TIDMAOGL
RNS Number : 6247Q
Attis Oil and Gas Ltd
22 October 2019
Attis Oil & Gas Ltd / Index: AIM / Epic: AOGL/ ISIN:
VGG6622A1057 / Sector: Oil and Gas
22 October 2019
Attis Oil & Gas Ltd ('the Company')
New Acreage in Texas, New Drill Programme, Reserve Report
Closing of Bridge Loan Facility & Issue of Equity
Highlights:
-- Secured first acreage in the proven Red Cave formation in
line with growth strategy focused on the development of the
Company's activities in the Texas Panhandle centred around its
headquarters in Borger
-- The Bivins 115 lease ("Bivins") includes 17 identified proved
undeveloped drilling locations with a present value (PV10) of
US$8.15m @ US$55 oil price (net to Attis) based on figures produced
jointly by the Company and KLF Geolgical Consulting LLC, a
qualified third party
o Assumes 945,585 BOE produced over 20 yr life of wells
-- 12 well drill campaign scheduled, subject to securing further
funding, to commence early Q2 2020
-- Closing of a non-dilutive interim Bridging Loan Facility
("Bridging Loan") of GBP420,000 to fund pre-drill development of
Bivins and working capital. The loan funds will be drawn over the
next 4 weeks as required for development funding.
-- The Company has also issued 102,450,160 shares at 0.1 p
GBP102,450 to three advisors for accrued fees and certain Directors
for accrued salaries (together the 'Settlement Shares')
o Mr Charlie Wood, CEO and Mr Paolo Amoruso, Executive Chairman
& Ms Sarah Cope have not drawn salaries for the past 3 months,
Mr Russell Lamming has not drawn a salary since joining the
board.
-- In line with re-postioning and the divestment of non-core
assets, sales package prepared for Austin Field to monetise part of
the NPV10 of US$7.6M assigned to proved and probable reserves by
recent independent Reserve Report, covering all existing assets,
being Austin, Zink Ranch and Fort Worth
-- MOU signed with large acreage holder to allow the Company to
conduct due diligence over additional Red Cave leases
Attis Oil and Gas Ltd (AIM: AOGL), the AIM listed oil and gas
company, is pleased to announce an update on its activities
including the acquisition of the Bivins 115 lease, the Company's
first acreage in the proven Red Cave formation in the Texas
Panhandle close to Attis' headquarters in Borger, Texas. This
follows the completion of the Company's successful 'Put-on-Pump'
delivery outlined below, and the ensuing asset and services review.
Further, the Company has completed a Bridging Loan Facility of
GBP420,000 supported by existing shareholders, the COO and the
Chairman of the Company to fund working capital and development
work to prepare the Bivins property to be drill-ready for an eight
well programme once the operational weather window reopens in Q2
2020.
The Company intends to use Bivins as a platform to build a
strategic position in Borger/Amarillo (Texas) and the surrounding
Texas Panhandle by leveraging its established relationships with
local mineral and working interest owners, operators and
contractors, and roll-out an aggressive multi-well drill programme
targeting the Red Cave formation. In order to achieve this, the
Company will seek to monetise its current portfolio to fund an
initial eight well programme in April 2020.
Pursuant to this, the Board commissioned Moyes & Co., an
independent third party, to undertake a Reserves Report covering
all the Company's existing assets, being Austin, Zink Ranch and
Fort Worth. The results confirm the portfolio's monetising
potential, and include a PV10 of US$7.6M assigned to proved and
probable reserves. The Company is now seeking to divest the Austin
Field in the near term, while the Zink Ranch and Fort Worth fields
are also under review with regards to ascertaining the potential to
redeploy funds to further advance the Company's Red Cave focus.
In line with this refocus, the Company has entered into a Mutual
Non-Disclosure Agreement and accompanying 30 day Memorandum of
Understanding ("MOU") with an owner and operator of approx. 25,000
leasehold acres in the Texas Panhandle. The MOU allows the Company
to conduct due diligence over the acreage, determine feasibility,
and, if satisfactory, enter into good faith negotiations on
structure, and mutually acceptable terms for a potential
transaction.
As well as providing field development capital, the divestment
strategy allows a more focused, cost effective approach centred
around the Borger headquarters and Bivins acerage. Further, Attis
is undertaking a corporate restructuring and cost reduction
programme and will update the market on this in due course.
