TIDMCLNR
RNS Number : 7810C
Cluff Natural Resources plc
20 April 2017
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
Cluff Natural Resources Plc / Index: AIM / Epic: CLNR / Sector:
Natural Resources
20 April 2017
Cluff Natural Resources Plc ('CLNR' or 'the Company')
Scoping Study indicates robust economics for North Sea gas
prospects on Licence P2248
CLNR, the natural resources investing company, is pleased to
announce the results of an independent Scoping Study covering two
prospects on its 100% owned Licence P2248 in the Southern North Sea
gas basin, a proven region which has seen a significant pick-up in
operational and corporate activity.
Highlights
-- Scoping Study by Xodus Group Limited indicates robust
economics for a range of development options for just two of the
Company's lower risk prospects on Licence P2248: the
Cadence-Scremerston Prospect and the Bassett Bunter Sandstone
-- Economic evaluation indicates highly positive NPV values in
various P50 development scenarios for both prospects
-- Post drill Expected Monetary Value ('EMV') following a
discovery for Cadence and Basset of GBP86.6 million and GBP69.0
million respectively
-- Implied extrapolated un-risked NPV for the six identified
prospects on Licence P2248 of GBP697 million
Algy Cluff, Chief Executive & Chairman commented: "This
study has confirmed our long-held conviction that exploring for gas
in the Southern North Sea can deliver significant value for
shareholders and the UK as a whole. Should exploration wells prove
commercial quantities of gas in line with expectations, then the
Scoping Study economics demonstrate that cost effective development
options are readily available, a key consideration for any operator
or investor looking at the Company's exploration assets."
Further Information
As an extension to the Competent Person's Report on P2248
published in October 2016, Xodus Group Limited were commissioned to
review potential development scenarios and economic viability of
two of the six identified prospects on CLNR licence P2248 in the
Southern North Sea gas basin, based on well analogues.
The Scoping Study focussed on two lower risk prospects on
Licence P2248, the Cadence-Scremerston Prospect and the Bassett
Bunter Sandstone Prospect, which, when combined, represent just 17%
of total P50 un-risked Prospective Resources detailed in the
October 2016 Competent Persons' Report and 12% of the Company's
total P50 prospective resources. The economics of each prospect,
based on a stand-alone development, were tested against numerous
potential exploration outcomes and development scenarios and using
a gas price profile based on UK NBP gas price futures forecasts (as
of 7 March 2017) from 2017 to the end of 2021, with gas prices from
2022 onwards increasing at 2% per annum.
The economic evaluation indicated highly positive NPV values for
both prospects and even in the P90 (i.e. low side recoverable gas
volumes) NPV positive outcomes are possible. The outputs of the
economic modelling for a selected representative development
scenario for each prospect are presented in the table below:
Prospect Formation Unrisked Chance Unrisked NPV(10) EMV
P50 Prospective of
Resources Success
(BCF)(1)
(GBPGBPMillions) (GBPGBPMillions)
---------- ------------- ------------------------- --------- ------------------------- ------------------
Low Mid High % Low Mid High Post-Drill
(P90) (P50) (P10) (P90) (P50) (P10) Success
EMV
---------- ------------- ------- ------- ------- --------- ------- ------- ------- ------------------
Cadence Scremerston 59 165 410 18 12.7 47.6 285.8 86.6
---------- ------------- ------- ------- ------- --------- ------- ------- ------- ------------------
Bassett Bunter 36 128 303 29 3.0 41.8 183.1 69.0
---------- ------------- ------- ------- ------- --------- ------- ------- ------- ------------------
(1) These figures are sourced from the Competent Person's Report
on P2248 published in October 2016.
The study indicated that other prospects on Licence P2248, which
would be significantly de-risked by exploration success, provide
significant further possible upside to the economic cases presented
below, but were not the focus of the current study. Additionally,
it is expected that significant CAPEX and OPEX synergies could be
realised if two or more prospects are developed as a cluster as
opposed to a stand-alone development.
Cadence-Scremerston Highlights
-- Modelled stand-alone development options included P90, P50
and P10 resource volumes, low and high CO(2) cases, different
export routings and varying production well performance outcomes
using the nearby Breagh field as the key analogue
-- Mid-case NPV(10) of GBP47.6 million for selected development
case (P90 to P10 range of GBP12.7 million to GBP285.8 million)
-- EMV of GBP86.6 million assuming a discovery results from the proposed exploration well
-- Cash flow positive after 18 months with a payback period of
three years for the selected P50 development case
-- Assumes no contribution from the Cadence-Fell or Camden
prospects which contain significant upside potential (P50
prospective resources of 764 BCF in aggregate) assuming exploration
success
Bassett Prospect
-- Modelled development options included P90, P50 and P10
resource volumes, low and high CO(2) cases, different export
routings and varying production well performance outcomes using the
nearby Esmond field as a primary analogue
-- Mid-case NPV(10) of GBP41.8 million for selected development
case (P90 to P10 range of GBP3.0 million to GBP183.1 million)
-- EMV of GBP69.0 million assuming a discovery results from the proposed exploration well.
