consultant Deep Trend is subsidiary of General Electric.
All of three of these experienced and were respected consultant firms are working with CAMAC Energy and Allied personnel to execute the draw objectives of well #7. For triple the rate of productions from the currently producing Pliocene reservoir and to hard reserves by appraising the resource potential in the deeper Miocene reservoir.
As we speak, Axxis is a 16 Allied in the procured of long lead drilling items for manufacturers and other operators. Halliburton has already submitted its feasibility study on the well design and is working with the internal personnel to refine the drilling specifications. And Deep Trend is collaborating with the manufacturer of Wellstream to design or manufacture the subsea production rises and flow lines necessary for completion a hookup of well #7 to the FPSO.
In addition to all these activities, Allied is currently engaged in advanced trilateral negotiations with the National Oil Company and their contracted rig provider to acquire a semi-submersible rig slot in the first quarter of 2013. As part of these negotiations, Allied is also working to secure a rig slot by additional well, Oyo well #8 to be drilled in the fourth quarter of 2013 and we are looking forward to that.
These is significant development, ladies and gentlemen, because it will allow us to actually the 2013 growth exit rate of production in Axxis of 15,000 barrels of oil per day, not including our existing gas production that is in Axxis of 43 million cubic feet today. We expect to announce the resolution of those rig negotiations before the end of 2012.
While our drilling activity has accelerated, CAMAC Energy personnel have also been managing existing operations in the Oyo field. Having stabilized production since assuming operatorship by managing work on well #5, our technical personnel are also attempting an very inexpensive gas fleet that is successful will increase gross production by 10% to 20%.
Speaking of gas, CAMAC Energy’s engineers have also been working with the original top side engineering firm of our FPSO, the Armada Perdana. On a gas monetization plan, we’ll install an open loop heavy oil absorption module on the FPSO. This module uses crude oil as an absorbent, fluid for enhanced natural gas liquid recovery. The crude oil would function as a carrier liquid for recovered natural gas liquids and eliminating heat for their dictator facilities to process store our offload natural gas liquids or Liquefied Petroleum Gas, LPG.
This process would stabilize the crude production, includes all your crude yields and improve all your crude quality while reducing the greenhouse gas emissions.
As it turns out, our current FPSO is already preconfigured to accommodate such a margin and the contractor NGS technologies are working to refresh with its ability study currently. This project when completed will add significant economic value to the current and future gas production in oil field, which could be in Axxis of 100 million cubic feet a day.
Last, but certainly not least, I am pleased to report that we concluded oil sales from the Oyo field in July and September which helped CAMAC Energy to achieve profitability in the third quarter. CAMAC Energy was also very active in their production side during the third quarter, our technical team submitted and received approval for our work programs, by two blocks in Gambia as well as four blocks in Kenya.