NUOG.L Regulatory News (NUOG)

20 Mar 2008 07:00

Enegi Oil PLC20 March 2008 Enegi Oil Plc ("Enegi" or the "Company") Placing and Admission to AIM and Bourse de Luxembourg 20 March 2008 Enegi Oil Plc is an independent oil and gas group whose strategy is to identify,develop and operate hydrocarbon opportunities initially focussed on the provenpetroleum region of western Newfoundland, Canada. The Company is pleased toannounce its admission to trading on AIM and the Bourse de Luxembourg today ("Admission"). Enegi will be admitted to trading at a placing price of 181p and is raisingapproximately £15.0 million, including the proceeds of a subscription by aninvestor into PDIP shortly before Admission (the "PDIP Subscription") gross ofexpenses. On Admission the Company will be capitalised, at the placing price, atapproximately £55 million. Cenkos Securities plc is Enegi's Nomad and jointBroker and Fox-Davies Capital is joint Broker. Key points: • The placing proceeds (including the proceeds of the PDIP subscription) willbe used to carry out the Group's work programme to acquire new or additionalworking interests in oil and gas assets which have been identified and are beingevaluated by the Group and provide general working capital for the Company. • Enegi's management team has extensive expertise both in the oil and gasindustry as well as the Atlantic Canada arena. • The Group's key geographical area of focus is eastern Canada, an area ofwhich the management team have significant detailed knowledge and believe isunderexploited. The Group's portfolio and area of activity is currentlyfocussed around the Port au Port Peninsula, western Newfoundland, originallyheld through Enegi's subsidiary, PDIP, which the Company acquired immediatelyprior to Admission. • The Group's portfolio comprises: Shoal point, a potentially sizeable playwhere drilling has commenced; Garden Hill South, an oil and gas discovery wherethe Group will be drilling an appraisal and production well in late 2008; andGarden Hill Central and Garden Hill North over which the group will acquire115km of onshore seismic data in 2008. Net resources on a P50 basis for thegroup are 13.1 mmboe (Information supplied by TRACS). • The Group's strategy will be to: - focus on the appraisal and development of assets which can be managed through to production; - look to acquire additional assets where they believe the Group's management team can add value through their technical and commercial skills; and - focus on Canada, which has a well established petroleum industry, access to the skills required to develop Enegi's assets and a stable economic and political environment. • The Group's work programme for 2008 involves the drilling of 2 wells:the exploration well on Shoal Point and a horizontal production well on GardenHill South. • Enegi expects to achieve commercial production and bookable reserves in2008 and plans are being developed to ensure the oil can be exported; theseplans will be implemented using local labour and should generate significantbenefits for the region. Alan Minty, CEO, commented: "We are delighted with the response that we have received during ourfund-raising roadshow. We have an exciting portfolio of assets in anunderexploited region and our admission to AIM and the Bourse de Luxembourg willenable us to move forward in our development and provide us with the fundingrequired to carry out our strategy whilst also taking full advantage of theopportunities that we believe are inherent in a consolidating oil and gasindustry. We are now looking forward to delivering value to shareholders and thecommunities in which we work." 20 March 2008 Enquiries: Enegi Oil Tel: + 44 161 817 7460 Alan Minty, CEOKevin McNair, CFO Cenkos Tel: + 44 207 397 8900Joe NallyStephen Keys Fox-Davies Capital Tel: + 44 207 936 5200Daniel Fox-DaviesRichard Hail College Hill Tel: + 44 207 457 2020 Nick ElwesPaddy Blewer Placing statisticsPlacing Price 181pNumber of Placing Shares 7,734,807Number of Ordinary Shares in issue immediately following the Placing 30,394,715Percentage of the enlarged share capital subject to the Placing 25.5%Estimated net proceeds of the Placing and the PDIP subscription receivable by the Group £13.0 millionMarket capitalisation upon Admission at the Placing Price £55.0 million The Company Enegi Oil Plc (''Enegi'' or the ''Company'') is the holding company of anindependent oil and gas group whose objective is the identification, developmentand operation of hydrocarbon opportunities. The Company is a newly incorporatedcompany with no trading history. It was incorporated to acquire PDI ProductionInc. (''PDIP'') and has, on Admission, acquired PDIP and its subsidiary, theconsideration being the issue of