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West Seno delays, property divestitures equal lower production rates for Unocal
Petroleum News
Unocal has lowered its production threshold for the second-half of 2003, citing as reasons lost production from property divestitures and “start-up issues” at its West Seno deepwater development in Indonesia.
However, Unocal said Oct. 3 it still expects after-tax third-quarter earnings to fall within its previously announced range of 65 cents to 75 cents per share. Analysts’ consensus is for 70 cents per share, down from 73 cents per share the company earned in the prior quarter.
For the third quarter, the big California-based independent said worldwide production would come in about 3 to 5 percent below the previously announced range of 460,000 to 470,000 barrels of oil equivalent per day. Third-quarter volumes also were impacted by higher host country production shares in Asia, as well as production declines in the United States, the company said.
In the fourth quarter, Unocal production is expected to further slip to 430,000 to 440,000 barrels of oil equivalent per day, reflecting delays at West Seno, the sale of nearly 7,000 bpd of production from Unocal’s equity holdings in independents Tom Brown and Matador Petroleum, and the expected close of the sale of more than 20,000 bpd to Forest Oil. West Seno problems related to processing facilities Unocal said problems ramping up its offshore Indonesia West Seno field were related to processing facilities that have been corrected. Specifically, the company said a chemical treatment to minimize oil-water emulsions during surface processing “has proven to be effective and is now being utilized, allowing existing wells to come up to full production levels.”
“The reservoir is performing as we predicted,” said Charles Williamson, Unocal’s chief executive officer. “We are encouraged by what we see in terms of oil pay thickness and initial well performance, which bodes well for the long-term success of the field.”
He said Unocal is confident it can achieve previously anticipated production rates at West Seno of 35,000 to 45,000 barrels of oil equivalent per day during the first phase, rising to 55,000 to 65,000 bpd when the second phase is completed.
Unocal said delays at West Seno should not affect the company’s expected 2004 worldwide production outlook of 450,000 to 460,000 barrels of oil equivalent per day.
“Now that we have resolved most of the short-term startup issues, we expect to be back on plan there by year-end 2003,” Williamson said.
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