Last checked at 28 Mar 2018 07:00
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Steve Boldy, the Chief Executive Officer of the Company (responsible for arranging release of this announcement).
Lansdowne Oil & Gas plc
Barryroe Oil Field Update
Farm-out Agreement Signed with Chinese Consortium
· Lansdowne and Providence agree to Farm-Out a 50% working interest in Barryroe to a Chinese Consortium ("The Consortium") led by APEC
Energy Enterprise Limited ("APEC")
· The Consortium to fund 100% of drilling costs for 3 wells and associated side-tracks
· The Consortium to finance Lansdowne and Providence's 50% share of
Drilling Programme costs by way of a non- recourse loan which is secured against future Barryroe Production cash-flow
28th March 2018
Lansdowne Oil and Gas plc ("Lansdowne" or "the Company") is pleased to announce that it, along with EXOLA a wholly owned subsidiary of Providence Resources, has entered into a Farm-Out Agreement ("FOA") with APEC Energy Enterprises Limited ("APEC") over SEL 1/11, containing the Barryroe Field. SEL 1/11 is operated by EXOLA DAC ("EXOLA")(80%), a wholly-owned Providence subsidiary, on behalf of its partner Lansdowne Celtic Sea Limited ("Lansdowne")(20%), collectively referred to as the "Barryroe Partners". The area lies in c. 100 metre water depth in the North Celtic Sea Basin and is located c. 50 km off the south coast of Ireland.
APEC is a privately owned Chinese company which has a strategic partnership with China Oilfield Services Co., Ltd ("COSL") and JIC Capital Management Limited ("JIC") for the investment and development of offshore oil and gas opportunities worldwide utilising Chinese drilling units, services and equipment.
Under the terms of the FOA, In consideration for APEC taking a 50% working interest in SEL 1/11, the key commercial and operational terms provide for APEC to:
Commercial Terms
- Be directly responsible for paying 50% of all the cost obligations associated with the drilling of 3 vertical wells, plus any associated side-tracks and well testing (hereinafter referred to as the "Drilling Programme");
- Provide a drilling unit and related operational services for the Drilling Programme;
- Finance, by way of a non-recourse loan facility (the "Loan"), the remaining 50% of all costs of the Barryroe Partners associated with the Drilling Programme;
- The loan, drawable against the budget for the Drilling Programme, will incur an annual interest rate of LIBOR +5% and will be repayable from production cashflow from SEL 1/11, with APEC being entitled to 80% of production cashflow from SEL 1/11 until the Loan is repaid in full;
- Following repayment of the Loan, APEC will be entitled to 50% of production cashflow from SEL 1/11 with EXOLA and Lansdowne being entitled to 40% and 10% of production cashflow, respectively.
Operational Terms
- EXOLA will act as Operator for the Drilling Programme with technical assistance being provided by the APEC Consortium.
- After the completion of the Drilling Programme, APEC will have the right to become Operator for the development/production phase.
Closing
The Closing of the Farm-Out ("Closing"), which is expected to occur in Q3 2018, is conditional on completion of all ancillary legal documentation required to implement the terms of the FOA, and is subject to the approval of the Minister of State at the Department of Communications, Climate Action and Environment and the approval of the Chinese government. In addition, the details of and schedule for, the Drilling Programme are subject to further ongoing technical discussions between the Consortium, Lansdowne and Exola. Subject to Closing, the revised equity in SEL 1/11 will be EXOLA (Operator, 40%), APEC (50%) & Lansdowne (10%).
Further announcements on the transaction will be made in due course.
Commenting on the news, Lansdowne CEO Steve Boldy said:
"We are delighted to have agreed the Farm-Out of Barryroe to APEC with the associated multi-well programme. The Chinese Consortium brings a wealth of technical and operational expertise and experience and we look forward to finalising the details of the drilling programme that is expected to move the project forward to development. Upon closing, Lansdowne will retain a net 34.5MMboe of contingent resources (2C) for its 10% ownership of Barryroe, with significant additional upside in terms of further exploration potential. The third party funded Drilling Programme will look to convert a sizeable amount of these resources in to proven and probable (2P) reserves ahead of subsequent development and production. With a current market cap of just US$10M, Lansdowne's valuation equates to less than US$0.3 per contingent barrel for its 10% ownership."
For further information please contact: | |
Lansdowne Oil & Gas plc | +353 1 495 9259 |
Steve Boldy |
Cantor Fitzgerald Europe | |
Nominated Adviser and Broker | +44 (0) 20 7894 7000 |
David Porter | |
Nicholas Tulloch | +44 (0) 131 257 4634 |
Qualified Person Review
This release has been reviewed by Stephen Boldy, Chief Executive of Lansdowne, who is a petroleum geologist with 37 years' experience in petroleum exploration and management. Dr Boldy has consented to the inclusion of the technical information in this release in the form and context in which it appears.
Notes to editors:
About Lansdowne
Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focussed, oil and gas exploration and appraisal company quoted on the AIM market and head quartered in Dublin. Lansdowne holds acreage in the North Celtic Sea Basin, including a 20% stake in Exploration Licence SEL1/11 which contains the Barryroe oil field.
