Maurel & Prom - Q3 2011 Sales

PARIS, November 3, 2011 -

Nine-Month Sales up 151% to €373 Million (vs. 2010)

Stable 2011 production: Q3 entitlements of 20,217 bopd for an average of 19,726 bopd in the first nine months

Activity in the third quarter of 2011

- Sales

  - Q3 2011: €119 million

  - Nine months cumulative: €373 million

- Entitlements

  - Q3 2011: 20,217 bopd

  - Nine months cumulative: 19,726 bopd

- Colombia: Encouraging results from exploration

  - Positive results of stratigraphic wells on CPO 17

  - Extension of Sabanero field to northeast

- Continued rationalisation of asset portfolio

  - Peru: signing of farm-out agreement with PRE

  - Caroil: closing of Tuscany’s acquisition of Caroil

Sales for the third quarter and first nine months of 2011

                                                9 months  9 months
    (In EUR m)         Q1 2011 Q2 2011 Q3 2011      2011      2010   Chg

    Exchange rate        1.367   1.440   1.413     1.407     1.315

    Gabon                 93.7   108.2    92.4     294.3     173.9  +69%
    Nigeria               30.5    40.3    37.6     108.4         0
    Tanzania               0.2     0.2     0.2       0.5       0.4
    Congo                    0     0.2     0.0       0.2       0.2
    Oil production       124.4   148.9   130.2     403.5     174.5 +131%
    Impact of hedges      -8.7   -11.1   -10.8     -30.6     -25.7

    Consolidated sales   115.7   137.8   119.4     372.9     148.8 +151%

*Sales for the third quarter are calculated by deducting sales for the first half of the year from sales for the first nine months.

Following the disposal of Caroil, the “Oil Services” activity has been reclassified in the income statement under “Net income from discontinued activities.”

Consolidated group sales totalled €373 million for the first nine months of 2011.

Hydrocarbon sales

Sales rose over the first nine months of the year, reflecting the start-up of production from the Omoc discovery and recognition over the entire period of sales from the Omgw and Ombg fields in Gabon, as well as the consolidation of €108.4 million in sales from Nigeria.

In Nigeria, sales were impacted by a seven-day production stoppage in late September 2011 to perform maintenance on the evacuation pipelines. A second stoppage occurred over 18 days in October, proportionally limiting sales in the fourth quarter of 2011. Gross production by year-end should reach 40,000 bopd.

In Gabon, production was stable between the first and second quarters of 2011. Four liftings were carried out in the third quarter versus five each in the first and second quarters, implying a correlative increase in oil inventories.

On the Omoc-North field, drilling of the Omoc-N-102 and Omoc-N-502 wells in the Grès du Kissenda, tested at 700 and 1,100 bopd respectively, confirms the extension of the reservoir. These results will allow development of this field to be launched in early 2012.

In Tanzania, the Group posted €0.5 million in sales on the Mnazi Bay field.

Impact of hedges

In early 2009, while securing financing for the reserve-based loan, the company set up hedges for operating cash flows based on oil prices. These covered 4,000 bopd in January and 4,500 bopd from February to September 2011 at an average price of $74.7/b, whereas the price of Brent rose to an average of $111.8/b. This produced a downward adjustment of €30.6 million.

Excluding the impact of the hedge, the average sale price for the first nine months of 2011 was $111.7/b, with $113.6/b in Nigeria and $111.0/b in Gabon.

    Economic data               2011     2010  Change
                            9 months 9 months
    Exchange rate (EUR/US$)    1.407    1.315     +7%
    Exchange rate (US$/EUR)     0.71     0.76
    Brent (US$/barrel)         111.8     77.1    +45%

Q3 entitlements of 20,217 bopd, for an average of 19,726 bopd over the first nine months of 2011

The following table summarises production data, in barrels per day, for the first three quarters of 2011:

    Country                Gross production
    in boepd      Q1     Q2     Q3 9 months

    Gabon     17,338 18,684 18,864   18,302
    Banio        311    287    281      293
    Omoueyi   17,027 18,397 18,583   18,009
    Nigeria   21,382 27,614 24,836   24,623

    Total     38,720 46,298 43,700   42,925

    Country                    Entitlements
    in boepd      Q1     Q2     Q3 9 months

    Gabon     13,968 15,046 15,188   14,740
    Banio        297    274    268      280
    Omoueyi   13,671 14,772 14,920   14,460
    Nigeria    4,330  5,592  5,029    4,986

    Total     18,298 20,638 20,217   19,726

Table Continued Below

                                 Maurel & Prom

    Country        working interest production
    in boepd         Q1     Q2     Q3 9 months

    Gabon        14,783 15,925 16,077   15,601
    Banio           311    287    281      293
    Omoueyi      14,472 15,638 15,796   15,308
    Nigeria       4,330  5,592  5,029    4,986

    Total        19,113 21,517 21,106   20,587

             Production
    Country        sold
    in boepd         Q1     Q2     Q3 9 months

    Gabon        13,883 14,646 12,492   13,669
    Banio           357    277    272      302
    Omoueyi      13,526 14,369 12,220   13,367
    Nigeria       4,479  5,239  5,029    4,918

    Total        18,362 19,885 17,521   18,587

Colombia: Encouraging exploration results

The Sab-Strat 1A stratigraphic well has confirmed the presence of oil on the Sabanero licence in Colombia (operator: Maurel & Prom, through its 50.01% subsidiary MP Colombia BV). This well is part of a stratigraphic drilling campaign (six firm wells) set to delineate the Sabanero field (three exploration wells already drilled) and help locate upcoming platforms in the appraisal programme for this discovery.

