Fastnet Oil & Gas PLC Board changes & operational update (3179Z)

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RNS Number : 3179Z

Fastnet Oil & Gas PLC

10 December 2014

10 December 2014

FASTNET OIL & GAS PLC

("Fastnet" or the "Company")

APPOINTMENT OF CHIEF EXECUTIVE, OTHER BOARD CHANGES

AND OPERATIONAL UPDATE

Fastnet (AIM: FAST, ESM: FOI), the UK and Irish listed E&P company focussed on near-term exploration and appraisal acreage in Morocco and the Celtic Sea, announces the appointment of a Chief Executive, other board changes and provides an operational update on the Company's key assets.

Board Changes

The Company announces that Carol Law has been appointed Chief Executive. Carol has been an Executive Director of Fastnet since 30 October 2012. In that role, she has worked closely with the Company's senior management team to develop and execute its near-term growth strategy. She has also worked with Fastnet's technical teams and partners to de-risk and high-grade existing opportunities to create shareholder value.(1)

As Chief Executive, Carol will lead the implementation of the Company's strategy of monetising its existing assets and prudently managing its significant cash reserves in order to restore and create shareholder value.

In addition, the Company announces that Cathal Friel assumes the role of Non-Executive Chairman, the original role he had at the time prior to the Company's acquisition of Pathfinder Hydrocarbon Ventures Ltd in July 2012. The Company also announces that Paul Griffiths, Managing Director, has resigned from the Board and leaves the Company with immediate effect to pursue other business opportunities.

The Board now comprises two executive directors Carol Law as CEO and Will Holland as CFO and three non-executive directors: Cathal Friel (Non-Executive Chairman), Michael Nolan (Non-Executive Director) and Michael Edelson (Non-Executive Director).

The Board has also agreed to seek to appoint an additional independent non-executive director with suitable E&P industry experience.

Operational Update

Given the rapidly changing economic conditions in the oil and gas sector, the Board has undertaken a detailed review of its oil and gas portfolio to ensure that the strategy to grow the Company's business and monetise its assets remains on track.

The Board is committed to growing a successful oil and gas business and believes that, in current market conditions, there are and will be opportunities to develop the business. Given the above, the Board also confirms that there is no current intention to return capital to shareholders but it has resolved to keep all options under review over the medium term.

An update on each of the Company's key assets is set out below.

Ireland

Fastnet's licences in the Celtic Sea are all in good standing and there are no outstanding financial commitments under the current license periods.

A farmout process covering the Company's Celtic Sea portfolio was initiated by Fastnet in May of this year with the intent to close the dataroom and receive indicative offers by mid-October. A number of companies engaged in a detailed review of the opportunities, with several opening unofficial discussions of potential interest in working towards a farm-in offer. However, the recent rapid decline in the oil price has created a strategic shift in the forward planning of many companies in the sector, resulting in the delay of decisions and/or changes in strategy regarding farm-in opportunities. Fastnet remains confident that its assets in the Celtic Sea hold considerable value and believes there is potential to unlock this value. The Board will continue to work, taking into account the current adverse market conditions, towards bringing in partners to further pursue exploration activities with Fastnet in the Celtic Sea.

The Company notes the recent Lansdowne Oil & Gas announcement in November of a farm-out of its Midleton gas prospect with PETRONAS' subsidiary, Kinsale Energy. This suggests that a rig could be in the region in the near term and could act as a further catalyst for an extensive exploration programme in the region.

Onshore Morocco

Fastnet retains an option ("Option") to farm into the Tendrara Lakbir Licence onshore Morocco ("Tendrara Licence") until 31 December 2014. The work programme included 3D seismic reprocessing and reservoir engineering studies by two independent parties. Results of the work undertaken support the materiality of the conventional appraisal project on the Tendrara Licence. Fastnet also recognises the potential for an unconventional gas play as well as additional conventional exploration upside on the Tendrara Licence.

The Company has been attempting to find farmin partners for Tendrara since the middle of 2014, with the intention of closing that process before the end of December 2014. It is the intention of the board of Fastnet to try to agree an extension on this option by 12 months to the end of 2015. However, these negotiations are still continuing and Fastnet has also been pursuing and continues to develop a series of strategic alternatives aimed at finding a potential financial partner who may try to develop the possible early monetisation of the Tendrara Licence. These initiatives are based on the gas-to-power market in Morocco and involve both downstream and upstream players. A further announcement on the status of the option will be made in due course.

Offshore Morocco

Fastnet drilled the FA-1 well in the Foum Assaka Licence in the Agadir Basin ("Foum Assaka Licence") earlier this year with its partners Kosmos Energy (Operator), BP plc and SK Innovation. The well encountered live oil shows and provided supporting evidence for reservoir development.

