Sherritt plans to drill 2nd Cuba well in H2

Sherritt International expects to begin drilling a second well atbBlock 10, its Cuban offshore operation in which it has a production-sharing contract, in August, with first results anticipated for the fourth quarter, the Canadian company said in its quarterly earnings report.

The company had reported preliminary results in March for offshore exploration well LT-100, in the same block.

Production and revenue at both oil and power operations were strong, and relatively consistent with 1Q17 results, the company said.

Sherritt reported Cdn$11.2mn (US$8.91mn) in cash provided by oil and gas operations, and Cdn$7.9mn from power operations. The company's oil business swung to a profit of Cdn$8.9mn, compared with a Cdn$3mn loss in 2Q16, while half-yearly oil profits were Cdn$19.9mn, compared with a loss of Cdn$11.7mn in 1H16.

Year-to-date, oil operations have provided Cdn$18.1mn in free cash flow and power operations Cdn$19.5mn.

Cuban power receipts were US$8.8mn lower in Q2 compared with first quarter.

Overall, the company reported a net loss of Cdn$102mn in Q2, compared with a net loss of Cdn$72.6mn in 1Q17 and Cdn$104mn in 2Q16. The net loss was driven largely by Ambatovy's performance, the company's nickel and cobalt JV, Sherritt said.

The company said that its oil and gas capital spending has been revised downward by US$20mn, primarily due to a reduction in drilling costs attributable to using part of the existing wellbore from the first well drilled on Block 10 in order to drill the second well, as well as deferred spending on the Block 8A seismic program, now expected to occur in 1Q18.