TIDMCERP
RNS Number : 1910K
Columbus Energy Resources PLC
09 April 2018
9 April 2018
COLUMBUS ENERGY RESOURCES PLC
("Columbus" or the "Company")
Q1 Business, Operational and Financial Update
Columbus, the oil and gas producer and explorer focused on
onshore Trinidad with the ambition to grow in South America, is
pleased to provide an update on business, operational and financial
activities during Q1 2018.
Leo Koot, Executive Chairman of Columbus, commented:
"Our vision is to create a Company with a strong and sustained
production base, providing a foundation of steady cashflow to allow
Columbus to create further growth elsewhere. In Q1 2018 we
delivered value growth production, we delivered solid cashflows,
and we delivered the South West Peninsula ("SWP") transaction on
improved terms, all of which positions the Company to move onto the
next stage of exciting growth opportunities through exploration and
M&A activities. We are confident that the SWP, which contains
multiple mapped prospects each ranging in size from 20-400 mmbbls,
has the potential to deliver transformational growth over the next
18 to 24 months.
"The growth of the production base in Goudron is not without its
challenges. In January, production was lower than our target due to
a testing and monitoring phase. For the remainder of Q1 2018,
successful well treatments led to the Company "Base Case" being
consistently met with occasional peaks of production reaching or
exceeding the "High Case" targets. The Company has worked hard to
increase the Company's possible production capacity and continues
to work on legacy and new technical challenges to unlock the full
benefit of this increased capacity.
"Our 2018 work programme is fully funded from production
revenues and available cash and we continue to increase production
in a responsible and efficient manner at Goudron, alongside
progressing activities on the SWP with the reactivation of the
Bonasse oilfield and further analysis of the 3D seismic and other
data to identify our first prospect to be drilled, potentially in
H1 2019.
"An active M&A market exists in Trinidad and elsewhere in
South America providing a number of acquisition opportunities. We
are working hard to grow our footprint and are focused on
completing at least one value accretive material acquisition in
2018."
Key Highlights in Q1 2018:
-- Good progress made delivering Columbus's strategy roadmap of
being cash flow positive from operations and providing a good
foundation for creating value though production growth.
-- Successful SWP re-negotiation on materially improved terms
consolidating Columbus's acreage position in an attractive basin
which includes multiple mapped prospects, each ranging in size from
20-400 mmbbl.
-- Solid production base within 2018 guidance, despite technical
challenges, delivering steady cashflow and base for future
growth:
o Q1 peak production of 627 BOPD, above the "High Case" target
of around 600 BOPD for February 2018.
o Following a testing and monitoring phase during January 2018
in the Goudron field, production has consistently met or exceeded
the Company's "Base Case" targets.
o Average production per month as follows: January 427 BOPD;
February 541 BOPD, March 542 BOPD.
-- Cashflow positive position maintained from operations delivering US$0.70 million.
-- Continued focus on capital discipline with cash balance of
US$4.1 million as at the end of Q1 2018 and outstanding loan
balances reduced to US$0.96m.
-- Legacy issues addressed including the BOLT transaction,
official closure of the La Lora Concession in Spain and
implementation of Goudron Field production optimisation well work
programme and operational, facility and process improvements
designed to improve production and operational performance.
Outlook
-- All planned 2018 activities fully funded from production revenues and available cash.
-- On track to deliver full year production guidance.
-- Reactivation of production from the Bonasse field has
commenced with a workover rig to be on-site for production
enhancement well-work in the coming weeks.
-- Continuing to work actively on a number of acquisition
opportunities using the following strict investment screening
criteria which is not exclusive: onshore; operatorship, easy export
routes, mature oil provinces in the Caribbean or South America;
close to infrastructure; funded in a manner which is accretive for
Columbus' current shareholders.
DETAILED INFORMATION
Growth Opportunities - South West Peninsula ("SWP"):
In March, the Company announced that it had successfully
restructured the BOLT transaction, on materially improved terms.
The intent behind the original BOLT transaction was to gain access
to the potential hydrocarbon resource in the SWP. The Company
continues with that intent and now has access to a large area
(approximately 8,700 acres) in the SWP including multiple mapped
prospects, each ranging in size from 20-400 million barrels in
place. The transaction is a clear fit with the Company's strategy
to build a core exploration, appraisal, development and potentially
significant production hub in the SWP.