Red Cave: de-risked profitable oil and gas development play
Bivins represents the Company's first acreage acquisition in the
Red Cave formation, a formation which has been steadily producing
high quality natural gas since 1916 with over 3.61 million barrels
of oil and 74.55 Billion Cubic Feet ("BCF") of high BTU gas
produced since 2006. Covering approximately 60,000 acres around
Borger and Amarillo in the Texas Panhandle, Red Cave is primarily
drilled for its liquids rich and high BTU ("British Thermal Unit")
content natural gas, but advancements in fracking technology have
opened up opportunities in the tight siltstone formation. The oil
play, which covers just 10,500 acres, sits in a 28 square mile
area, 30 miles to the north of Amarillo, and remains largely intact
as drilling has historically targeted the deeper and larger Brown
Dolomite formation. With low drilling costs and low geological
risk, Red Cave represents an opportunity to generate significant
cash flow in the near term.
The natural gas produced obtains an average US$2.75 premium per
Million Cubic Feet ("MCF") above spot price. On a barrels of oil
equivalent conversion, according to the field and well economics
outlined in the table below, the Company expects to generate
compelling returns on its investment, subject to the availability
of additional funds to undertake the proposed drilling campaign.
Drilling and development at Bivins and elsewhere in 2020 and beyond
is expected to be funded from a combination of cashflows, asset
consolidation, reserve based lending and strategic joint
ventures.
The below modelled economics have been prepared in conjunction
with KLF Geolgical Consulting LLC, a qualified third party
geological consultant group enaged by the Company.
Oil price
Gas Price held flat @ $5.65/MCF $50 $55 $60 $65
Lease Size 115 acres
------------ -------- --------- --------- ---------
Drill Sites 17
------------ -------- --------- --------- ---------
Working Int. 100%
------------ -------- --------- --------- ---------
Net Revenue Int. 75%
------------ -------- --------- --------- ---------
Cost per well $295,000
------------ -------- --------- --------- ---------
EUR per well (BOE) 55,623
------------ -------- --------- --------- ---------
Field EUR (BOE) 945,585
------------ -------- --------- --------- ---------
Undiscounted Cashflow
@ $50/bbl + $5.65/MCF
(17 wells) $26,934,571
------------ -------- --------- --------- ---------
Post Tax IRR 58.3% 65.4% 72.5% 79.9%
------------ -------- --------- --------- ---------
PV10 per well $426,985 $479,530 $532,074 $584,618
------------ -------- --------- --------- ---------
17 well PV10 $7.25m $8.15m $9.04m $9.93m
------------ -------- --------- --------- ---------
Aggressive drill-out: objective to drill all 17 well locations
at Bivins
Based on seven-acre spacings, 17 well locations have been
identified on the Bivins 115 lease. Subject to funding, Attis is
focused on an aggressive drill-out of this Red Cave property during
2020; topside completion planning, site preparation, infrastructure
build out and tank battery installation are well underway.
Negotiation for the acquisition of a disposal well is complete and
drill slots with Quest Drilling Services have been secured for a
maximum eight well programme in April 2020 and a further four well
slots through Q3 in 2020.
Wider Portfolio Reserve Report: PV10 of US$7.6M assigned to
existing proved and probable reserves
The Company has had a Reserve Report prepared by petroleum
consultants, Moyes & Co., based on production data as at 1
September 2019. Dated 1 September, the report was commissioned to
catagorise the existing producing reserves and future potential.
Moyes & Co. has estimated the net reserves and future net
revenue for the Company's interest in the properties: Austin Field,
Fort Worth Field, Zink Ranch Field. The estimates of reserves and
future revenue in the report have been prepared in accordance with
SPE/WPC/SPEE/PRMS guidelines.
Grand Total Reserves As Of 1(st) September 2019
Reserves Net Cash Flow
Gross Gross Net Net Future Future Future Future NPV
Oil Gas Oil Gas Net Net Net Net (10)
Revenue OPEX Capital Cash
& Taxes Flow
------- -------- ------- -------- --------- --------- --------- --------- --------
Reserve Class/Category (Mbbl) (MMscf) (Mbbl) (MMscf) ($M) ($M) ($M) ($M) ($M)
------- -------- ------- -------- --------- --------- --------- --------- --------
Proved Developed
Producing 58.0 859.0 45.3 649.4 4,195.8 2,294.6 1,774.5 126.6 252.1
------- -------- ------- -------- --------- --------- --------- --------- --------
Proved Developed
Non-Producing 4.9 421.4 3.9 296.7 994.1 496.3 302.7 195.1 188.5
------- -------- ------- -------- --------- --------- --------- --------- --------
Proved Undeveloped 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------- -------- ------- -------- --------- --------- --------- --------- --------
Total Proved (P1) 62.9 1,280.4 49.2 946.1 5,189.9 2,790.9 2,077.2 321.7 440.6
------- -------- ------- -------- --------- --------- --------- --------- --------
Probable Undeveloped 374.3 545.3 289.1 443.1 15,758.4 2,070.3 2,558.0 11,130.2 7,199.3
------- -------- ------- -------- --------- --------- --------- --------- --------
Proved + Probable
(P2) 437.2 1,825.7 338.3 1,389.2 20,948.3 4,861.2 4,635.2 11,451.9 7,639.9
------- -------- ------- -------- --------- --------- --------- --------- --------
NOTES TO RESULTS
1. The Reserve Report is not a revision of the Company's CPR
dated November 2012. No property listed in the 2012 CPR are
currently owned by the Company.
