7 Aug 2018 07:00
7 August 2018
Nu-Oil and Gas plc
("Nu-Oil" or "the Company")
Update - PL2002-01(A) Farm-In Agreement
Further to the Company's announcement on 24 May 2018, the Company provides an update on discussions between Enegi Oil Inc. ("Enegi") and PVF Energy Services Inc. ("PVF") on the farm-in by PVF to Production Lease 2002-01(A) ("PL2002-01(A)"), in which the Company's wholly-owned subsidiary, Enegi, holds a 100% working interest. The PL2002-01(A) lease area lies over the Garden Hill field.
Discussions continue between the parties in respect of entering into a definitive farm-in agreement, which will fund the next phase of development and optimise the operational and ownership structure for the longer-term success of the project. Negotiations have identified opportunities to create local infrastructure which, in the long run, is expected to reduce costs and minimise disruption caused by the lack of a local supply chain; incorporating this may require a broader and more complex agreement perhaps incorporating further entities.
The Company is encouraged by the progress made to date with PVF and other parties, in particular the ambition to develop wider opportunities in the region. Enegi is working to conclude a farm-in agreement as a priority and will update the market as and when appropriate.
For the avoidance of doubt, all parties remain fully committed to restoring production from the PAP#1-ST#3 well and ongoing operations are not affected by these discussions.
Alan Minty, Chairman of Nu-Oil, commented:
"We believe that building infrastructure at and around Garden Hill with strategic partners makes this the cornerstone project that unlocks more opportunities for Enegi in the region; we are considering the farm-in agreement in this wider context. Thus, we would use a consortium model to develop onshore assets in western Newfoundland mirroring the Company's offshore marginal field initiative.
"We have chosen to explore this because the successful implementation of such an approach would reduce costs and potentially amend farm-in terms for the benefit of the Company."
Enquiries
Nu-Oil and Gas plc | |
Simon Bygrave Investor Relations & Communications | Tel: +44 (0)161 817 7460 |
Nigel Burton Chief Executive Officer | Tel: +44 (0)7785 234 447 |
Strand Hanson Limited Rory Murphy/Ritchie Balmer/Jack Botros | Tel: +44 (0)20 7409 3494 |
Novum Securities Limited | Tel: +44 (0) 20 7399 9425 |
Jon Bellis |
Notes
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.
Enegi Oil Inc.
Enegi Oil Inc., the Company's wholly owned subsidiary, is a private limited company registered in Canada through which the Company manages its Newfoundland assets. Enegi Oil Inc. owns 100% of Production Lease 2002-01(A) and Exploration Licence 1070.
PL2002-01 (A)
PL2002-01(A) lies over the Garden Hill Field Trend, which is a proven hydrocarbon bearing accumulation beneath the Port au Port peninsula in western Newfoundland. It is estimated, based upon internal reservoir models, to contain between 83 and 341MMBO in-place, increasing to between 136 and 591MMBO when considering the mapped offshore extent. PL2002-01(A) covers an area of 16km2 and holds between 21 and 97MMBO of this total.
Initially discovered in 1994 with the PAP#1 well, the conventional Lower Ordovician, Aguathuna Formation reservoir has since been penetrated by three appraisal side-tracks, which support the theory that reservoir productivity is linked to hydrothermal alteration. Extensive testing at the Garden Hill Site observed a lack of pressure depletion, indicating that a minimum connected volume in excess of 100 million barrels of oil is present.
Pursuant to the Production Sharing Agreement, the Company has a net revenue sharing agreement with PVF whereby PVF will undertake, and fund 100% of the costs of, operations on the PAP#1-ST#3 well, with the aim of restoring production. The Company will receive 50% of net revenue from production following PVF's recovery of costs associated with their obligations under the agreement.
As announced on 16 August 2017 the lease was renewed for a further five years and is now due to expire on 11 August 2022.
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").