Saffron Energy starts first production at Italy gas field

Saffron Energy started first production at its Italy gas field on 13 April, just seven weeks after the natural gas producer floated on AIM.

The explorer expects commissioning and ramp-up leading to flow rates in the range of 30-40,000 standard cubic meters (scm) per day, which is equivalent to 190-250 barrels of oil equivalent per day (boepd), at its Bezzecca gas field.

Production at Bezzecaa, which is operated by Saffron's subsidiary Northsun Italia, is sold at about €0.21 per scm which equates to €190-€250,000 per month in revenue, on production of 30-40,000 scm.

Reservoir performance will be evaluated during the current quarter on each of the three perforated levels and steady state production is expected mid-year.

When combined with the company's production from the Sillaro gas field, which is producing 10,000 scm per day, Saffron expects net production from its Italian assets to increase over four times its current production to 40-50,000 scm per day - about 250-315 boepd.

Saffron has an offtake agreement with Royal Dutch Shell’s Italian business, Shell Energy Italia, for the gas produced to go directly to the Italian national grid, which is owned by SNAM Rete Gas.

Saffron chief executive Michael Masterman said that first gas at Bezzecca “represents a great technical, financial and management achievement for the company and shareholders”.

“The commencement of production will boost revenues and operating cash flows consolidating our portfolio and provides further validation of the company's strategy.”

Shares in Saffron Energy were down 0.43% to 8.09p at 0913 BST.