Malcys blog 1/212 Nov 2020 18:43
Oil price, VOG, Enteq. And finally…
Victoria Oil & Gas
VOG announce the Settlement of litigation with CHL and the termination of the CHL Royalty Agreement this morning, on a long to-do-list for the new CEO and CFO these are meaningful announcements. The former shows an agreement to cease all legal action and the latter to cancel the CHL Royalty Agreement.
The deal brings ‘valuable net revenue income’ to GDC on a monthly basis from December 2020 and avoids significant legal costs as well as giving the management ‘the opportunity to focus on value added activities’. The settlement amount of an aggregate $12.5m can be paid out over ‘many years or sooner without penalty’ which is an impressive settlement by any yardstick.
Well La-108 Remediation and Initial Testing
The company has confirmed that after the well was effectively broken, much work was needed to repair it, problems were compounded by the fact that due to COVID-19 the ability to get spare parts was significantly impaired. Despite that the over-pressured well has been fixed after some three fishing operations, an unambiguously positive result, indeed the company leave it as ‘the full potential of the well is highly likely to exceed the capacity of the plant, which is 20 MMscf/d’.
Commenting today Roy Kelly, CEO of VOG, said:
“The two items addressed in this RNS hopefully demonstrate that the Company is proactively and decisively dealing with intractable legacy issues. Firstly, the settlement of this long-standing legal dispute removes financial uncertainty and ongoing costs which could have run to a final hearing in 2022, with potentially negative consequences. The termination of the CHL Royalty Agreement as part of the Settlement is a considerable benefit to shareholders in terms of future cashflow. Without the distraction of expensive legal proceedings and the considerable drain on management resources, we can now focus on value accretive activities.
Lastly, we are extremely pleased to have safely remediated La-108 and to have tested it at excellent flowrates. The complexity of this project in a deep, high pressure well was exacerbated by the remoteness of our operation meaning lead times for spares or new equipment can be several weeks or months as there are no other upstream onshore operations in the country. This took meticulous planning and execution by the team and its subcontractors. As to the additional gas sales potential this well provides, we maintain a “hopper” of additional gas sales opportunities, including new and existing customers, power and thermal use, and we will now pursue these earnestly”.
I have quoted the CEO’s comments in full in order to try and create the impression of quite how much work is going on and how successful these two separate operations have been. continued
https://www.malcysblog.com/2020/11/oil-price-vog-enteq-and-finally/
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