ordinary shares in the Company to the formershareholders of PDIP. The Company was incorporated in the United Kingdom on 13 September 2007. PDIP,which is the principal operating subsidiary of the Group, was incorporated inthe Province of Newfoundland and Labrador, Canada on 5 May 2006 in order toacquire a portfolio of oil and gas assets on the Port au Port peninsula inwestern Newfoundland and it is headquartered in St. John's, Newfoundland. The Group's current operations are focused on one discovery and four prospectsaround the Port au Port peninsula in western Newfoundland, which, althoughlightly explored, is in an active petroleum system with light oil havingpreviously been discovered there. The Group's prospects include Garden HillCentral, Garden Hill North, Lourdes and Shoal Point, along with a provendiscovery - Garden Hill South. Enegi intends to embark on an appraisaland development programme for each of these prospects in early 2008 and theDirectors anticipate that this programme will be concluded during 2009. Providedthat this programme is successful, it is expected to be followed by fulldevelopment of each of the four prospects. Background to the oil and gas sector in Newfoundland and Labrador The Province of Newfoundland and Labrador (the "Province") is located on theeastern edge of the North American continent in a stable political setting witha good environmental record. Substantial amounts of oil and gas have beendiscovered there and the Directors believe that there is potential for furtherdiscoveries. Currently there are three offshore oil projects in production, amemorandum of understanding is in place for the Hebron Project, and severalother significant discoveries and continued exploration. From 1997 to the end ofJune 2007, Hibernia, one of the three existing offshore projects, has producedmore than 800 million barrels of oil from an overall discovered resourceestimate of 2.75 billion barrels. In 2007, Newfoundland and Labrador was expected to produce almost 45 per cent.of Canada's conventional, light crude oil and to generate 12 per cent. ofCanada's hydroelectricity. Newfoundland and Labrador is strategically positionedon international shipping lanes, giving unique access to global petroleummarkets, and currently has a 115,000 barrels of oil per day refinery, with aproposed second 300,000 to 600,000 barrels of oil per day facility. There isalso a three million barrel per day transhipment terminal that services theoffshore petroleum industry. The Government of Newfoundland and Labrador obtains value from energy projectsthrough a variety of different sources, including royalties, corporate incometaxes and profits from Crown corporations. The revenues generated from energyresources are determined by the price at which they are sold, the costs todevelop them and the agreements or legislation in place to secure the Governmentof Newfoundland and Labrador's share of the resulting net revenues. The recent Energy Plan presented by the Government of Newfoundland and Labradorset out the following aims: • to ensure that any future fiscal regimes provide maximum returns to the people of the Province and are designed to respond to changing circumstances; • to assume an ownership interest in the development of energy resources where it fits strategic long-term objectives; • to leverage the Province's non-renewable oil and gas wealth into a renewable future by investing a significant portion of the Province's non-renewable resource revenues in renewable energy infrastructure and development; and • to seek resource development partners actively and to work with those partners, other governments and customers to develop these resources for the Province's mutual benefit. Exploration efforts in Newfoundland and Labrador following the discovery ofHibernia were focused on the Jeanne d'Arc Basin on the Grand Banks. Severalother areas hold great potential as indicated by early seismic explorationresults and the high level of exploration commitments. There have been seismicacquisition programmes off Labrador every year since 2002 and new surveys areplanned for the next three years. The first Call for Bids in this area since the1970s was issued in 2007 and is expected to close during 2008. Offshore easternand southern Newfoundland exploration is continuing in the Orphan and LaurentianBasins. The Directors believe that onshore and offshore Western Newfoundlandholds much promise with a number of finds onshore, excellent resource potentialoffshore and new seismic and drilling programmes planned in both areas. In order to encourage exploration activity in the region, the Government ofNewfoundland and Labrador has undertaken to make an initial investment of $20million over