TIDMMXO
RNS Number : 9114O
MX Oil PLC
04 February 2019
4 February 2019
MX OIL PLC
("MXO" or the "Company")
Aje Investment and Corporate Update
MXO plc, an oil and gas investing company quoted on AIM, is
pleased to provide the following update.
Highlights
-- Continued production from the Aje field of around 3,150 bopd (158bopd net to MXO)
-- Completion on 9(th) lifting from Aje field in late November
2018 with total offtake of c. 315,000 bbls
-- Joint venture anticipates that the next lifting will take
place in the last week of February 2019
-- Aje partnership has fully paid the $9.8m licence renewal fee
thereby securing a 20 year extension of OML 113 (Aje field)
licence
-- RPS technical work now expected to conclude in Q1 2019 to
support a decision on Aje Phase 2 development; targeting estimated
gross production of 8-12,000 bopd
-- Joint venture partners planning to undertake a flow assurance
study, during Q1 2019, planned to be concluded by Schlumberger for
potential modest increase in daily oil rate and meaningful
reduction in operation expenditure
-- Encouraging interest from potential project finance providers
given the very stable oil production and potential significant
near-term production upside
-- Company has continued to maximise its cash positions through
undertaking a full review of its operating cost base
-- Monthly burn rate reduced by 66% compared to its 2018 position
Aje Investment Operations Update
During 2018, operations at the OML 113 licence continued to make
good progress underpinned by strong performance of the Turonian and
Cenomanian reservoirs which continue in line with the operating
partners' expectations. Production from the two wells in the Aje
field within the OML 113 licence area has continued at a very
stable rate achieving a total produced volume for 2018 of
approximately 1,200,000 barrels of oil. Currently the field is
producing around 3,150 bopd (158 bopd net to MXO).
The partnership successfully completed the 9(th) lifting from
the Aje field in late November 2018 offtaking approximately 315,000
barrels of oil. The 10(th) lifting is scheduled to occur in late
February 2019.
Following the announcement in August 2018 that consent from the
Minister of Petroleum Resources had been received for the renewal
of the OML 113 licence for another term of 20 years, the Aje
partners have now fully paid the $9.8m licence renewal fee.
The continuous oil production of Aje-4 and Aje-5 is above
initial expectations and has encouraged the operating partner group
to approach RPS Group with the purpose to establishing the
viability of additional development of Aje. RPS Group was appointed
in late October 2018 to conduct an assessment of the potential
development activity associated with the additional upside oil
resources. The modelling work conducted to date has reinforced the
partners' view of the potential for new oil wells in both the
Turonian and Cenomanian. RPS Group's work is now expected to
conclude in Q1 2019 and will form the basis for a decision on
further drilling in 2019 ("Phase 2") with a view to a full
development project thereafter.
The operating partners continue to assess the viability that
these two development phases. The operating partners consider that
the initial development drilling may result in peak oil production
rates of 8,000 to 12,000 barrels of oil per day and the full
development drilling may increase production to 20,000 barrels of
oil per day and 100 million standard cubic feet per day of gas. The
partnership expects that the initial development drilling is likely
to require one new development well in the Cenomanian reservoir and
one horizontal side track development well in the Turonian
reservoir. The full development project will be subject to the
availability of project finance in the future to allow a number of
new wells to be developed.
Project Financing
The operating partners continue to assess options to meet the
funding requirements for the completion of the additional wells
expected in Phase 2 and later to the full field development. The
operating partners continue to be cognisant of the impracticality
of funding projects the size of the Aje development by equity and
the partners have commenced steps to procure debt funding for Phase
2 and, potentially, the future stages of development.
In furthering these conversations at the joint venture
partnership level and supported by advisers, MXO is exploring the
option to secure project financing at the asset level.
These exploratory discussions are expected to continue
throughout H1 2019 so as to ensure the funding solutions and the
technical output of the RPS modelling work are in place in order
that a decision on Phase 2 development can be taken by the
partnership quickly.
Operating costs and business objectives review
The Board has undertaken a full review of its operating costs
and business objectives in order to ensure that the Company is best
set up to execute its investment plan in the most cost effective
and efficient manner with a core focus on preserving cash. The
result of this comprehensive review has been a significant
reduction in the monthly operating expenses, which are 66% lower
than incurred in 2018 and, in turn, the cash burn rate of the
Company.
The Board considers that this operating model significantly
strengthens the Company's position, ahead of the critical decision
on the Phase 2 development, whilst maintaining sufficient focus on
its investment in Aje.
Board and Key Personnel
In respect of providing it technical appraisal of its continued
investment in Aje, the Company is very pleased to retain the
services of Wim Burgers as a consultant. Wim has more than 40
years' international exploration and production experience as a
geologist and geophysicist in the oil and gas industry. Wim was
employed by ExxonMobil for the majority of his career before his
retirement in 2014. He started to work for the Company in 2015 as a
production and development geoscientist on the Aje project. This
has allowed him to develop a geological model of the Aje oil and
gas field such that he is also strongly involved within the
partnerships subsurface technical committee. He earned his master
degree in geology and geophysics at the University of Leiden, the
Netherlands.
In regard to its previous commitment to corporate governance and
to strengthening the Board, the Company maintains its intention to
do so at the appropriate time in advance of the next stage of
development later this year. The Company intends to appoint a
Chairman with the suitable industry, technical, commercial and
operational experience to support and direct the Company as the
partners develop the Aje project. As previously announced, the
Company regards the appointment of a new Chairman as a key step at
the appropriate time and is pleased that Richard Carter will
continue in the role of Non-Executive Chairman in the interim.
Stefan Oliver, the Company's CEO commented:
"The Aje partnership has continued to make significant progress
towards the realisation of a Phase 2 development of Aje. 2019 is
poised to be an important year for the Company and its stakeholders
as we expect to see continued encouraging progress through the work
undertaken by RPS Group towards an investment decision on the Phase
2 development. With the continued stable production from the field,
the current well economics and the work to increase production
rates, MXO is well positioned to see a potential significant
revaluation of its investment in Aje arising from the development
strategy of the Aje field."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 and the person who arranged
for release of this announcement on behalf of the Company was
Stefan Olivier, Chief Executive Officer of the Company. Upon the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
* * ENDS * *
For further information please visit www.mxoil.co.uk or
contact:
MX Oil PLC
Stefan Olivier, CEO +44 20 77863555
Cairn Financial Advisers
LLP
(Nominated Adviser)
Jo Turner/James Caithie +44 20 7213 0880
Cornhill Capital
(Broker)
Daniel Gee +44 20 7710 9612
MX Oil's classification of reserves and resources are based on
the definitions set by the Petroleum Resources Management System
(PRMS-2007), sponsored by the Society of Petroleum Engineers/World
Petroleum Council/American Association of Petroleum
Geologists/Society of Petroleum Evaluation Engineers
(SPE/WPC/AAPG/SPEE) as issued in March 2007.
Glossary of key terms
bbls barrels
bopd barrels of oil per day
Mscf Thousand standard cubic feet
MMboe Million barrels of oil equivalent
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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