News

June 30, 2009

End Of An Era For Meridian Petroleum As It Sells The Depleting Orion 36 Sour Gas Project

With its Orion 36 gas field in the US nearing the end of its productive life, Meridian Petroleum has decided to sell off its interest rather than the keep the high cost asset on its books. Wellmaster Production Company, contract operator for the well, has agreed to buy Meridian's 72.75 per cent working interest in the Orion 36 well and associated leases and production facilities for US$207,000.

The divestment makes sense given the easing in natural gas prices: on current projections,   future net cash flow from Orion would only be sufficient to cover abandonment and clean-up costs of around US$75,000 to US$100,000.  By selling the field now, Meridian should derive total cash-flow benefits of more than US$250,000, which will be used to further reduce debt.

The AIM firm brought the sour gas field onstream in August 2007, since when it has produced over 2...