the next three years through a state owned company, the EnergyCorporation, to purchase existing proprietary seismic data for re-evaluation andto acquire new data. In the onshore sector, the Government of Newfoundland andLabrador is investing $5 million, through the Energy Corporation, in a PetroleumExploration Enhancement Programme to boost new petroleum exploration in WesternNewfoundland. It is expected that the Energy Corporation will use thisinvestment to acquire and assess seismic data potentially to be utilised inconsideration for equity interests in onshore projects. One issue arising from the recent Energy Plan is that the Government ofNewfoundland and Labrador is entitled to and may require a 10 per cent. equityposition in future offshore petroleum projects that require Development Planapproval, where it fits its strategic long-term objectives. It is intended thatthis equity will be held and managed by the Energy Corporation. The regulatory regime affecting the Group's interests operates at both theprovincial and federal levels. Onshore leases are issued and regulated by theDepartment of Natural Resources (DNR) in Newfoundland and Labrador and governedby the Petroleum and Natural Gas Act. The Directors consider the Group to haveexcellent relations at this level as it maintains a fully informed process withthe DNR in St. John's. Offshore petroleum resources are jointly managed by thefederal and provincial governments through the Canada-Newfoundland and LabradorOffshore Petroleum Board (C-NLOPB). The C-NLOPB manages the regulatory regimeestablished by the Atlantic Accord in 1985 and the subsequent implementationlegislation. Summary of key interests PDIP has a working interest in a production lease where it is operator and in anexploration licence, both of which are located on and around the Port au PortPeninsula, Western Newfoundland. A summary of these is set out below: Lease/licence Enegi Interest* Area Comment Production Lease 2002-01 100% (Operator) 39,227 acres Onshore (158.8 km2) (PAP-1 discovery) Exploration Licence 1070 60% (Non-operator) 254,608 acres Offshore (1,030.4 km2) * (a) assumes that all amounts due under the various agreements with CreditorCorp. and which are described in paragraph 11 of Part XII of the Company'sadmission document, will be paid when due and (b) does not include the impact ofvarious options and farm-in agreements as described in paragraph 11 of Part XIIof the Company's admission document. Garden Hill South Although Garden Hill South is an identified discovery, commercial production hasnot yet been established. There are plans to drill a 1,500m horizontal sidetrackfrom the Garden Hill South Port au Port #1 well in spring 2008. A recent studyhas indicated that a horizontal sidetrack from the existing Port au Port #1 wellis likely to provide commercial production levels. Initial production estimatesrange from 400 bpd to over 5,000 bpd. Garden Hill Central and Garden Hill North The licence holders are committed, under the terms of the extension granted tothe term of Production Lease 2002-01, to spending C$2,500,000 on a geophysicalprogramme over the Garden Hill trend which includes these two prospects. Theproposed 2D seismic survey, which will acquire 115km of onshore seismic data,should take place in 2008. Line cutting in preparation for the survey has beencompleted bringing current expenditure to C$250,000 with a further C$250,000held on deposit by the Department of Natural Resources. Shoal Point Exploration Licence 1070, which covers Shoal Point, requires a well to bespudded and diligently pursued on or before 15 July 2008. SPE is the appointedoperator for Shoal Point and has commenced their drilling programme. Work programme The Port au Port project comprises three main elements: • appraisal and development of the Garden Hill South discovery; • exploration of the Garden Hill trend along Garden Hill North and Garden Hill Central; and • exploration of Shoal Point. Corporate structure The Company, is the ultimate parent company of PDIP and Gestion which areincorporated in Newfoundland and Labrador, Canada and the UK respectively. The shares of PDIP are currently listed on the Luxembourg Stock Exchangealthough the listing of the shares in PDIP will be cancelled in due course. TheCompany has applied to have its shares admitted for trading on the LuxembourgStock Exchange. Use of proceeds and reasons for Admission The aggregate net proceeds of the Placing and the PDIP Subscription areestimated to be £13.0 million. The Directors intend to use these proceeds to: • meet the Group's funding requirements as detailed in the Group's work programme; • acquire new or additional working interests in oil and gas assets which have been