For more information on Lansdowne, please refer to www.lansdowneoilandgas.com
About Providence Resources
Providence Resources is an Irish based Oil & Gas Exploration Company with a portfolio of appraisal and exploration assets located offshore Ireland. Providence's shares are quoted on the AIM in London and the ESM in Dublin. Further information on Providence can be found on www.providenceresources.com
ABOUT APEC
APEC Energy Enterprise Ltd. was established in 2014 as a Hong Kong registered company with headquarters in Beijing. In addition to its original focus on offshore oil & gas services, APEC provides upstream energy acquisition advice and management services in partnership with Chinese oil companies, offshore and onshore service providers, and SOE investment groups. www.apecenergy.com
In 2017, APEC established a strategic partnership with COSL and JIC for the investment and development of offshore oil and gas opportunities worldwide, utilising Chinese infrastructure and equipment (most notably Chinese offshore drilling units/vessels) to earn equity positions in projects.
ABOUT JIC
JIC Capital Management Limited is the investment arm of China Jianyin Investment Limited (known as "JIC"), which is a Chinese state-owned (100% subsidiary of China Investment Corporation) integrated investment group established in 2004. At the end of FY 2016, total assets totalled 124.71 billion yuan (US$19.3 billion), with total AUM of 40.843 billion yuan (US$63.4 billion). The Company is headquartered in Beijing with 14,000 employees around the world and over 120 subsidiaries. JIC has a A+1 rating from Fitch, an A2 rating from Moody's and an A rating from Standard & Poors. http://en.jic.cn
ABOUT COSL
China Oilfield Services Co., Ltd. ("COSL") is the largest integrated oilfield service provider in Asia. Services run through all stages of offshore oil and gas exploration, development and production. The business is divided into four broad categories: geophysical prospecting services, drilling services, oilfield technical services and ship services. It is a majority owned (54.63%) subsidiary of Chinese state-owned company, CNOOC. www.cosl.com.cn
ABOUT BARRYROE
ABOUT BARRYROE
Barryroe, located in the North Celtic Sea Basin, off the south coast of Ireland, has had six wells successfully drilled on the structure. Hydrocarbons have been logged in all six wells, with flow test results from four wells. Four wells were drilled in the 1970's by Esso with a further appraisal well drilled in 1990 by Marathon Oil. The sixth well was drilled by Providence & Lansdowne in 2011/12. The oil is light (43° API) with a wax context of c. 17-20%. The successfully tested reservoir sands are of Cretaceous Middle and Lower Wealden age located between c. 4,500' TVDSS and 7,550' TVDSS. The field is covered by both 2D and 3D seismic, the latter which was acquired in 2011.
Following acquisition and interpretation of the new 2011 3D seismic data together with the subsequent drilling and testing of the 48/24-10z Barryroe appraisal well in 2012, Providence retained the services of Netherland Sewell & Associates Inc. (NSAI) to carry out a third party contingent resource audit (CPR) of the in-place hydrocarbon and recoverable resources for the Basal Wealden oil reservoir. NSAI reported that the Basal Wealden oil reservoir has a 2C in-place gross on-block volume of 761 MMBO with recoverable resources of 266 MMBO and 187 BCF of associated gas, based on a 35% oil recovery factor. A third party (CPR) audit of the overlying Middle Wealden, which was carried out by RPS Energy (RPS) in 2011, reported a 2C in-place gross on-block volume of 287 MMBO with technically recoverable resources of 45 MMBO and 21 BCF of associated gas, based on a 16% oil recovery factor.
The total combined audited gross on block 2C recoverable resources at Barryroe therefore amount to 346 MMBOE, comprising 311 MMBO and 207 BCF. The following table summarises the range of total gross audited on-block Barryroe oil resources:
1C | 2C | 3C | |||
(MMBO) | (MMBO) | (MMBO) | |||
Basal Wealden STOIIP (NSAI) | 338 | 761 | 1,135 | ||
Basal Wealden Recoverable (NSAI) | 85 | 266 | 511 | ||
Middle Wealden STOIIP (RPS) | 31 | 287 | 706 | ||
Middle Wealden Recoverable (RPS) | 4 | 45 | 113 | ||
TOTAL STOIIP | 369 | 1,048 | 1,841 | ||
TOTAL RECOVERABLE OIL RESOURCES | 89 | 311 | 624 | ||
Note: The table above excludes recoverable solution gas (i.e. 207 BCF or 34.5 MMBOE in the 2C case)
Further incremental resource potential has been identified in logged hydrocarbon bearing intervals within stacked Lower Wealden and Purbeckian sandstones which Providence has previously estimated contains total associated P90, P50 & P10 in place oil resources of 456 MMBO, 778 MMBO & 1,165 MMBO respectively. As there is currently limited reservoir and well test data available over these two intervals, future well data over these specific zones would be required in order to firm up their associated final recoverable resource estimates.