Sagres ramps up investment in Jamaican oil exploration
Published:Wednesday | November 16, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Sagres Energy announced that it would invest another CDN$2.94 million (J$250m) in its search for oil in Jamaica, its largest quarterly capital outlay to date, but says it continues to search for a partner to share the cost of drilling.
The Canadian oil-exploration company hopes to start drilling by yearend.
"It's the first quarter that these costs have escalated into the millions," said Sagres in its June 2011 financial report. In the March quarter, capital expenditure in Jamaica totalled CDN$37,900.
So confident is the company in its ability to recoup its investment that it has made no provision for outlay.
"There were no indications, events or changes in circumstance which would cause the company to question whether the carrying amount for Jamaica and Colombia may not be recoverable; as such, there is no provision for impairment recorded," said the financial report.
Bought rights from pcj
Sagres Energy earlier this year mapped an offshore oil drill site by Pedro Banks in a bid to fast-track drilling. The site lies some 120 kilometres off the coast of Port Kaiser within one of three contiguous "blocks" to which it bought the rights from Petroleum Corporation of Jamaica.
The blocks span 8,800 square kilometres of sea and have already displayed promising investigations, the company said.
Sagres must elect to enter into its second phase of exploration in Jamaica by December 2011, but it wants a "partner for the funding of the remaining exploration work commitments". The second phase must be completed by December 2013.
Sagres owns 100 per cent of blocks 9, 13 and 14 located in the Walton Basin in the Pedro Banks. The company believes the blocks might hold some three billion barrels of reserves, but was careful to note that these were prospective, not proven, reserves.
Sagres has spent CDN$13.16 million in Jamaica, Colombia and Guyana on evaluation and intangible exploration as at June 2011 (December 2010: CDN$5.6m).
The increased activity resulted in Sagres making a six-month net loss of CDN$6.5 million compared with a CDN$2.2 million net loss a year earlier.
"Consequently, the company's ability to continue as a going concern is dependent on the company's ability to obtain additional financing if, as and when required, and, ultimately, the attainment of profitable operations," said Sagres.
The oil explorer remains cash-positive with CDN$4.5 million in cash and equivalents.