LGO Energy PLC Operational Update (3958U)

TIDMLGO

RNS Number : 3958U

LGO Energy PLC

29 July 2015

For Immediate Release, 7am

29 July 2015

LGO ENERGY PLC

("LGO" or the "Company")

Operational Update

LGO is pleased to announce that its latest development well, GY-676, at its Goudron Field development in Trinidad, reached total depth at 3,545 feet measured depth ("MD") on 19 July 2015. Electric log interpretation from both the Goudron Sandstone and C-sand intervals confirms the presence of recoverable hydrocarbons, with the net hydrocarbon pay in the main C-sand target estimated as 222 feet. The well has been successfully cased for future production.

Well GY-676 is the fifth of the seven 2015 wells and the second well from drilling Pad 5 in the north-east of the field. Net oil pay in the Goudron Sandstone was encountered between 535 and 1,255 feet with an estimated 250 feet of total net pay. The oil bearing C-sand interval was encountered between 1,870 and 3,455 feet MD. Shows of light oil at surface were reported at a depth of 2,077 feet, typical for these wells which are drilled close to pressure balance. Net hydrocarbon bearing pay in the C-sand interval is estimated as 222 feet. These observed net pay zones are fully in line with pre-drill expectations for this well.

The next well in the planned sequence, GY-677, the sixth in the 2015 program, and the fourteenth in the field redevelopment program has now been spudded and drilled and cased to the first casing point at 355 feet MD.

Second Quarter Production

Group oil production averaged 951 bopd during the second quarter 2015. This includes managed natural depletion from the new wells drilled last year on Pads 1, 2 and 3 at Goudron. This figure does not reflect production from Goudron Pad 4 since wells GY-672, GY-673 and GY-674, were drilled during the second quarter and only brought on line at the end of the period. Operations continue to optimise production from those new Pad 4 wells and a further update on that will be issued in due course. Once all seven 2015 wells have been completed the Company will be able to update production guidance.

Future Goudron Drilling Plans

Well Services Rig 70 has been moved to the next cellar on Pad 5 and it has spudded the sixth well of the 2015 program, GY-677, which is planned to be drilled to a total depth of 3,286 feet MD (3,000 feet TVDss) at a location 540 feet south-west of the surface location. Well GY-677 is once again targeting a C-sand reservoir interval.

The final well in the 2015 C-sand program, well GY-678, will be drilled from Pad 3 and will target an area which is similar to the very successful well GY-670 which was flowed at rates above 1,000 barrels of oil per day in late 2014. Further drilling on Pad 5 is planned for at a later date. Well GY-678 will be designated a "data well" with additional tests including the cutting of a 30-foot core in the C-sand. This additional data is key to the planned enhanced oil recovery ("EOR") project for which we are planning a pilot project which we anticipate commencing in 2016.

A program of shallow Goudron Sandstone wells, which can be drilled using a smaller drilling rig, is now being worked-up with plans to commence that work later in the year. A rig has been identified and it is being brought up to necessary specifications for this work. Sites are being selected for the drilling of simple low cost vertical wells to depths up to 1,700 feet in order to exploit the Goudron Sandstone. The thirteen wells drilled in our 2014 and 2015 campaigns have so far exhibited an average of 288 feet of net oil pay in the Goudron Sandstone. Site preparation can be scaled back considerably with the use of the small footprint rig, and locations can therefore be sited close to Goudron Sandstone targets across the field.

As previously announced, the recent independent reserves assessment by LR Senergy identified between 170 and 343 million barrels of Proved and Probable oil in place in the Goudron Sandstone. This new drilling work is intended to start to convert a portion of that to producing reserves and broaden the production base. To accommodate the expanded drilling program, we have made the necessary applications for the current 30 well environmental approvals to be increased to 60 wells.

Fergus Jenkins, LGO's Chief Operating Officer, commented:

"Our C-sand drilling program at Goudron continues to progress very well and we are now on our sixth new well in 2015. Drilling times and costs have been markedly reduced from 2014 and we have been collecting valuable data to plan the future development of the field, including the EOR project which has exciting potential. Goudron continues to operate in a very efficient fashion with low historical operating costs of less than $10 per barrel which is beneficial in the low oil price environment in which we continue to have to operate."

Steve Horton, LGO's Chairman, commented:

"The Company has a sound investment case for the long-term development of its portfolio in Spain and Trinidad. The Goudron asset in Trinidad, with its low operating cost, is especially robust to low oil prices and we are confident of the Company's underlying value."

Qualified Person's Statement:

The information contained in this announcement has been reviewed and approved by Neil Ritson, Chief Executive Officer and Director for LGO Energy plc, who has over 35 years of relevant experience in the oil industry. Mr. Ritson is a member of the Society of Petroleum Engineers (SPE), an Active Member of the American Association of Petroleum Geologists (AAPG) and is a Fellow of the Geological Society of London.

Enquiries:

 
 LGO Energy plc              [phone] 
 Neil Ritson 
  Fergus Jenkins 
 
 Beaumont Cornish Limited    [phone] 
 Nomad 
 Rosalind Hill Abrahams 
  Roland Cornish 
 
 FirstEnergy Capital LLP     [phone] 
 Joint Broker 
  Jonathan Wright 
  David van Erp 
 Bell Pottinger              [phone] 
 Financial PR 
  Henry Lerwill 
 
 
 
 
 

Glossary:

 
 C-sand              sandstone reservoirs below the pre-Mayaro 
                      unconformity and above the pre-Lower 
                      Cruse unconformity encompassing sandstones 
                      of equivalent age to both the Gros 
                      Morne and the Lower Cruse formations 
------------------  ---------------------------------------------- 
 EOR                 enhanced oil recovery 
------------------  ---------------------------------------------- 
 oil in place        stock tank oil initially in place, 
  or STOIIP           those quantities of oil that are 
                      estimated to be in known reservoirs 
                      prior to production commencing 
------------------  ---------------------------------------------- 
 pay and net         a reservoir or portion of a reservoir 
  pay                 formation that contains economically 
                      producible hydrocarbons. The overall 
                      interval in which pay sections occur 
                      is the gross pay; the portion of 
                      the gross pay that meets specific 
                      criteria such as minimum porosity, 
                      permeability and hydrocarbon saturation 
                      are termed net pay 
------------------  ---------------------------------------------- 
 proved reserves     those quantities of petroleum, which, 
                      by analysis of geoscience and 
                      engineering data, can be estimated 
                      with reasonable certainty to be commercially 
                      recoverable (1P), from a given date 
                      forward, from known reservoirs and 
                      under defined economic conditions, 
                      operating methods, and government 
                      regulations 
------------------  ---------------------------------------------- 
 probable reserves   those additional reserves which analysis 
                      of geoscience and engineering data 
                      indicate are less likely to be recovered 
                      than Proved Reserves but more certain 
                      to be recovered than Possible Reserves. 
                      It is equally likely that actual 
                      remaining quantities recovered will 
                      be greater than or less than the 
                      sum of the estimated Proved plus 
                      Probable Reserves (2P) 
------------------  ---------------------------------------------- 
 MD                  measured depth; the depth of a well 
                      measured along the length of the 
                      borehole 
------------------  ---------------------------------------------- 
 TD                  total depth 
------------------  ---------------------------------------------- 
 TVDss               true vertical depth below the sea 
                      level datum 
------------------  ---------------------------------------------- 
 

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