LGO Energy PLC Group Operational Update (9724D)

TIDMLGO

RNS Number : 9724D

LGO Energy PLC

03 May 2017

For Immediate Release, 7 am

3 May 2017

LGO ENERGY PLC

("LGO" or the "Company")

Group Operational Update

LGO is today pleased to announce progress on its Trinidad operations in both Goudron and the South West Peninsula, and also provides an update on its activities in Spain.

Goudron Field, Trinidad

Following the completion of the initially planned two infill wells, GY-682 and GY-683, Rig #18 has been temporarily demobilized whilst new drilling contracts are negotiated. Additionally, some of the ancillary equipment associated with the rig is being modified in order to reduce the size of drilling locations needed, which will save future earthworks and costs when the infill drilling programme proceeds.

Four additional Mayaro Sandstone infill locations have been fully approved by the Petroleum Company of Trinidad and Tobago ("Petrotrin") and the Ministry of Energy and Energy Industries ("MEEI") and work can commence as soon as the LGO Board approves contracts for these wells.

Well GY-683, which initially flowed naturally without pumping has now been put on rod pump at a stable average oil rate of 55 barrels oil per day ("bopd"), which remains significantly ahead of the average prognosis of 45 bopd. GY-683 continues to produce dry oil, strongly suggesting that it is not in communication with depleted sandstone reservoirs already produced in any nearby wells.

The earlier well, GY-682 was producing at an average of 32 bopd in the first half of April with a relatively high water cut and by contrast with GY-683 this may suggest that some of the perforated zones are affected by depletion. Initial simple interventions to improve oil production rate were undertaken in mid-April leading to an erratic rate which has yet to stabilise. Since water handling is not an issue at the Goudron Field GY-682 will be left on pump for now and further interventions, including water shut-off, to restore stable production closer to the initial oil rate of 55 bopd will be undertaken as necessary.

Technical work supporting the first phase of the Goudron waterflood enhanced oil recovery project is nearing completion and final regulatory approvals will be sought over the coming weeks.

Production from the Goudron Field in the first quarter of 2017 averaged 435 bopd. The second quarter will benefit from the recent completion of the GY-682 and GY-683 wells and it is anticipated to see a significant improvement in production as a result.

South West Peninsula, Trinidad

LGO, through its local subsidiary Leni Trinidad Limited ("LTL"), holds an interest in all onshore private petroleum leases covering in excess of 10,000 acres of the prospective, but underexplored, South West Peninsula of Trinidad. Included in the leases are several LTL 100% owned lease, as well as a 50% interest in the Icacos Field and associated leases, which produces oil from shallow reservoirs. In addition, LTL holds a 25% interest in Beach Oilfield Limited ("BOLT") which owns the shallow Bonasse Field and surrounding leases. LTL has an exclusive right to acquire the remaining shareholding in BOLT under a Sale and Purchase Agreement (the "SPA") announced 24 January 2017.

As discussions with various parties have not been completed LTL has delayed the completion of the acquisition of BOLT and as a result the longstop date in the SPA, previously 30 April 2017, has been mutually waived by the parties.

Notwithstanding the decision to defer completion, LTL and BOLT have commenced a handover of operations. During the last week of April, LTL transported approximately 200 barrels of oil from Bonasse to the sales point at Point Fortin approximately 30 kilometres from the field and this will sold to Petrotrin in the next few days. LTL now expects to commence regular oil sales and to start to increase production rates by the recommissioning of existing wells and equipment at the field.

During the first quarter 2017 the Icacos Field produced 12 bopd net to LTL's 50% interest.

Spain

Further to the Company's announcement of 9 February 2017 LGO's Spanish subsidiary Compañía Petrolífera de Sedano, S.L.U. ("CPS") has been working with the Ministry of Energy, Tourism and Digital Agenda ("Ministry") to close all relevant files associated with the previous La Lora Concession. Once that process is completed the Hydrocarbons Department of the Ministry can commence the formal issuing of a tender for a new concession covering oil operations at the Ayoluengo Field. A final inspection of the Company's physical suspension arrangements is anticipated to be made by the Ministry in May and then notice of the tender is expected to be issued.

Other than regular site inspections by CPS's senior HSE engineer, no work is now being undertaken at Ayoluengo. All wells remain suspended and all oil previously produced from the field has been sold and exported. Staff employment contracts are also suspended.

Neil Ritson, LGO's Chief Executive Officer, commented:

"Increasingly LGO is focusing on its South West Peninsula assets and is looking forward to completing the licensing process and an independent resources evaluation this year. The recommencement of oil operations at the Bonasse Field is very encouraging and adds to the growing momentum the Company has at the Goudron Field."

Qualified Person's Statement:

The information contained in this announcement has been reviewed and approved by Neil Ritson, Chief Executive Officer and Chairman for LGO Energy plc, who has over 38 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 (FGS).

Enquiries:

 
                                          [phone] 
 LGO Energy plc                            9230 
 Neil Ritson/Fergus Jenkins 
 
                                          [phone] 
 Beaumont Cornish Limited                  3396 
 Nomad and Joint Broker 
 Rosalind Hill Abrahams/Roland Cornish 
 
                                          [phone] 
 VSA Capital                               5000 
 Joint Broker 
 Andrew Monk/Andrew Raca 
 
                                          [phone] 
 Camarco                                   4983 
 Public and Investor Relations 
  Gordon Poole/Billy Clegg 
 

Glossary:

 
 bopd               barrels of oil per day 
-----------------  --------------------------------------------- 
 dry oil            crude oil produced with no appreciable 
                     quantity of water 
-----------------  --------------------------------------------- 
 Mayaro Sandstone   alternative name for the Goudron 
                     Sandstones occurring at stratigraphic 
                     intervals above the pre-Mayaro unconformity 
-----------------  --------------------------------------------- 
 perforated /       the process of creating holes in 
  perforations       the casing, typically using explosive 
                     charges, to allow the reservoir to 
                     be in communication with the production 
                     wellbore 
-----------------  --------------------------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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May 03, 2017 02:00 ET (06:00 GMT)