9 Jan 2018 07:00
09 January 2018
Nu-Oil and Gas plc
('Nu-Oil' or 'the Company')
Aker Solutions sign Agreement with MFDevCo for Provision of Dutyholder Services and Update on Licensing Option ON 11/1
Nu‐Oil is pleased to announce that Marginal Field Development Company Limited ('MFDevCo'), in which the Company has a 50 per cent interest, has entered into an agreement with Aker Solutions Limited ('Aker Solutions') for the provision of dutyholder (or 'installation operator') services on MFDevCo's projects. The dutyholder is appointed by the licensee to manage the operation of a field. The addition of dutyholder capability is imperative in the final phases of project due diligence and provides the link with the operational stage of projects. Prior to project acquisition, it is important to secure a dutyholder that understands MFDevCo's operating philosophy and will exercise the strong control of 'through-life' costs that is vital if forecast project economics are to be maintained.
Key points
· MFDevCo has entered into an agreement with Aker, with an initial term of 5 years, under which Aker has the right of first refusal to provide dutyholder services on MFDevCo projects.
· The dutyholder role is critical to the operational stage of projects, providing the strong control of through-life costs that is vital if forecast project economics are to be maintained.
· Aker Solutions will invest resources in assisting MFDevCo in the identification and initial assessment of potential projects, providing invaluable operational input and third party verification.
· Aker Solutions will undertake an 'operations oversight' role throughout the design and delivery stages of projects on which it will be dutyholder, to ensure facilities can be operated safely and effectively and that through-life costs are controlled. These services will be delivered on a deferred payment basis with costs recovered from production.
Aker Solutions is one of the world's leading providers of oilfield products, systems and services to the industry. The experience and expertise that Aker Solutions brings, in particular in managing offshore operations across the life of a field, complements that of MFDevCo and the existing members of the Consortium and demonstrates the ability to not only deliver but also operate the projects that MFDevCo secures.
Under the agreement signed, MFDevCo has granted Aker Solutions the right of first refusal to provide dutyholder services on all MFDevCo projects; in return, Aker Solutions will invest resources in assisting MFDevCo in the identification and initial assessment of potential projects. The investment that Aker Solutions is making in project evaluation is a major contribution to MFDevCo's project due diligence and provides third party verification that will be important to investors and will help MFDevCo finalise project finance strategies. The dutyholder input also brings an additional dimension to the 'Suitability Assessments' MFDevCo undertakes for projects and facilities by providing greater certainty in the estimation of through-life costs and, again, greater confidence to potential investors.
In addition to the initial assessment, Aker Solutions will provide operational input throughout the design and delivery stages of projects on which it will be dutyholder to ensure that facilities can be operated safely and effectively, in line with specified performance criteria and with through-life costs controlled. Operations oversight services will be delivered on a deferred payment basis with costs recovered from production.
The initial term of the agreement is five years and both parties intend it to form the basis for a long term working relationship with the potential for increasing efficiencies in service provision and working practices going forward.
The Company continues to work with MFDevCo to conclude negotiations on a number of marginal field projects.
Alison Pegram, Managing Director of MFDevCo
"Signing this agreement with Aker Solutions is a very significant step for us, ensuring that we have the support and expertise required not only to deliver but also to operate our projects safely and cost-effectively. Aker Solutions' commitment to innovation and collaboration fits very well with our own philosophy and that of our Consortium; their reputation and experience will lend further credibility and give additional confidence to partners and potential investors at what is an extremely exciting time for the company."
Craig Wiggins, Senior Vice President of Aker Solutions
"Working with Marginal Field Development Company is an excellent fit for Aker Solutions in the UK" said SVP Craig Wiggins, who heads Aker Solutions' production asset services business in the UK. "The relationship will capitalize on our broad capabilities including our strength in 'installation operator' services."
Alan Minty, Executive Chairman of Nu-Oil
"I am delighted that MFDevCo has reached this agreement with Aker Solutions, which secures the support of a world-class dutyholder for their marginal field projects. This is a significant step towards completing the team required to develop and, crucially, to deliver projects efficiently and safely. This news will reinforce the credibility of the Consortium and help to secure MFDevCo's first marginal field projects.
"As negotiations to secure the first projects accelerate, I am looking forward to announcing further news as the various commercial agreements required are concluded."
Licensing Option ON11/1
In February 2013, the Company submitted an application for an Exploration Licence over the area covered by Licensing Option ON11/1 (the 'Licensing Option') in the Clare Basin, onshore Ireland. The application was suspended pending the outcome of the Irish Environmental Protection Agency's ('EPA') studies into the use of hydraulic fracturing which was to be integral to the development of the area. Following completion of the EPA's report, hydraulic fracturing has been expressly prohibited from use in the exploration for and extraction of onshore petroleum hence the Company's application for an Exploration Licence has been declined.
The declination of the Exploration Licence application was expected by the Company and planning for that area was terminated over 3 years ago. The area covered by the Licensing Option is part of the Company's legacy assets hence the Company's strategy, business plan and activities are unaffected by this decision.
Enquiries
Nu-Oil and Gas plc | |
Simon Bygrave, Investor Relations | Tel: +44 (0)161 817 7460 |
Nigel Burton, CEO | Tel: +44 (0)7785 234 447 |
Strand Hanson Limited | Tel: +44 (0)20 7409 3494 |
Rory Murphy Ritchie Balmer Jack Botros | |
Beaufort Securities Limited | Tel: +44 (0)20 7382 8300 |
Jon Belliss Elliot Hance |
Note to Editors
The Company
Nu-Oil is a development and production company, which utilises appropriate development approaches to create value from undeveloped and mature oil and gas assets. Nu-Oil is building a portfolio of development and production assets with an emphasis on stranded and marginal discoveries which can be unlocked using cost-effective development solutions.
Nu-Oil targets thoroughly appraised fields located in basins with stable political and regulatory regimes. By doing so Nu-Oil minimises exposure to the risks associated with frontier plays, particularly exploration and appraisal risks.
Nu-Oil's 50% owned subsidiary, Marginal Field Development Company Ltd. ('MFDevCo'), has developed offshore production solutions that improve the economics of oil projects by significantly lowering development costs compared to conventional approaches. To implement its solutions, MFDevCo has established the Marginal Field Delivery Consortium ('the Consortium'), a group of leading global engineering specialists who provide the skills and capability required to deliver projects. Nu-Oil will utilise MFDevCo solutions and the capability within the Consortium to develop and deliver its projects.
www.nu-oilandgas.com
Marginal Field Delivery Company
Marginal Field Delivery Company ('MFDevCo') focuses on maximising recovery from the vast, undeveloped hydrocarbon resources contained within marginal fields worldwide, utilising appropriate re-deployable solutions to transform these undervalued assets. MFDevCo manages the entire lifecycle of marginal field projects from opportunity screening, suitability assessment and financing through engineering to production and decommissioning.
www.mfdevco.com
Aker Solutions Limited
Aker Solutions is a global provider of products, systems and services to the oil and gas industry. Its engineering, design and technology bring discoveries into production and maximize recovery. The company employs approximately 14,000 people in about 20 countries.
www.akersolutions.com
Disclaimer
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").