A summary of the key commercial terms of transaction (in
comparison with previous BOLT transaction) are as follows:
Commercial Terms New Transaction Previous BOLT Transaction
------------------------ ---------------------------- --------------------------
SWP Rights - 100% rights through 100% rights until
access to lease new wholly-owned Feb. 2019 through
for up to 28 Company subsidiary BOLT company, new
years for upfront consideration 27-year lease extension
of US$0.375m for BOLT from Feb.
2019 (not yet secured)
------------------------ ---------------------------- --------------------------
Bonasse Field 100% operational Operational control
control through BOLT acquisition
------------------------ ---------------------------- --------------------------
BOLT loan adopted Nil US$ 1.1m principal
and payable by (plus interest)
the Company
------------------------ ---------------------------- --------------------------
Upfront consideration US$0.53m - upfront US$0.18m
to Seller and consideration
Petrotrin payable has effectively
by the Company fallen by approx.
60% (when BOLT
loan taken into
account)
------------------------ ---------------------------- --------------------------
3% only after
Royalty (or equity) 10m barrels produced,
payable to Seller US$1.25m pa cap 7.5%
------------------------ ---------------------------- --------------------------
Deferred consideration US$0.5m upon development No deferred consideration
payable to Seller of any field other
than Bonasse Field
------------------------ ---------------------------- --------------------------
BOLT Ownership No ownership - Columbus owned
25% current equity 25% of BOLT with
relinquished agreement to acquire
remaining 75% as
part of transaction
------------------------ ---------------------------- --------------------------
Future drilling Approx. US$15k No drilling bonuses
bonuses to Singh upon spud of each
Estates of first 3 deep
wells
------------------------ ---------------------------- --------------------------
Future Development Approx. US$30k No development
Bonus to Singh on approval of bonuses
Estates Development Plan
arising from new
discovery
------------------------ ---------------------------- --------------------------
Lease royalty 0% 10% from first
2019-2020 oil, no cap
------------------------ ---------------------------- --------------------------
Lease royalty 10%, US$2m pa 10% from first
2021-2026 cap oil, no cap
------------------------ ---------------------------- --------------------------
Lease royalty 12.5%, US$2m pa 10% from first
2027-2045 cap oil, no cap
------------------------ ---------------------------- --------------------------
Lease royalty After 2 years On first oil
timing
------------------------ ---------------------------- --------------------------
The up-front considerations in 2018 are payable from available
cash in accordance with the 2018 Budget. The Company plans to
undertake further analysis of the good quality 3D seismic and other
data on the SWP, with the first well potentially being drilled,
subject to satisfactory technical analysis, in the first half of
2019.
A new dedicated operational team is being established to work on
the Bonasse oilfield. Shortly after signing the SWP deal, the
Company has reactivated the Bonasse oilfield and is planning
further well reactivation work, with a workover rig commencing
activities in the coming weeks. All works have been budgeted for in
the 2018 Budget.
Goudron Performance Enhancements:
The Company has continued to implement a programme of Goudron
Field production optimisation wellwork aimed at low cost oil
production gains, whilst simultaneously growing the field
operations crew numbers and capabilities in a cost-efficient
manner. This has been accompanied by the implementation of
operational, facility and process improvements designed to improve
production and operational performance:
-- The Goudron Field crew has been reorganised into three
functional operations: (a) Goudron Baseline Protection; (b) Well
Interventions; and (c) Water Injection teams.
-- Core staffing has been strengthened through integrating key
contract personnel such as the sales Battery Station Operators into
the core Baseline Protection Team and additional recruitment into
the Water Injection team.
-- The wellwork programme has focussed on low cost existing well
optimisation with the successful Q4 2017 campaign continuing into
Q1 2018. This programme has the added benefits of establishing well
integrity ahead of potential water injection operations. All
Goudron Field wells are targets for such activities and 8 jobs have
been successful in increasing oil rates in Q1 2018.
-- The well-optimisation programme has resulted in some
successful oil increment wells responding with increased sand
production which the conventional rod pumps are not designed to
handle efficiently. This prohibits consistent achievement of the
"High Case". Resolving solids management in successful well
stimulations represents the main technical challenge to the Goudron
Field 2018 incremental production initiative. The Company has
recruited additional Petroleum Engineering expertise in Trinidad
and is working with artificial lift and sand control suppliers to
develop effective solutions to improve post well intervention sand
clean-up.
-- The wellwork programme has also targeted the re-start of
previously shut-in wells to increase oil and produced water
availability. A 7 well programme has been completed in Q1 2018
targeting increased field production of 1,000 BWPD. This has now
been achieved, allowing additional volumes to be available for the
water injection pilot work.
