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Operations Update

Mon, 13th Mar 2017 07:00

RNS Number : 2090Z
Mayan Energy Limited
13 March 2017

13 March 2017

Mayan Energy Ltd / Index: AIM / Epic: MYN/ ISIN: VGG6622A1057 / Sector: Oil & Gas

Mayan Energy Ltd ("Mayan" or "the Company")

Operations update- Lutcher Moore ("LM") 13 Shallow Well Perforation and Oklahoma Energy ("OKE") Production Update and First Non-Core Asset Realisations

Mayan Energy Ltd (AIM: MYN), the AIM listed oil and gas company, further to the announcement of 21 February 2017, is pleased to provide an update on its progress regarding the exploitation of the new formation recently detected at Shoats Creek Field ("Shoats Creek"), and progress in the revitalisation and monetization of its OKE assets.

Shoats Creek

· LM 13- Shallow Well: Owing to bad weather since last weekend, planned work has been delayed. Weather and terrain conditions permitting, the intention is to begin work in the week commencing 13 March 2017 to undertake a re-entry and squeeze with the intention of isolating the pay formations identified at 2,600 and 2,900 feet. Once the cement job has been completed, the well will be perforated and swabbed, first at the 2,900 level and if necessary at the 2,600 level. Indications as to whether these formations are oil bearing is expected to be determined during the first two weeks of work on the well.

· Once the new zone has been proved, further work will be required to complete the well and install surface equipment, with further announcements concerning economic viability and sustainable production rates to be forthcoming in due course.

· LM 20: The next stage of the rework of this well will follow on from work on the LM13-Shallow well.

Mayan has a 50.00% WI and 37.7% net revenue interest ("NRI") in the LM 13 Shallow Well formation. And has a 20.00% WI and 15.08% NRI in LM 20 in respect of oil, and a 50.00% WI and 37.7% NRI in respect of gas.

Oklahoma Energy ("OKE")

Since its RNS of 21 February 2017, a further two more wells have been restarted such that the Company now has 13 wells operating and is now producing 20 barrels oil per day ("bopd") up from the 18 bopd previously reported. This production comes from Mayan's Libby and Tinker leases, which as a result of restructuring measures introduced since the beginning of the year, have now been reinstated as productive fields. Mayan presently has 100% WI and NRI of 75% in these fields.

At the same time, the Company has now closed two transactions which will generate nearly USD 150,000 from its portfolio of OKE assets (which portfolio was until recently uneconomic to Mayan).

· Sale of Libby Lease: The Company has sold its Libby lease, in Hominy, Oklahoma for US$ 150,000. The new owner, CMO LLC will pay US$ 50,000 on taking over operations, with the balance of US$ 100,000 payable once the assignments of the leases have been approved and registered (likely to be 4 to 6 weeks from taking over operations).

· The new owner of the Libby Lease will also be taking on the decommissioning liabilities associated with more than twenty other defunct wells which are part of this field, which based upon standard industry metrics could be as much as US$ 400,000 if they were to have crystallised. Mayan had a 100% WI and a 75% NRI in these leases.

· Sale of Tinker Lease: The Company has sold its Tinker lease for US$ 16,000, with the new owner taking on the decommissioning liabilities associated with more than 25 other defunct wells which are part of this field, which based upon standard industry metrics could be as much as US$ 500,000 if they were to have crystallised. Mayan had a 100% WI and a 75% NRI in these leases.

· Liabilities to Blue Rock Capital, LLC ("Blue Rock) Following the successful renegotiation of Royalty and Contingent Liability settlement terms with Blue Rock which reduced Royalty Payments from 41% down to 5% and waived the overall Contingent liability from US$ 1.5 Million in exchange for a 10% stake of sale proceeds up to US$ 200,000 and a 50% share of proceeds in excess of US$ 200,000 (see Company's RNS of 12 January 2017)-the Company expects Blue Rock will receive US$ 16,000 from these two transactions.

Commenting on the above Eddie Gonzalez said: "I am disappointed that we have been hit by bad weather in Louisiana- from time to time access by heavy vehicles to Shoats is rendered almost impossible by very heavy rain. Unfortunately, the weather means we will have to wait another few weeks longer before we are in a position to provide an update on our LM 13- Shallow well. None the less, I am still of the view that our work will, if it is successful, have a major bearing on our thoughts as to the further development of Shoats.

At the same time, I am pleased that our work on our OKE assets has begun to show some rewards. Our start position was not favourable: our fields were uneconomic and hence not operating and were therefore potentially threatened by significant decommissioning liabilities.

By restructuring the operational obligation to Blue Rock, and following this up with very modest investment, we have been able to make the wells economic once again. From this position we have then successfully closed two transactions. Once again, as a result of the Blue Rock restructuring which we negotiated, the benefits of these deals will largely accrue to the Company (as opposed to Blue Rock). A further upside of the deals is that we have also de been able to eliminate the risk and cost of decommissioning issues which were connected to the fields, which we estimate could have been as much as US$ 800,000.

Having dealt with the Libby and Tinker leases, we are now working on the restructuring of our remaining Oklahoma assets, the Horizon and Zinc Ranch leases (both of which are presently uneconomic to Mayan) and we hope to be in a position to announce progress on creating more value from these leases in due course."

Qualified Person

The technical information that is contained in this announcement has been reviewed by Mr. Kevin Green, a Consultant to the Company and a Petroleum Geologist who is a suitably qualified person with over 30 years' experience in assessing hydrocarbon reserves and who has consented to the inclusion of the technical information.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

**ENDS**

For further information visit www.Mayan energy.com or contact the following:

Eddie Gonzalez

Mayan Energy Ltd

+ 1 469 394 2008

Charlie Wood

Mayan Energy Ltd

+44 7971 444 326

Roland Cornish

Beaumont Cornish Ltd

+44 20 7628 3396

James Biddle

Beaumont Cornish Ltd

+44 20 7628 3396

Elliot Hance

Beaufort Securities Ltd

+44 20 7382 8300

Nick Bealer

Cornhill Capital Limited

+44 20 7710 9612

Elisabeth Cowell

St Brides Partners Limited

+44 20 7236 1177

Notes:

Mayan Energy Limited is an AIM listed (London Stock Exchange) oil and gas energy company; whose present operations which are focussed on the redevelopment and enhancement of its upstream oil and gas interests in Oklahoma and Louisiana.

This information is provided by RNS
The company news service from the London Stock Exchange
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