The partnership is satisfied that it has fulfilled all the current required commitments in respect of the Foum Assaka Licence. Technical work is ongoing to incorporate all of the FA-1 well data into the geological framework of the Foum Assaka License. The Foum Assaka Licence contains multiple prospects with numerous future drilling opportunities. Provided SK Innovation elects to participate in a second exploration well on the Foum Assaka Licence, Fastnet will have a carry of up to a gross well cap of US$100 million.

Numerous wells are being drilled offshore Morocco in 2015 and 2016, demonstrating the continued industry interest in the area.

The Royalty Agreement in relation to the Foum Assaka licence area between Pan Maghreb Oil and Gas Limited and Pathfinder Hydrocarbon Ventures Limited, a 100% owned subsidiary of Fastnet, has now been terminated.

Financial Position

Fastnet's cash balance as of 30 November 2014 was US$18 million, with no material outstanding license commitments. The Company's current monthly corporate overheads are running at circa $275,000 per month.

The Board believes Fastnet is well-positioned to maintain its licence portfolio and discretionary opportunities through existing option agreements for a significant time.

Outlook

Although the recent decline in the oil price and adverse market sentiment for the oil and gas sector has proved in the near-term to be challenging for all oil and gas exploration companies, large and small, the Board remains firmly committed to building a successful oil and gas business. The Board will focus on restoring and creating shareholder value through the implementation of its long held strategy of monetising existing assets and by continued prudent application of its significant cash reserves. As the industry and markets adjust to the new levels of oil pricing, the Board anticipates the industry focus will move towards profitable shallow water and onshore projects in attractive fiscal regimes with low operating costs. The Board believes Fastnet's portfolio increases in marketability based on the above premise.

Cathal Friel, Non-Executive Chairman of Fastnet, commented:

"On behalf of the Board, I wish to welcome Carol Law as Chief Executive. Having worked closely with her over the past two years, I have seen at first hand the benefits to the Company of her in-depth oil and gas experience and her deal-making expertise. I look forward to Carol driving the Company and its strategy."

"I would like to thank Paul Griffiths for his contribution to the Company and, in particular, his role in assembling the Company's asset portfolio. I wish Paul very well in his future endeavours."

Carol Law, CEO of Fastnet, commented:

"I am delighted to be appointed to the position of CEO at Fastnet and look forward to continuing to work with the Board to develop and execute our strategy. Our portfolio, both in Morocco and Ireland, holds significant exploration upside and the work programs carried out over the last 2 years have focused on de-risking the opportunities towards unlocking their value for our shareholders. Going forward, in the near term we will continue to work to high grade our asset base and manage our strong cash position through the current downturn in the energy sector. "

An updated corporate presentation is now available on the Company's website (http://www.fastnetoilandgas.com/investor-relations/presentations/2014.aspx)

 
 Fastnet Oil & Gas plc 
  Cathal Friel, Non-Executive 
  Chairman 
  Carol Law, Chief Executive 
  Officer 
  Will Holland, Chief Financial 
  Officer                                   [phone] 
 
   Shore Capital 
   Nomad 
   Bidhi Bhoma, Edward Mansfield 
 
   Corporate Broking 
   Jerry Keen                                 [phone] 
 
   GMP Securities Europe LLP 
   (Joint Broker) 
   Rob Collins, Emily Morris, 
   Liz Williamson                             [phone] 
 
   Davy 
   (ESM Adviser & Joint Broker) 
   John Frain, Anthony Farrell                [phone] 
 
   Bell Pottinger 
   Philip Dennis, Rollo Crichton-Stuart, 
   Jimmy Lea                                  [phone] 
 

ENDS

Note to editors:

(1) Carol Law is a geologist by training with more than 30 years' petroleum industry experience in exploration management, exploration geology, research, and consulting in a variety of geological settings. She has been involved in exploration activities in more than 40 countries and was a member of teams responsible for discoveries in Mozambique (Rovuma Gas), Ghana (Jubilee), Brazil (multiple Campos Basin discoveries), Alaska (Nikaitchuq), China (Bohai Bay) plus Angola, the Gulf of Mexico and others.

As Exploration Manager - East Africa & Caribbean for Anadarko Petroleum Corporation, Carol was responsible for the team that discovered the Prosperidade gas complex in Rovuma Area 1, offshore Mozambique.

She was also a member of the technical team and later Exploration Manager - West Africa, China, and Alaska for Kerr McGee Oil & Gas. Technical and managerial responsibility amongst her portfolio included offshore Morocco, including what is now the Foum Assaka block held by Fastnet and Kosmos Energy. Carol's Kerr McGee experience also included working in partnership with Kosmos Energy in offshore southern Morocco, Benin, and Ghana.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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