Oil and gas firm Melrose Resources is to spend $83m (£53.4m) next year in exploration and development work while continuing to reduce its debt levels.

In a London Stock Exchange statement, Melrose said it would spend $37m (£24m) on exploration wells in Bulgaria and Egypt and a seismic project in Romania.

Most of the rest will be used to develop its main fields in Egypt.

Melrose said its capital budget had been set at a level which would allow it to continue cutting its debts.

It expects to reduce its gearing – the level of its net debt compared with equity capital – to below 100% by the end of this year and to 50%-60% by the end of 2012.

The Edinburgh firm’s exploration programme for next year comprises three exploration wells – two in Egypt and one in Bulgaria – and a seismic acquisition in Romania.

The first Egyptian well scheduled to be drilled will be Al Hajarisah-1 in the South East Mansoura concession, which is expected to begin drilling in the second quarter.

The second well in southern Egypt is scheduled to begin drilling late in the third quarter.

In Bulgaria, one well is set to be drilled in the central area of the Galata block.

Romanian first

Melrose also plans to invest $12m (£7.7m) on a seismic survey, offshore Romania – its first exploration activity in the country.

The majority of planned development expenditure – some $45.1m (£29m) – will be allocated to the company’s main producing fields in Egypt.

Melrose chief executive David Thomas said: “We are looking forward to 2012 when we will continue to pursue our various exploration and development projects whilst maintaining a strong focus on delivering the company’s financial objectives.

“Based on our performance in 2011, we are now setting a new target to reduce financial gearing to below 60% within 12 months.

“The exploration programme contains some potentially high impact wells, both in Egypt and Bulgaria, and we will be particularly pleased to commence the seismic acquisition programme on the Muridava and Est Cobalcescu blocks, offshore Romania.”

Source: BBC