TIDMMSMN
RNS Number : 5122W
Mosman Oil and Gas Limited
15 November 2017
15 November 2017
Mosman Oil and Gas Limited
("Mosman" or the "Company")
Arkoma Stacked Pay Project Update and Further Option
Extension
Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration,
development and production company, provides a further update in
respect to the Arkoma Stacked Pay Project ("Arkoma" or the
"Project") in Oklahoma, USA.
Summary
To date the focus has been to gather information to update the
geological model and quantify reserves and resources. Additional
flow tests and subsequent technical analysis is required in order
for Mosman to complete this and as a result Mosman and the Operator
have agreed to further extend the first option exercise date from
15 November 2017 to 28 February 2018. There is no change to the
Second Option date of March 2018.
Additional work is still required to inform Mosman's investment
decision and Mosman will fund an ongoing work program at a cost of
USD$125,000 with a corresponding reduction of the First Option
exercise price from USD$1 million to USD$875,000. This schedule
also allows the full investment decision to be made in the first
quarter of 2018, with the benefit of a more complete data set as
this significant investment requires the benefit of full technical
due diligence and integration of the Moyes and Co reserves report
currently being prepared.
Details of the extension
As per in the Company's announcement of 23 May 2017, Mosman
currently owns 10% of the Project and holds two options to increase
its interest to 55%:
1. A first option to acquire a further 20% of the Inland Assets
for USD$1 million expiring on 15 November 2017, having been
extended from the original 10 October 2017 expiration (the "First
Option");
2. Subject to the First Option being exercised, a second option
to acquire a further 25% of the Inland Assets for USD$425,000 in
March 2018 (the "Second Option").
Mosman's strategic alliance partner Blackstone Oil and Gas
Limited has an option over 45% of the Project.
The First Option to acquire 20% and increase ownership to 30%
has now been extended to 28 February 2018. The Second Option to
further increase ownership to 55% in to be made by 31 March 2018.
There is no change to the Second Option date. This schedule will
allow the full investment decision to be made in the first quarter
of 2018.
As part of the agreement to extend the First Option date, Mosman
will fund the ongoing work program at a cost of USD$125,000 with a
corresponding reduction of the First Option exercise price from
USD$1 million to USD$875,000.
Meetings have been recently held in Dallas with Mosman Directors
and technical staff; representatives of Moyes and Co, and the
vendors.
The testing of the multi-zone stacked pay project is still in
progress.
For a full reserves evaluation, flow tests would be required on
all zones, and there are more than six prospective reservoir zones
on this project, with five potential production wells. Extended
flow tests are required to determine the optimal production rates
and to estimate the reserves and oil production rates and the main
zones will be tested before an investment decision is made by
Mosman.
So far, the Wilcox zone has been flow tested on four wells, and
the Viola and Woodford zones on one well each. One shallow well
testing the Booch gas zone produced water and was abandoned.
However, these results alone are not yet sufficient to make a field
development plan and for Mosman to make an investment decision.
Mosman requested the Operator to flow test the Union Valley and
Cromwell zones, and the initial re-completions were done in
October, but initial results were inconclusive.
Mosman and the vendor have agreed an additional work program to
further test the Union Valley zone, as this is one of the key
potential oil producing zones. The Operator will also increase
perforations on one Wilcox zone to establish optimal production
rates. The development plan is becoming clearer and may involve the
use of pump-jacks on shallow zones, in combination with Electrical
Submersible pumps (ESPs), and multi-zone completions on some wells.
The Wilcox production in the area normally contains both oil and
water, and the project has a water disposal well on-site to manage
water disposal, with pump design optimised to deal with fluid flow
rates and associated costs.
The Woodford and Caney shales may be potential shale resources
but Mosman does not currently plan to include this in the first
stage development plan as full testing of these zones would require
horizontal wells and fracking that would require significant time
and capital and may be considered in due course.
Going forward Mosman does not plan to report the results on the
individual testing elements, but will await the results of the
whole testing programme. In this instance, this will be signified
by the release of the Moyes and Co reserves report with details
reported as appropriate. There can be no guarantee that Mosman will
exercise its options.
John W. Barr, Executive Chairman, said: "Whilst Mosman was keen
to conclude the decision at Arkoma, this is a significant fiscal
decision and it must be based on the best and most complete
information available. We had hoped the Wilcox oil alone would have
been enough to make the option exercise decision, however we would
like more detailed information to enable Moyes to conclude the
report on which we will make our decisions and believe this is in
the best interest of shareholders."
Competent Person's Statement
The information contained in this announcement has been reviewed
and approved by Andy Carroll, Technical Director for Mosman, who
has over 35 years of relevant experience in the oil industry. Mr.
Carroll is a member of the Society of Petroleum Engineers.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Enquiries:
Mosman Oil & Gas Limited NOMAD and Broker
John W Barr, Executive Chairman SP Angel Corporate Finance LLP
Andy Carroll, Technical Director Stuart Gledhill / Richard Hail
jwbarr@mosmanoilandgas.com / Soltan Tagiev
acarroll@mosmanoilandgas.com +44 (0) 20 3470 0470
Gable Communications Limited
Justine James / John Bick
+44 (0) 20 7193 7463
mosman@gablecommunications.com
Updates on the Company's activities are regularly posted on its
website
www.mosmanoilandgas.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGGGAUGUPMPWC
(END) Dow Jones Newswires
November 15, 2017 03:02 ET (08:02 GMT)
Mosman Oil And Gas (LSE:MSMN)
Historical Stock Chart
From Apr 2024 to May 2024
Mosman Oil And Gas (LSE:MSMN)
Historical Stock Chart
From May 2023 to May 2024