This well was followed by the Sab-Strat 2 stratigraphic well, which found oil at 12° API in the Carbonera C7 formation, 2 km southwest of the Sab-1 discovery well. Drilling on the Sab-Strat 3 stratigraphic well, located 3 km south of the Sab-1 discovery well, started on 22 October 2011.

The works programme on this licence includes three more stratigraphic wells and appraisal wells, to be drilled starting in the fourth quarter of 2011 and continuing until the third quarter of 2012. Each of the appraisal wells is expected to be subject to long-term testing using temporary installations that are now being assembled.

To develop its resources in Colombia, particularly those discovered on the Sabanero licence (in which M&P Colombia BV holds a 100% working interest), Maurel & Prom has chosen to partner with Pacific Rubiales Energy (49.99% of Maurel & Prom Colombia BV), which has notable expertise in the production and processing of heavy crude in Colombia. This partnership will allow the Group to fund all assessment, development and production set-up operations on the Sabanero field’s resources.  

A drilling campaign began on stratigraphic wells on the CPO 17 exploration licence (50% operator Hocol, 50% Maurel & Prom Colombia). The purpose of the drilling campaign was to assess various geological objectives in the licence. The first three wells drilled showed the in situ presence of oil in Basal Sandstones of the Oligocene Carbonera formation of the Merlin prospect. The works programme on the CPO 17 licence continued with the drilling of stratigraphic wells CPO 17 East 7 on the Merlin prospect and CPO East 3 on the Gideon prospect, confirming the in situ presence of oil in the Basal Sandstones of the Oligocene Carbonera formation on both prospects. Furthermore, the two stratigraphic wells - CPO 17 East 1 and East 8 - drilled on the Dorcas prospect showed the presence of oil in the channels of the Carbonera C7 formation. Drilling of the Merlin-1 well will be followed by drilling of the Dorcas-1 well; these two wells could undergo production tests.

Continued rationalisation of asset portfolio

Caroil

Maurel & Prom announces that Tuscany International Drilling Inc. closed the acquisition of all shares in Caroil SAS on 15 September 2011 under the following financial terms:

• Closing payment of US$117 million in addition to the US$3 million initially paid.
• Issuance to Maurel & Prom of:
  • 81,500,000 Tuscany shares listed in Toronto (TSX: TID).
  • 27,500,000 Tuscany stock options, free of consideration (on a one-for-one basis, non-transferable and without voting rights).
• Allocation of two seats on the Tuscany board for representatives designated by Maurel & Prom, which becomes Tuscany’s main shareholder.

PERU

Maurel & Prom signed an agreement to sell 50% of its interests in the Lote 116 exploration licence in northeast Peru to Pacific Rubiales Energy. Under this farm-out transaction, Pacific Rubiales will bear the financial obligations, up to $75 million, of the various phases of the licence. The environmental authorisation to drill the first well, Dominguza, was received on 3 October 2011.

GLOSSARY

Gross production: production at 100%.

Working interest production: gross production - partner’s share.

Mining royalties in Gabon: royalties are paid in foreign currencies in Gabon.

Entitlements: working interest production - in-kind royalties - in-kind State share of profit oil + corporation tax if the State’s profit oil is paid in kind.

Production sold: entitlements -/+ stock.

Sale price: in Gabon, prices are set by the State based on oil quality and benchmark prices. The mutually-agreed costs to achieve commercial viability are then deducted from these prices.

Sales: entitlements x sale price. Sales are recognised on the production extraction date.

Taxes and duties: profit oil due to the Gabonese State is paid in foreign currencies for the Banio field and in kind for the Onal, Omko, Omgw and Ombg fields. Corporation tax in Gabon is included in the State profit oil and systematically recognised as revenue.

Second-quarter sales: sales for the second quarter are calculated by deducting sales for the first quarter from the figure for half-year sales.

Third-quarter sales: sales for the third quarter are calculated by deducting sales for the first half of the year from sales for the first nine months.

For more information, visit www.maureletprom.fr

This document may contain forward-looking statements regarding the financial position, results, business and industrial strategy of Maurel & Prom. By nature, forward-looking statements contain risks and uncertainties to the extent that they are based on events or circumstances that may or may not happen in the future. These projections are based on assumptions we believe to be reasonable, but which may prove to be incorrect and which depend on a number of risk factors such as fluctuations in crude oil prices, changes in exchange rates, uncertainties related to the valuation of our oil reserves, actual rates of oil production and related costs, operational problems, political stability, legislative or regulatory reforms, or even wars, acts of terrorism or sabotage.

Maurel & Prom is listed for trading on Euronext Paris - compartiment A - CAC® mid 60 - SBF120® - CAC® Mid & &Small - CAC® All-Tradable - CAC® All-Share

ISIN FR0000051070 / Bloomberg MAU.FP / Reuters MAUP.PA

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