-- Cash flow positive after 18 months with a payback period of
less than three years for the selected P50 development case
-- Assumes no contribution from the Bathurst and Beckett
prospects which contain significant upside potential (P50
prospective resources of 678 BCF in aggregate) assuming exploration
success.
A copy of the full report can be found on the following link:
http://www.cluffnaturalresources.com/investor-relations/technical-reports/
Qualified Person's Statement:
Andrew Nunn, CLNR's Chief Operating Officer, has reviewed and
approved the information contained in this announcement. Mr Nunn is
a Chartered Geologist who meets the criteria of a qualified person
under the AIM Guidance Note for Mining, Oil and Gas Companies.
**S**
For further information please visit
www.cluffnaturalresources.com or contact the following:
Cluff Natural Resources Plc Tel: +44 (0)
20 7887 2630
------------------------------------- -----------------
Algy Cluff / Graham Swindells
/ Andrew Nunn
------------------------------------- -----------------
Allenby Capital Limited (Nominated Tel: +44 (0)
Adviser & Broker) 20 3328 5656
------------------------------------- -----------------
David Hart / Alex Brearley /
Asha Chotai (Corporate Finance)
Chris Crawford / Katrina Perez
(Corporate Broking)
------------------------------------- -----------------
St Brides Partners Ltd Tel: +44 (0)
20 7236 1177
------------------------------------- -----------------
Lottie Brocklehurst / Frank Buhagiar
(Financial PR)
------------------------------------- -----------------
Glossary of Technical Terms
BCF: Billion Cubic Feet
Prospective Resources: Are estimated volumes associated with
undiscovered accumulations. These represent quantities of petroleum
which are estimated, as of a given date, to be potentially
recoverable from oil and gas deposits identified on the basis of
indirect evidence but which have not yet been drilled.
Chance of Success: For prospective resources, means the chance
or probability of discovering hydrocarbons in sufficient quantity
for them to be tested to the surface. This, then, is the chance or
probability of the prospective resource maturing into a contingent
resource. Prospective resources have both an associated chance of
discovery (geological chance of success) and a chance of
development (economic, regulatory, market and facility, corporate
commitment and political risks). The chance of commerciality is the
product of these two risk components. These estimates have been
risked for chance of discovery but not for chance of
development.
EMV: Expected Monetary Value, being the value for a set of
possible scenarios based on the average risked value of that set of
scenarios and which is calculated by multiplying the value of each
possible scenario with the chance of that scenario being
realised
NBP: National Balancing Point, being a virtual trading location
for the sale and purchase and exchange of UK natural gas
NPV: Net present value
NPV(10) : NPV at a 10% discount rate
TCF: Trillion Cubic Feet
Definition of Prospective Resources, P90, P10, P50
While there may be a significant risk that sub-commercial or
undiscovered accumulations will not achieve commercial production,
it is useful to consider the range of potentially recoverable
volumes independently of such a risk.
Prospective Resources are those quantities of petroleum which
are estimated to be potentially recoverable from undiscovered
accumulations. These estimates are derived from volumetric
estimates for the reservoir size, estimates of the reservoir
characteristics (porosity, permeability, oil saturation). The basis
of these estimates would be available geological and geophysical
data, and the data from any existing wells in the given area.
Any estimation of resource quantities for an accumulation is
subject to both technical and commercial uncertainties and
consequently there will be a range of estimates which in general
will be substantially greater for undiscovered accumulations than
for discovered accumulations. In all cases, however, the actual
range will be dependent on the amount and quality of data (both
technical and commercial) which is available for that accumulation.
As more data become available for a specific accumulation (for
example wells and reservoir performance data) the range of
uncertainty would be reduced.
Probabilistic methods are normally used to quantify the
uncertainty in these estimated quantities and the results of the
analysis are typically presented by stating resource quantities at
the following levels of confidence:
P90 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 90% probability that the
quantities actually recovered will equal or exceed the estimate.
This is therefore a low estimate of resource.
P50 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 50% probability that the
quantities actually recovered will equal or exceed the estimate.
This is therefore a median or best case estimate of resource.
P10 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 10% probability that the
quantities actually recovered will equal or exceed the estimate.
This is therefore a high estimate of resource.
The Prospective Resources have been presented in accordance with
the 2007 Petroleum Resources Management System (PRMS) prepared by
the Oil and Gas Reserves Committee of the Society of Petroleum
Engineers (SPE), reviewed, and jointly sponsored by the World
Petroleum Council (WPC), the American Association of Petroleum
Geologists (AAPG) and the Society of Petroleum Evaluation Engineers
(SPEE).
This information is provided by RNS
The company news service from the London Stock Exchange
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