LGO Energy PLC Update, Spain (1760U)
January 13 2017 - 10:15AM
UK Regulatory
TIDMLGO
RNS Number : 1760U
LGO Energy PLC
13 January 2017
For Immediate Release
13 January 2017
LGO ENERGY PLC
("LGO" or the "Company")
Update, Spain
LGO today provides an update on its Spanish oil production
operations at the Ayoluengo Oilfield in the 100% held La Lora
Concession ("Concession") in northern Spain, which are operated by
its wholly owned subsidiary Compañía Petrolífera de Sedano, S.L.U.
("CPS").
La Lora Concession
The oil production concession at La Lora was granted in late
1966 covering the known extent of the Ayoluengo Field and is due to
expire on 31 January 2017 after 50 years of continuous operations.
CPS has operated the field for over 9 years since November 2007 and
has maintained production averaging 115 barrel of oil per day over
that period. In August 2015, after several years of preparation,
CPS submitted a comprehensive technical and legal analysis of
future investment options and applied to the Spanish authorities
for an extension of the Concession for a further two 10-year
periods in which to implement those investments.
The Spanish Ministry of Industry and Tourism ("Ministry")
responsible for hydrocarbon concessions submitted CPS's application
to the Spanish Council of State for consideration of the legal
position. The legal status of the Concession is complicated by
several fundamental changes in the hydrocarbon and concession laws
in Spain over the last 50 years. The Council of State has now
provided their guidance to the Ministry and we understand the
Ministry is in the process of preparing a final decision for
submission to, and ratification by, the Spanish Cabinet of
Ministers.
Should an extension be granted the next phase of field
development is envisaged, subject to Group financing
considerations, to involve the drilling of between five to ten new
side-track wells from existing wellbores to reach additional
reservoir zones from which primary oil production can be extracted.
Original oil in place ("STOIIP") has been estimated in a number of
independent studies to be approximately 105 million barrels
("mmbbls") of which only 17.5 mmbbls have been produced to
date.
If an extension of the current Concession is not forthcoming
then CPS plans to submit an application for a new 30-year
concession on the same technical basis as the planned 10-year
extensions and will potentially do so in collaboration with a
partner.
LGO understands that the Ministry will inform CPS of its final
decision by the end of January 2017.
Field Operations
In order to satisfactorily manage the Ayoluengo operations in
the event that an immediate decision is not taken, or that an
extension is not granted by 31 January 2017, CPS has now started to
temporarily suspend operations at Ayoluengo with a view to
suspension being complete by the end of January. The temporary
suspension of producing wells, oil handling facilities and staff
employment contracts will reduce CPS's outlay by some 90% during
any period of continued uncertainty.
As previously announced on 29 November 2016 CPS plans to
transport all produced oil from the field by end January to an
existing buyer under the terms of a contract signed in November
2016. CPS is discussing interim arrangement with the Ministry for
the transport of any remaining oil, anticipated to be approximately
1,000 barrels, held in tanks at the 31 January 2017 when oil
production operations will be suspended.
Neil Ritson, LGO's Executive Chairman, commented:
"LGO has been actively seeking a continuation of the La Lora
Concession for several years and regrets that a final decision has
yet to be reached by the Spanish administration. Whilst a temporary
suspension is unfortunate it has very limited impact on the
Company's operating finances and we remain positive about the
longer term potential of the field and we look forward to being in
a position to continue work as soon as possible. We have indicated
to the Ministry that we will be keen to apply for a new concession
should an extension not be granted."
"LGO's focus remains on its oil operations in Trinidad which
represent over 90% of the Company's oil in place and booked
reserves, and over 80% of current production. Preparations for the
resumption of drilling at the Goudron Field are progressing as
envisaged with further news expected shortly."
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 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 (BGS).
Enquiries:
LGO Energy plc +44 (0) 203 794 9230
Neil Ritson
Fergus Jenkins
Beaumont Cornish Limited +44 (0) 20 7628 3396
Nomad
Roland Cornish
Rosalind Hill Abrahams
FirstEnergy Capital LLP +44 (0) 20 7448 0200
Joint Broker
Jonathan Wright
David van Erp
Bell Pottinger +44 (0) 20 3772 2500
Financial PR
Henry Lerwill
Glossary:
mmbbs million barrels of oil
----------------- -------------------------------------
OIIP (or STOIIP) (stock tank) oil initially in place,
those quantities of oil that are
estimated to be in known reservoirs
prior to production commencing
----------------- -------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
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