2. The Company's net future gas revenues reflect the depressed prices and future forecasts.
Bridging Loan Facility and Issue of Warrants
The Company has agreed a short-term, five-month senior secured
funding facility of GBP420,000 with 5 shareholders and the
Company's COO, Thom Board and Chairman, Paolo Amoruso. The material
terms of the facility comprise interest of 10% per annum accruing
monthly and paid with principal at the end of the five month term,
a fixed and floating charge over the Company's Zink and Austin
assets, and the issue of 420 million five-year warrants priced at
0.1 pence per share ("Warrants"), which is a premium of 17.5%
premium over the Company's closing mid-market share price on 21
October 2019. The Bridging Loan will be due for repayment on or
before 21 March 2020 and will have a preferential right of
repayment from any future financing secured by the Company.
The purpose of the Bridging Loan is to cover working capital
while the Company seeks to complete the sale of the Austin assets
and finalise the financing package for the development of the
Bivins Ranch property.
On completion of the Bridging Loan, Paolo Amoruso & Thom
Board will be interested in the following warrants:
Participants Number of Total number Shareholding % of issued
Warrants of Warrants upon exercise share capital
being issued held including of total upon exercise
this issue** number of of Warrants++
Warrants
held
Paolo Amoruso 60,500,000 60,500,000 181,886,952 4.7%
-------------- ---------------- --------------- ---------------
Thom Board* 25,000,000 25,000,000 120,135,443 3.1%
-------------- ---------------- --------------- ---------------
* Held by JAM & Sons Limited, a company in which T.
Board has a 49% interest
** Not including unvested
employee options
Related Party Transaction
Paolo Amoruso and Thom Board, as directors of the Company, are
considered to be "related parties" as defined under the AIM Rules
and, accordingly, the Bridging Loan constitutes a related party
transaction for the purposes of Rule 13 of the AIM Rules.
The Directors independent of the Bridging Loan, being Charlie
Wood, Sarah Cope and Russell Lamming consider, having consulted
with Beaumont Cornish, the Company's nominated adviser, that the
terms of the Bridging Loan are fair and reasonable insofar as the
Company's shareholders are concerned.
Charlie Wood, Attis CEO said, "The acreage secured at Bivins
represents the culmination of the Company's 12-month strategic
review and delivery. One year ago, 11 October 2018, at Mayan's AGM,
the Company proposed to take stock of the current assets, assess
near term revenue potential and future opportunity. Following
Attis' review, at the time an independent company, the Company
pursued an aggressive 'put-on-pump' transition to production and
cashflow. The acquisition of Attis in April of this year completed
the transition to a full discipline North American oil and gas
owner and operator. The securing of this non dilutive funding
facility provides additional working capital, which allows us to
complete preparation works on Bivins Ranch, exit Austin field and
work towards a funding package for the drilling of Bivins in
2020.
"These last few months have been a continuation of the Board's
commitment to grow the business and return increasing shareholder
value. With the existing properties in production, we have utilised
our in-house experience to undertake commercial and technical
reviews of new business opportunities. The incorporation of Attis'
oilfield services division demonstrates the depth of our
operational resource and market penetration in the Texas Panhandle.
Our local knowledge and relationships has further translated into
commercial success by securing Bivins, a cornerstone property for
our Red Cave development play. The rationale for our decisions one
year ago has been delivered and I'm delighted to present the new
Company strategy."
