LGO.L Share News (LGO)

(ShareCast News) - LGO Energy provided an operational update on Tuesday, including plans for production drilling and enhanced oil recovery at the Goudron Field in Trinidad, its Trinidad South West Peninsula interests and group production for the fourth quarter 2016.The AIM-traded company said that at Goudron, its local operating subsidiary Goudron E&P has now received approval from the Petroleum Company of Trinidad and Tobago (Petrotrin) and the Ministry of Energy and Energy Industries for the first two of its planned Mayaro Sandstone infill wells, currently designated H18E G11(5) and H18E N4.Those wells would be given definitive well numbers in the 'GY' sequence when the wells have spudded.LGO said all relevant rig and services contracts had been agreed, and mobilisation of equipment and crews for the site preparation work would commence as soon as Petrotrin receives approval from the forestry authorities for the cutting of trees necessary to clear the drilling sites.GEPL was looking at ways to expedite the approval process for the current and future wells, and would provide a further update once final approval has been granted.In order to ensure smooth progress with future planned Mayaro wells in 2017, GEPL was in the process of submitting applications for a further eight well locations for Petrotrin and MEEI approvals.The pace of drilling of the additional wells depended on the availability of funds, the firm said, with the initial two well programme is being funded from existing cash in GEPL.Work in preparation for the planned low cost initial waterflood at Goudron was also continuing to advance, the board said, with approvals expected to be sought in February for the initial phase of water flooding.The phase will use available produced water in the field and deploy two existing C-sand wells for injection and four existing C-sand wells for production.Once the initial scope of work is agreed with Petrotrin and the MEEI, a Certificate of Environmental Compliance will be requested from the Trinidadian Environmental Management Authority, LGO confirmed.It said minimal new infrastructure was needed for the initial phase and therefore implementation of the project could be undertaken shortly after all necessary approvals have been granted.At the South West Peninsula in Trinidad, LGO and its local subsidiary, Leni Trinidad Limited had reached agreement with Beach Oil Field Limited on the terms of a final sale and purchase agreement for BOLT's interests in the peninsula.The firm said the agreement will see LTL acquire the remaining 75% of the shareholding in BOLT for a final one-off payment of $0.05m, and will supersede the previously announced Deep Rights Agreement signed in 2013 on which a residual payment of $1.4m would have been due.Through the transaction, LTL's shareholding in BOLT will increase from 25% to 100%, and LTL will gain rights to all shallow and deep leases held by BOLT.Completion of the ownership of the leases required the completion of an existing agreement between BOLT and Petrotrin through the payment of $0.089m, and various minor payments to leaseholders and third-parties likely to total approximately $0.045m.LGO said BOLT currently had a loan with a Caribbean bank for approximately $1.1m, and as part of the transaction that will be refinanced in the local market or repaid as appropriate.Looking at production, LGO produced an average of 540 barrels of oil per day during the period, with production from Trinidad averaging 459 bopd.Fourth quarter production was impacted by the decision to commence temporary suspension of production activities at the Ayoluengo Field in Spain, the board said, pending agreement on a new concessions at the end of January.As announced on 13 January the decision to temporarily suspend production in Spain has minimal impact on group operating finances."Regaining momentum in our Trinidad production and business development activities is a key objective for the company in early 2017," said chairman and chief executive Neil Ritson."Recommencing development drilling at Goudron, progressing the Goudron waterflood for which we hold over 60 million barrels of independently certified contingent resources and continuing with the high value South West Peninsula exploration programme are all key to building shareholder value from the excellent underlying assets in the company."