TIDMMSMN
RNS Number : 6335B
Mosman Oil and Gas Limited
24 September 2018
24 September 2018
Mosman Oil and Gas Limited
("Mosman" or the "Company")
Two US Acquisitions and Baja Strategic Alliance Update
Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration,
development and production company, is pleased to announce two new
acquisitions and provide an update to the Baja Strategic
Alliance.
Background
Mosman entered into a Strategic Alliance with Baja Oil and Gas
LLC ("Baja") in July 2018. This Alliance led to the participation
by Mosman in the Stanley-1 well in east Texas, which is now
producing.
At the time Mosman noted that Baja owned a portfolio of oil and
gas projects and was continuing to add projects to its inventory.
Under the umbrella of the Strategic Alliance, Mosman would work
with Baja to invest in the development of existing projects and to
source and evaluate additional projects in Texas.
Stanley-1
The results from the Stanley-1 well are most significant as the
well penetrated multiple reservoir sands and provided evidence on
logs of oil in multiple zones. Stanley-1 is now on production and
the additional zones may be produced by the existing well in due
course or production can be accelerated by drilling additional
development wells. Two Mosman Directors recently visited the site
in Texas, to see the Stanley-1 well and the production facilities.
The well is producing through a separator to a permanent oil line
to tanks and a temporary gas line to the sales gas meter. The
current gas line has limited capacity and will be upgraded shortly
as required to increase production.
The Company is working with Baja to optimize development of the
oil zones identified by Stanley-1. The first follow up well,
Stanley-2, is now in the planning stages and may be drilled in the
next few months. Other development wells may follow in due
course.
Project Acquisition and Strategic Alliance
Two Mosman Directors met with the Managing Partners of Baja in
both Dallas and Houston to discuss all the Baja projects and to
progress the Strategic Allaince. Mosman and Baja have now signed
detailed Strategic Alliance documention that facilitates both
companies working together on Baja projects, seeking new ventures
in east Texas, and the contractual basis for technical work and
operations on those projects with a Technical Services Agreement,
all effective 1 September 2018. Mosman will have a 50% interest in
all existing and new projects, other than the acquisition of
interests in two existing projects (Champion and Challenger) where
Baja has an interest in leases which are detailed below:
The Baja team have demonstrated they can source opportunities,
negotiate lease positions, do the technical work to identify high
return exploration and development projects in Texas, where the oil
and gas business has social licence, existing infrastructure, low
costs, and a well priced market for sale of production.
The significant advantage for Mosman with this Strategic
Alliance is the synergy of working with Baja to source new
projects, and to develop existing projects with a very strong local
business development and technical team, without the cost of
establishing such a team and the associated infrastructure.
Acquisition of 60% of the Champion Project
Mosman has agreed to acquire a 60% working interest in the 240
acre Champion Project for USD 108,000. This Project is also located
in East Texas and has several drilling locations identified using
the same 3D seismic techniques as Stanley-1. Baja retains the other
40% interest, and will be the Operator.
Acquisition of 16% of the Challenger Project
Mosman has also acquired a 16% working interest (half of Baja's
32% interest) in the 352 acre Challenger Project, in East Texas,
for USD 43,500. This project includes a lease which is Held By
Production (HBP) with two production wells in the Wilcox, with
nominal periodic production. The intention is to use 3D seismic to
identify development well locations within the existing lease area.
A Reserve Report indicates the project has Reserves (gross) as
follows (thousands of barrels of oil equivalent "MBOE"):
Proved Proved Proved Total Total Total
Developed Developed Undeveloped Proved Probable Proved
Producing Behind Pipe Plus Probable
------------- ------------- -------- ---------- ---------------
2 49 614 665 184 849
------------- ------------- -------- ---------- ---------------
This Reserves Report was prepared by a third party independent
petroleum engineering firm for Barry Lasker, a Managing Partner at
Baja, in June 2017 and conforms to SPE-PRMS petroleum guidelines.
The royalties on the lease are circa 25%.
Mosman and Baja will continue the technical and other work
required to drill wells on these Projects. The first well locations
are already identified and could be drilled as early as the first
quarter 2019. Drilling locations are selected based on sub-surface
technical work, and also locations with, or close to, existing
production infrastructure are prioritised so that any successful
well can be quickly completed and brought on production, as
demonstrated by Stanley-1.
Funding
Stanley-2 and the two US acquisitions will be funded from
existing cash resources.
John W Barr, Chairman, said:
"Given the significant results at Stanley-1, we have determined
to prioritise existing resources towards the projects that hold the
most chance of further increasing production and cashflows, which
includes the potential Stanley-2 well, and the Champion and
Challenger projects."
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 Joint Broker
Justine James / John Bick SVS Securities Plc
+44 (0) 20 7193 7463 Elliot Hance/Tom Curran
mosman@gablecommunications.com +44 (0) 203 700 0078
Updates on the Company's activities are regularly posted on its
website www.mosmanoilandgas.com
APPIX 1
Glossary of Oil and Gas Terms
% per cent.
Acre a unit of land being 4,840 square yards
(0.405 hectare).
-----------------------------------------------
Boe barrels of oil equivalent.
-----------------------------------------------
MBOE Thousand of barrels of oil equivalent.
-----------------------------------------------
Production the cumulative quantity of petroleum
that has been recovered at a given date.
While all recoverable resources are
estimated and production is measured
in terms of the sales product specifications,
raw production (sales plus non-sales)
quantities are also measured and required
to support engineering analyses based
on reservoir voidage.
