14 October 2016
Mayan Energy Ltd / Index: AIM / Epic: MYN/ ISIN: VGG6622A1057 / Sector: Oil & Gas
Mayan Energy Ltd (“Mayan” or “the Company”)
Gas production brought on line. Cost saving measures now kicking in.
Mayan Energy Ltd (AIM: MYN), the AIM listed oil and gas company, is pleased to announce the commencement of gas production from the Shoats Creek Field (“Shoats Creek”) and the impact of cost cutting measures introduced by its new management team.
Completion of Shoats Creek gas pipeline and initiation of gas sales
- A 600 metre gas line has now been installed which enables oil and gas to be produced from wells at Shoats Creek, including inter alia: Lutcher Moore 14 well (“LM14”) and LM 20, as well as a number of other candidates for reconnection in the near to medium term.
- LM 14 was the first well to be connected. Operating on a tight choke, initial flow rates are reported as 1,300 thousand cubic feet per day (“Mcfd”) and 30 barrels of oil per day (“bopd”). These flow rates are close to previously reported expectations, and the intention is to be conservative in managing the well, as producing at increased choke rates would be counterproductive to well life and production rates. It is anticipated that after the first few weeks of production that rates will stabilise at approximately 300 Mcfd and 30 bopd. Both initial and expected flow rates are gross rates produced by the well. The net attributable to Mayan from LM 14 is expected to be approximately 900 Mcf gas and 25 bopd oil, stabilising at approximately 200 Mcfd gas, and 20 bopd oil.
- LM 20 – which had not been anticipated to contribute gas has, following on from minor over haul work to the well which has opened it up to gas flow, now started delivering gas. Revised production rates from LM 20 will be reported shortly, once they have been determined, as a down-hole pump still needs to be lowered and adjusted for proper influx of fluids. As a result; LM 20 became the second well to be connected to the gas line.
- Gas sales to Enerfin Field Services LLC, a subsidiary of Enerfin Resources Company (see RNS announcement dated 28 July 2016) will start at the end of the second week of October; with first cash flow expected in November 2016. Under the contract with Enerfin, and on the basis that daily production volumes are more than 1,000 Mcfd, the Company expects to receive Henry Hub sales price, less a 10% commission; below 1,000 Mcfd price received will be net of a 15% commission to Enerfin.
- Mayan has a 70.00% working interest (“WI”) and 52.78% net revenue interest (“NRI”) in LM14, and a 20.00% WI and 15.08% NRI in LM 20 in respect of oil, and a 70.00% WI and 52.78% NRI in respect of gas;
- Based upon oil and gas prices of US$ 40 per barrel, and US$2.5 per Mcf gas (against current spot prices of approximately US$50 per barrel and approximately US$3/ Mcf), the Company estimates that the impact of these oil and gas wells coming on stream will significantly increase Mayan monthly revenues.
Operational profitability now achieved
- Cost cutting introduced by the new management team over the last few months has reduced operational and administrative personnel costs by approximately US$60-70,000 per month and together with other measures now in place, put Mayan in a position where, for the first time and assuming the oil and gas price environment remains at current levels, its US operations have the potential to be operating on a profitable footing.
Commenting on the above, Mayan’s CEO Eddie Gonzalez said: “I am really pleased to report that we achieved this important production milestone. I think it shows that together with the cost cutting measures we have taken, our new team is on track to meet another of our objectives: namely achieving US operational profitability. And if we factor in the benefit of oil and gas prices, which have moved favourably upwards during the last few months, I would say that we are comfortably ahead of our game plan.
“Looking ahead, we are now in a position to begin to unlock the value and cash flow from the Shoats Creek, and on the back of that, and our plans to monetise some of our non-core assets, we will then pick up speed in moving forward with our plans for Mexico.
“Finally, I have to say that after a little more than a month in the job, I am really looking forward to keeping up the news flow of our progress against the targets that we have set ourselves, and in particular how we will be further improving returns to the Company, as we finesse and fill in the details of our previously reported plans for the development of our assets.”
For further information visit http://www.mayanenergy.com/ or contact the following:
|Eddie Gonzalez||Mayan Energy Ltd||+ 1 469 394 2008|
|Charlie Wood||Mayan Energy Ltd||+44 7971 444 326|
|Roland Cornish||Beaumont Cornish Ltd||+44 20 7628 3396|
|James Biddle||Beaumont Cornish Ltd||+44 20 7628 3396|
|Elliot Hance||Beaufort Securities Ltd||+44 20 7382 8300|
|Nick Bealer||Cornhill Capital Limited||+44 20 7710 9612|
|Elisabeth Cowell||St Brides Partners Limited||+44 20 7236 1177|
- Mayan Energy Limited is an AIM listed (London Stock Exchange) oil and gas energy company with a vision of building a midstream service (oil and gas waste management) and downstream operations business in Mexico ,exploiting the opportunities arising from the liberalisation of that country’s energy sector. This vision will complement the Company’s present operations which are focussed on the redevelopment and enhancement of its upstream oil and gas interests in Oklahoma and Louisiana.
- This announcement contains inside information for the purposes of Article 7 of the EU Regulation 596/2014.
The technical information that is contained in this announcement has been reviewed by Mr. Kevin Green, a Consultant to the Company and a Petroleum Geologist who is a suitably qualified person with over 30 years' experience in assessing hydrocarbon reserves and who has consented to the inclusion of the technical information.