LGO.L Share News (LGO)

(ShareCast News) - LGO Energy updated the market on its corporate plans for the first quarter of 2017 on Wednesday, saying its recent loan refinancing and equity placement positioned the company for an early return to drilling in the Goudron Field.The AIM-traded firm said that would happen with the imminent signing of an initial two well contract, including options to extend for further wells, in order to drill production wells to the ubiquitous Mayaro Sandstone oil pay interval.After retendering the rig and services, LGO said it had been possible to obtain a small footprint conventional drilling rig on a turnkey basis, which is considered to offer a lower risk and lower cost solution compared to previously proposed solutions using large conventional or heavy workover rigs.The company owned workover rig, Columbus #1, was now expected to be deployed to routine well service operations.It said the initial Mayaro drilling program would get underway as soon as practical in 2017 and was expected to be followed by further drilling to the Mayaro Sandstone oil pay, where up to 70 infill target locations had been identified.Of those, 45 wells had already received outline approval.During the proposed work programme, the company said it expects to issue regular updates on progress, including the spudding and results of each well.LGO would also continue to announce group production on a quarterly basis once oil sales volumes had been fully fiscalised and audited, it said.The company's Goudron subsidiary, Goudron E&P, also expected to submit the formal application for a waterflood enhanced oil recovery project to authorities in Trinidad during early 2017 with a view to commencing the initial phase of waterflood in the C-sands at Goudron in late 2017.Its proposed initial scheme involves the use of existing C-sand wells - two injectors and six producers - and the results of that EOR pilot would determine the detailed form of the wider EOR development in future years.Reductions of discretional spending and headcount during the last year, as well as deferral of director's fees, resulted in a marked reduction in the general and administration costs of the company, it said.The board said it would be continuing the programme of cost reduction to further reduce the corporate overhead in line with its 2017 operational plan.Given the recent re-financing, general and administration costs would be in line with the sustainable financial capacity the company expected to have in the next few years."After a difficult period with low oil prices and a senior debt facility that was difficult to service effectively from field operations, which themselves were constrained by limited available funds, we can now look forward to the imminent return to development drilling and the deployment of capital to increase production at the company's flagship Goudron Field," said chief executive Neil Ritson."During the recovery period some very difficult decisions had to be made on the deployment of funds and shareholder equity and we appreciate the commitment and support of our shareholders during this process."