-- Field facilities improvements continue including the
installation of an additional back-up electrical generator which
now allows 100% coverage of Goudron production wells during the
frequent external power outages. Additional in-field flow-lines
using reclaimed production tubing have been installed to distribute
water for the injection and well stimulation programmes. These
practical, low-cost solutions are aimed at improving production
uptime, enhancing water injection pilot operational efficiency and
reducing incremental wellwork costs.
Solid production base delivering cash flow:
In January 2018, the Company undertook a testing phase to allow
for a better understanding of the reservoir and to plan for an
increase in incremental production. Due to wells being taken
offline for injection trials and monitoring, there was a period of
lower production compared to the Company's "Base Case" target.
During the remainder of Q1 2018 the monitoring continued and
successful well treatments led to the Company "Base Case" being
consistently met with occasional peaks of production reaching or
being greater than the "High Case". This has increased the
Company's possible production capacity, however the Company has
continued to work on legacy and new technical challenges in order
to unlock the full benefit of this capacity.
Production in Q1 2018 was as follows:
-- January oil production: average of 427 BOPD. Base target: 501 BOPD
-- February oil production: average of 541 BOPD. Base target: 506 BOPD
-- March oil production: average of 542 BOPD. Base target: 542 BOPD
-- Peak production: 627 BOPD, demonstrating High Case potential
is achievable as legacy and technical issues continue to be
addressed.
The Board remains confident that the Company will achieve its
end of year forecasted cumulative production volumes. The Company
notes that it has established a solid, production base that is cash
flow positive. This allows the Company to maintain its capital base
and reinvest cashflow profits to grow the business. Whilst some
production challenges remain, including sand control, profitable
day to day operations from the Goudron field (with 2P reserves of
11.8 mmbbl) provides a robust platform for future growth through
either the SWP assets and/or M&A activity.
Goudron Waterflood Campaign:
Water injection emphasis in Q1 2018 has concentrated on
injection interference testing in the Goudron Mayaro sandstone in
the vicinity of the GY-254 well. Daily injection of available water
has been achieved using the newly commissioned produced water
re-injection facilities with offset production well monitoring
through downhole memory gauges and active Echometer based fluid
level monitoring.
GY-669 injection was discontinued in January after pressure
monitoring results indicated a limited connectivity with offset C
sand production point GY-670. Support for GY-670 remains a high
potential injection target and other offset existing well locations
are being reviewed to assess their potential support to this well
which when initially completed in December 2014 delivered 1,100
BOPD.
The Company is continuing with water injection on a daily basis
and is constantly reviewing the effect on production and where
water injection can best be deployed to increase production.
Spain:
In Q1 2018, the Company largely closed-out legacy issues
associated with the La Lora Concession in Spain and is ready to
participate in any re-tender process for the Ayoluengo oil field
initiated by the Spanish Authorities.
The re-tender is expected in Q2-3 2018. The legacy issues were addressed as follows:
-- Completion in January of various dismantling works of old infrastructure.
-- Formal extinction of the La Lora Concession in March.
-- Completion in March of a Collective Dismissal Process ("CDP")
under Spanish law affecting 14 employees. The CDP process was
completed on time and the final cost was consistent with the
relevant budget approved by the Board. The costs were met from
currently available funds. The final cost to the Company of the CDP
was approximately EUR410,000 with ongoing costs to maintain the
field on a care and maintenance basis reducing to approximately
EUR15,000 per month instead of EUR60,000 per month.
Health, Safety & Environment ("HSE"):
The Company passed a 400,000 manhours without a LTI in February
2018 following another accident free quarter. Total field manhours
in 2017 was 101,879 and the milestone signifies over 3 years since
the last LTI. A reorganisation of the Company HSE structures has
been undertaken to reflect the new challenges of the Goudron Field
increase in wellwork, facilities and water injection operations
activity. This has included a renewed emphasis on risk
identification and management as well as recruitment and training.
The operational implementation of water injection that commenced in
Q4 2017 has moved the Goudron Field away from discharging produced
water and allowed a focus on increased field crew competencies.
Strong cash position, fully funded 2018 work programme:
Un-audited Q1 2018 Financial Results Summary
-- Cash flow from operations in Q1 2018: US$0.70 million
operating netback achieved after payment of operating costs,
workovers and well interventions, royalties and SPT.
