6 December 2018
Predator Oil & Gas Holdings Plc
("Predator" or the "Company" and together with its subsidiaries "the Group")
End of Year Operational Update
Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas Company, today provides an end of year operational update on its progress onshore Trinidad, offshore Ireland and onshore Morocco.
· Operational planning for C02 EOR at the Innis Trinity Field in Trinidad progressing well.
· Expected initial oil production rate in first half of 2019 in the range of 318 to 392 bopd.
· Application submitted to convert Licensing Option 16/26 (Corrib South), 18km from Corrib Gas Field Production Lease, into a Frontier Exploration Licence.
· Application submitted to extend the Ram Head Licensing Option 16/30 in the Celtic Sea offshore Ireland.
· Ram Head reservoir engineering study shows potential development via 10 wells capable of delivering 400 mm cfgpd and recovering over 1 TCF of gas in 11 years.
· Accelerating ongoing discussions with potential farm in partners interested in the Company's Irish portfolio during January.
· Formal award of the Guercif Permit onshore Morocco is expected as previously announced. During 2019 planning for drilling will commence.
Onshore Trinidad - Inniss-Trinity oil field
Operational planning for the commencement of Enhanced Oil recovery operations using injected carbon dioxide ("C02 EOR") is progressing well with the delivery of the selected C02 injection pumps from the United States supplier being scheduled for January 2019.
Scoping reservoir engineering studies have been completed, based on which surface facilities have been designed for an initial oil production rate in the range of 318 to 392 bopd.
Combined existing production rate pre-C02 injection from the wells which are being included in the Pilot C02 EOR project is 45 bopd and therefore the target in the minimum case is a six-fold increase in incremental oil production ("Enhanced Oil Production") compared to existing production levels. Enhanced Oil Production will be the Company's share of future production.
Economics over the initial six-year life of the project incorporating available tax losses, indicate a break-even WTI Spot Price for the C02 EOR Project of 27$/brl. Incorporating capital expenditure, for which the Company is fully funded, the breakeven Enhanced Oil Production rate in the first year of production is 110 bopd at a WTI Spot Price of 55$/brl.
Subject to all necessary regulatory consents and approvals the Company expects cash flow from operations to commence during the first half of 2019.
The Company is fully-funded for its investment in the Pilot C02 EOR Project and capital expenditures are coming in at below initial estimates.
The Company took a precautionary step to hedge US Dollars at 1.32$/1.00£ to cover the forecast capital expenditures for the project and will potentially benefit from receiving anticipated revenues in 2019 in US dollars.
An application to convert Licensing Option 16/26 (Corrib South), adjoining the Corrib gas field Production Lease, is progressing.
During early 2019 planning will continue to prepare for drilling the Corrib South Prospect, 18 kilometres from the Corrib gas field, in 2020, subject to all fully compliant regulatory consents and approvals.
An application has been submitted to extend the Ram Head Licensing Option 16/30 for a further 12 months from 30 November 2018.
The Company has completed an independent reservoir engineering study, based on modern reservoir analysis technology not available at the time to the previous operator Marathon, to assess the development potential of the 49/19-1gas discovery made in 1984.
The study, which is the first such study carried out on this gas discovery, shows the potential to develop the gas via 10 development wells capable of delivering 400 mm cfgpd and recovering over 1 TCF of gas in 11 years.
The present development concept would land the gas at the current Inch landfall for Kinsale gas.
The Company has carried out a screening study to assess the technical feasibility and commercial viability of re-entering the 49/19-1 well to test the discovered gas in order to calibrate the proposed scoping development plan. Results indicate that the re-entry is feasible and very cost effective compared to drilling a new well.
Planning for a well re-entry will be undertaken in early 2019 with a view to executing the programme in 2020, subject to all fully compliant regulatory consents and approvals.
Related Corporate Activity
The Company noted the recent announcement by the incoming operator of the Corrib gas field ("Corrib"), Vermilion, confirming the completion of the sale of Shell's 45% interest in Corrib for approximately $1.3billion to Nephin Energy Holdings Limited and the transfer of operatorship to Vermilion. Predator further noted the recent press article in the Irish Independent stating that Vermilion has outlined plans to expand the project and in addition that it would look to do deals with other oil and gas companies exploring in the waters around Corrib, either by allowing those companies to use Corrib Infrastructure to transport gas, or by buying stakes in those companies.
The announcement validates Predator's business model in relation to focussing solely on gas in Ireland and only in those areas where gas production has already established offshore and onshore infrastructure.
Predator therefore is accelerating its ongoing discussions with potential partners interested in the Company's Irish portfolio during January with a view to combining its assets in a substantive low risk drilling and re-entry programme in 2020 to target potentially material gas resources.
The formal award of the Guercif Permit onshore Morocco is expected as previously announced. During 2019 planning for drilling will commence.
Discussions have been initiated with a drilling contractor and drilling team for the provision of a land rig on a partial risk-reward basis. The initial scoping project will be for an exploration well with a "Call Option" to drill up to 14 development wells, subject to regulatory consents and approvals, in a Success Case.
Simultaneously with rig discussions the Company may seek partners for the drilling given the potential materiality of the project and its proximity to the Maghreb gas pipeline to Europe.
Paul Griffiths, Chief Executive of Predator, commented: "This has been a busy year completing the building of the Company's portfolio of a revenue-generating C02 EOR project and attractive and strategic gas assets adjacent to infrastructure. This has been achieved without the use of large amounts of capital and without diluting shareholders. Early 2019 will see the Company start to execute its strategy to generate cash flow from Trinidad operations requiring only capital investment from existing cash resources. The Company is also in a favourable position to potentially exploit three large gas assets adjacent to infrastructure. The independent identification of Ram Head as a potential gas development project comparable in size to the Corrib gas field, is a possible "game-changer" for the Celtic Sea. The Company has now consolidated sufficiently material early stage gas assets capable of being linked to the European gas market to provide an attractive commercial proposition for larger industry players and infrastructure owners, whether it be through farm ins, or by acquisition of equity in the assets, or in the subsidiary Predator companies holding the assets."
This announcement contains inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 on market abuse
Predator Oil & Gas Holdings Plc
Paul Griffiths, Chief Executive Officer
Sarah Cope, Non-Executive Chairman
Tel: +44 (0) 1534 834 600
Novum Securities Limited
Tel: +44(0) 207 399 9425
Notes to Editors:
Predator is an oil and gas exploration company with the objective of participating with FRAM Exploration Trinidad Ltd. in further developing the remaining oil reserves on the producing Inniss Trinity oil field onshore Trinidad, primarily through the application of C02 EOR technology. Potential for cash flow exists by executing a Pilot Enhanced Oil Recovery project using locally-sourced carbon dioxide for injection into the oil reservoirs ("C02 EOR"). Near-term expansion and growth potential is focussed on upscaling the C02 EOR operations in the Inniss-Trinity oil field and potential acquisitions of assets suitable for C02 EOR development.
In addition, Predator also owns and operates exploration and appraisal assets in current licensing options offshore Ireland adjoining Shell's Corrib gas field in the Slyne Basin on the Atlantic Margin and east of the Kinsale gas field and Barryroe oil discovery in the Celtic Sea.
Predator has also recently negotiated the Guercif licence onshore Morocco, the formal award of which is pending.
The Company has a highly experienced management team with a proven track record in the oil and gas industry.
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