identified and are being evaluated by the Group; and • provide general working capital for the Group. The Directors believe that Admission will be beneficial to the Group as it will: • provide access to capital markets for additional fundraising should the Directors consider it to be necessary; • provide the Group with the ability to offer shares as consideration for future acquisitions; • enable the Group to attract and retain key personnel, by the establishment of the Performance Share Plan; • raise the Group's profile within its chosen geographic markets; and • the Directors also believe that a dual listing (on the Bourse de Luxembourg) will broaden and increase the benefits listed above. Directors and senior managers Directors Clive Fowler, Non-executive Chairman (Age 58) Clive joined Amoco and in 1996 was appointed Managing Director of Amoco UK, thefirst British national to hold this position. Following the merger between BPand Amoco, he became West of Shetland Business Unit Manager for BP. Cliveretired from BP in 2003 and has since held non-executive director positions intwo Aberdeen-based start-up companies. He has a BSc Hons in Geology from theUniversity of Birmingham. Member of the Audit, Remuneration and Nomination Committees. Alan Minty, Chief Executive Officer (Age 61) Alan qualified as a Chartered Engineer in 1975. Alan was a risk advisor for theNorwegian Petroleum Directorate in 1979. Since then he has worked on majorcontracts for clients such as Mobil, BP, Amerada Hess, Shell, Texaco, and, inNewfoundland, on the Hibernia, Terra Nova, and White Rose projects. Alan has aBSc in Mechanical Engineering from Manchester University and an MSc inManagement Studies from Bradford Management Centre. Kevin McNair, Chief Financial Officer, (Age 41) Kevin started his career in 1988 as an auditor for Fremont Financial Corporationin Chicago. Following completion of his MBA in 1993, he joined the corporatefinance team of UBS. In 1995 he joined the corporate finance team of GranvilleBaird, a UK investment bank. In 2002, he joined a privately owned industrialservices group as Group Finance Director. Kevin has a degree in Finance andAccounting from William & Mary (USA) and an MBA from London Business School(UK). Alex Lamb, Non-executive Director, (Age 37) Alex is Chairman of British Engines Limited, an engineering company supplyingthe oil and gas industry. Before joining British Engines, Alex trained as aChartered Accountant (CA) with Price Waterhouse, qualifying as a CA in 1996.After qualifying he worked within the Audit and Transaction support departmentwith a number of listed and international companies. Alex has a degree inEconomics from Heriot Watt University. Member of the Audit, Remuneration and Nomination Committees. Atholl Turrell, Non-executive Director, (Age 53) Atholl is Non-executive Vice-Chairman of Arbuthnot Securities and aNon-executive Director of, and consultant to, Arbuthnot Banking Group Plc. Hewas, until 2001 Managing Director and Head of Corporate Stockbroking at SchroderSalomon Smith Barney (now Citigroup). He qualified as a Chartered Accountant in1984. Atholl holds a Ph.D in History from Cambridge University. Member of the Audit, Remuneration and Nomination Committees. Barath Rajgopaul, Executive Director, Sub-surface Manager, Enegi (Age 61) Barath is a Chartered Engineer who began his career at Shell Chemicals, beforemoving to ICI and then the British National Oil Corporation which was latertaken over by BP. He joined BG Group where he worked until 2006. Barath'sspecialisation is in negotiating and managing large joint ventures such as TheNorth Caspian Venture (Kashagan), Elgin Franklin, Ninian, Audrey, Pickerill, andV-Fields (North Sea UK). Barath holds an MSc in Mechanical Engineering from theUniversity of Strathclyde. Senior management Rupert Porter, Financial Controller (Age 37) Rupert is CIMA qualified with fourteen years' experience and joined PDIP in May2007 as Financial Controller. Prior to this, Rupert held the position of VicePresident with BlackRock in the Business Finance team providing financial andmanagement accounting support to the Operations Business. Rupert holds a BA(Hons) from Leeds Metropolitan University in European Finance and Accounting. Damian Minty, Commercial Manager (Age 33) Damian is a Chartered Accountant with 12 years' experience. Damian began workwith PDIP in July 2006. Prior to joining PDIP, Damian held the position ofFinance Director with ENEGI Inc (a gas-to-wire technology company). He holds aBachelor of Science from Leeds University in Computer Science and ManagementStudies. Damian is the son of the CEO, Alan Minty. This information is provided by RNS The company news service from the London Stock Exchange