Further Information
Terms of Bivins 115 Lease
The Bivins 115 lease provides for a US$25,000 signature bonus
and a 25% royalty payment on production. The Company is required to
drill a well during the primary term of 18 months of the lease and
remains in force thereafter as long as oil or gas are produced from
the lease in paying quantities. In order to retain the lease beyond
the primary term, Attis is required to (i) drill and complete at
least one (1) well and (ii) drill and complete at least one (1)
Commercial Well or Dry Hole during each year, following the end of
the primary term of the lease.
The Company can confirm the following is completed at
Bivins:
-- Eight well locations surveyed, staked; four location
permitted by the Texas Rail Road Commission
-- Agreed acquisition of depleted gas well on the Bivins 115
lease for conversion to water disposal well.
-- Draft oil and casinghead gas gathering contracts in place.
Directors Fees
51,700,160 Ordinary Shares will be issued 0.1p ( 17.5% premium
to mid market at close on 21 October 2019 ) in relation to the
settlement of accrued Director fees to the Company's CEO, Charlie
Wood, Chairman, Paolo Amoruso, Russell Lamming & Sarah Cope for
accrued unpaid salary ("the Settlement Shares"). Following the
issue of the Settlement Shares the directors will have the
following holdings:-
Holding Post
Settlement Settlement
Director Shares Shares % equity
Russell Lamming 9,266,670 211,380,337 5.5%
----------- ------------- ---------
Paolo Amoruso 25,793,650 121,386,952 3.1%
----------- ------------- ---------
Charlie Wood 13,684,000 44,632,767 1.2%
----------- ------------- ---------
Sarah Cope 2,955,840 2,955,840 0.1%
----------- ------------- ---------
Advisor Fees
50,750,000 Ordinary Shares will be issued at 0.1p in relation to
the settlement of accured fees to three advisors ("the Settlement
Shares").
Admission of Settlement Shares
The Settlement Shares ("New Shares"), which will rank pari passu
with the existing Ordinary Shares, are to be admitted to trading on
AIM (the "Admission"). It is expected that Admission will become
effective and dealings in the New Shares will commence on or around
28 October 2019.
Total Voting Rights ("TVR"):
Following the issue of the New Shares (being the Settlement
Shares), the Company's issued share capital will consist of
3,876,742,468 Ordinary Shares with voting rights. No Ordinary
Shares are held in treasury at the date of this announcement and
therefore following the Admission, the total number of Ordinary
Shares in the Company with voting rights will be 3,876,742,468.
The above total voting rights figure may be used by shareholders
as the denominator for the calculation by which they will determine
if they are required to notify their interest in, or a change to
their interest in the Company.
**S**
For further information visit www.attisog.com or contact the
following:
Charlie Wood Attis Oil & Gas Ltd +44 20 7236 1177
Thom Board Attis Oil & Gas Ltd +44 207236 1177
---------------------------- -----------------
Roland Cornish Beaumont Cornish Ltd +44 20 7628 3396
---------------------------- -----------------
James Biddle Beaumont Cornish Ltd +44 20 7628 3396
---------------------------- -----------------
Frank Buhagiar St Brides Partners Limited +44 20 7236 1177
---------------------------- -----------------
Megan Dennison St Brides Partners Limited +44 20 7236 1177
---------------------------- -----------------
Colin Rowbury Novum Securities Limited +44 20 7399 9400
---------------------------- -----------------
About Us
Attis Oil & Gas Ltd is an AIM-traded (London Stock Exchange)
North American-based energy company. It is actively pursuing a
primary recovery oil strategy focused on re-stimulating wells
within mature producing basins with immediate cash flow from
projects that are shallow, low risk with low levels of capex and
infrastructure already in place. Attis is also seeking to develop
new drill opportunities within both existing & new acreage.
Technical Sign Off
All of the technical information, including information in
relation to reserves and resources that is contained in this
announcement has been reviewed by, Mr Thom Board. Mr Board is a
member of the Society of Petroleum Engineers who is a suitably
qualified person with over 24 years' experience operating and
developing oil and gas assets. Mr Board has reviewed the release
and consents to the inclusion of the technical information.
Glossary
NPV Net Present Value is the value of all future cash flows.
The statement of cash flows acts as a bridge between the
income statement and balance sheet (positive and negative)
over the entire life of an investment discounted to the
present
PV10 is the present value of estimated future oil and gas revenues
net of estimated direct expenses and discounted at an annual
discount rate of 10%
EUR Estimated Ultimate Recovery
PUDs Proven Undeveloped Drills
MBbls One thousand barrels of crude oil.
MBoe One thousand barrels of oil equivalent.
Mcf One thousand cubic feet of natural gas volume.
BOE Barrel of Oil Equivilent
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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