-- Cash in hand: US$4.1 million at 31 March 2018, after full
payment of the EUR0.41 million (US$0.504 million) CDP costs to
employees in Spain.
-- Average realised sales price from Goudron operations in Q1
2018: US$58.41 per barrel (peaking at US$60.68 per barrel in
January).
-- Gross Revenues during Q1 2018 of US$2.64 million, all monies
received by the Company in Q1 2018 from Petrotrin before
month-end.
-- Special Petroleum Tax ("SPT") now payable in Trinidad with
realised sales oil price consistently above US$50 per barrel.
Royalties and SPT in Q1 2018 charged at equivalent of US$24.78 per
barrel on Goudron field.
-- Capex: Total capex of US$0.86 million incurred during quarter.
-- Lind Partners loan position: Loan balance reduced to US$0.96
million at end March 2018, US$0.4 million of loan repayments made
to Lind in Q1 2018 in cash as per Budget. Loan repayments will be
reduced to US$0.04 million per month by the end of July 2018.
-- All planned activities, business costs and liabilities in
2018 in Trinidad, Spain and London, including loan repayments, will
be fully funded from production revenues and available cash, as per
the approved 2018 Budget.
No new fund-raises are planned in 2018 by the Company at this
time, although the Company continues to examine new business
opportunities and funding possibilities for those opportunities
with various external parties. The Board has committed that any
future fund-raising, to support any new business opportunities,
will be seen to be accretive for all of the Company's shareholders.
"Accretive" in this respect means that any equity or other form of
funding to support a transaction/s needs to be clearly seen to
increase shareholder's value, not reduce that value through
dilutive fund-raising.
Issue of Shares:
In order to conserve the Company's cash resources, the Company
agreed last year with its financial adviser & broker VSA
Capital Ltd and one of its consultants Anthony Hawkins Consulting
GmbH, to receive part of their fees in shares instead of cash.
Pursuant to these agreements, approximately 1.3m of the Company's
shares fall to be issued for services provided from July 2017 to
February 2018. These shares, which were calculated using the volume
weighted average share price of the Company for the 30 days prior
to the first day of each month in which services were provided,
will be issued shortly and the market will be updated
accordingly.
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
Qualified Person's statement:
The information contained in this document has been reviewed and
approved by Stewart Ahmed, Managing Director (Trinidad) for
Columbus Energy Resources plc. Mr Ahmed has a BSc in Mining and
Petroleum Engineering and is a member of the Society of Petroleum
Engineers. Mr Ahmed has over 32 years of relevant experience in the
oil industry.
Contact Information
Columbus Energy Resources plc +44 (0)20 3794
Leo Koot / Gordon Stein 9230
VSA Capital Limited
Financial Adviser and Broker
Andrew Monk / Andrew Raca / Justin +44 (0)20 3005
McKeegan 5000
Beaumont Cornish Limited
Nominated Adviser
Roland Cornish / Rosalind Hill +44 (0)20 7628
Abrahams 3396
Camarco
Public and Investor Relations +44 (0)20 3757
Georgia Edmonds / James Crothers 4983
Notes to Editors:
Columbus Energy Resources Plc is an oil and gas producer and
explorer focused on onshore Trinidad with the ambition to grow in
South America. Initially focussed on maximising production from its
core Goudron field asset, Columbus is cashflow positive and aims to
create transformational growth by developing its exploration
targets across its portfolio in the South West Peninsula ("SWP"),
which lies in the extreme southwest of Trinidad and consists of
stacked shallow and deep prospects, in a capital efficient and
disciplined manner.
Columbus is guided by the following core values; safe and
sustainable, stronger together, creative excellence, positive
energy, totally trusted and personally responsible.
The Company is led by an experienced Board and senior management
team with supportive shareholders and intends on leveraging its
expertise and experience to build an attractive and diversified
portfolio of assets across South America in order to build an oil
production led South American exploration business.
To find out more, visit www.columbus-erp.com or follow us on
Twitter @Columbus_ERP.
Glossary
"BOPD" Barrels of oil per day
"BWPD" barrels of water per day
"LTI" Lost Time Incident
"mmbbl" Million barrels of oil
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFLLFIASDITIIT
(END) Dow Jones Newswires
April 09, 2018 03:25 ET (07:25 GMT)
Columbus Energy Resources (LSE:CERP)
Historical Stock Chart
From Apr 2024 to May 2024
Columbus Energy Resources (LSE:CERP)
Historical Stock Chart
From May 2023 to May 2024