-----------------------------------------------
Proven Reserves an estimated quantity of all hydrocarbons
statistically defined as crude oil or
natural gas, which geological and engineering
data demonstrate with reasonable certainty
to be recoverable in future years from
known reservoirs under existing economic
and operating conditions.
-----------------------------------------------
SPE-PRMS Society of Petroleum Engineers-Petroleum
Resources Management System.
-----------------------------------------------
Technical Services means services providing specific engineering,
geoscience, or other professional skills,
such as those performed by engineers,
geologists, geophysicists, and technicians,
required to handle specific operating
conditions and problems for the benefit
of joint operations.
-----------------------------------------------
USD or $ United States Dollar.
-----------------------------------------------
APPIX 2
(Extracted from Reserves Report)
Glossary of Oil and Gas Terms
APPIX
Petroleum Reserves and Resources Classifications, Definitions,
and Guidelines
Reference is made herein to the Petroleum Resources Management
System approved by the Society of Petroleum Engineers (SPE) Board
of Directors,March 2007.
Reference is made herein to the Petroleum Reserves and Resources
Classification, Definitions and Guidelines jointly published in
2007 by SPE, the World Petroleum Council (WPC), the American
Association of Petroleum Geologists (AAPG), and the Society of
Petroleum Evaluation Engineers (SPEE), hereinafter denoted as the
SPE-PRMS Definitions.
Table 1: Recoverable Resources Classes and Sub-Classes
RESERVES
Reserves are those quantities of petroleum anticipated to be
commercially recoverable by application of development projects to
known accumulations from the given date forward under defined
conditions.
Reserves must satisfy four criteria: they must be discovered,
recoverable, commercial, and remaining based on the development
project(s) applied. Reserves are further subdivided in the
accordance with the level of certainty associated with the
estimates and may be sub-classified based on project maturity and/
or characterized by their development and production status.
To be included in the Reserves class, a project must be
sufficiently defined to establish its commercial viability. There
must be a reasonable expectation that all required internal and
external approvals will be forthcoming, and there is evidence of
firm intention to proceed with development within a reasonable
period.
A reasonable period for the initiation of development depends on
the specific circumstances and varies according to the scope of the
project. While 5 years is recommended as a benchmark, a longer time
frame could be applied where, for example, development of economic
projects are deferred at the option of the producer for, among
other things, market- related reasons, or to meet contractual or
strategic objectives. In all cases, the justification for
classification as Reserves should be clearly documented.
To be included in the Reserves class, there must be a high
confidence in the commercial producibility of the reservoir as
supported by actual production or formation tests. In certain
cases, Reserves may be assigned based on well logs and/ or core
analysis that indicate that the subject reservoir is
hydrocarbon-bearing and is analogous to reservoirs in the same area
that are producing or have demonstrated the ability to produce on
formation tests.
On Production: The development project is currently producing
and selling petroleum to market.
The key is that the project is receiving income from sales,
rather than the approved development project necessarily being
complete. This is the point at which the project "chance of
commerciality" can be said to be 100%.
The project "decision gate" is the decision to initiate
commercial production from the project.
Approved for Development: All necessary approvals have been
obtained, capital funds have been committed, and implementation of
the development project is under way.
At this point, it must be certain that the development project
is going ahead. The project must not be subject to any
contingencies such as outstanding regularity approvals or sales
contracts. Forecast capital expenditures should be included in the
reporting entity's current or following year's approved budget.
The project "decision gate" is the decision to start investing
capital in the construction of production facilities and/ or
drilling development wells.
Justified for Development: Implementation of the development
project is justified on the basis of reasonable forecast commercial
conditions at the time reporting, and there are reasonable
expectations that all necessary approvals/ contracts will be
obtained.
In order to move this level of project maturity, and hence have
reserves associated with it, the development project must be
commercially viable at the time of reporting, based on the
reporting entity's assumptions of future prices, costs, etc.
("forecast case") and the specific circumstances of the project.
Evidence of a firm intention to proceed with development within a
reasonable period will be sufficient to demonstrate commerciality.
There should be a development plan in sufficient detail to support
the assessment of commerciality and a reasonable expectation that
any regularity approvals or sales contracts required prior to
project implementation will be forthcoming. Other than such
approvals/ contracts, there should be no known contingencies that
could preclude the development from proceeding within a reasonable
timeframe (see Reserves class).
The project "decision gate" is the decision by the reporting
entity and its partners, if any, that the project has reached a
level of technical and commercial maturity sufficient to justify
proceeding with development at that point in time.
CONTINGENT RESOURCES
Those quantities of petroleum estimated, as of a given date, to
be potentially recoverable from known accumulations by application
of development projects, but which are not currently considered to
be commercially recoverable due to one or more contingencies.
Contingent Resources may include, for example, projects for
which there are currently no viable markets, or where commercial
recovery is dependent on technology under development, or where
evaluation of the accumulation is insufficient to clearly assess
commerciality. Contingent Resources are further categorized in
accordance with level of certainty associated with the estimates
and may be sub-classified based on project maturity and/ or
characterized by their economic status.
Development Pending: A discovered accumulation where project
activities are ongoing to justify commercial development in the
near future.
The project is seen to have reasonable potential for eventual
commercial development, to the extent that further data acquisition
(e.g. drilling, seismic data) and/ or evaluations are currently
ongoing with a view to confirming that the project is commercially
viable and providing the basis for selection of an appropriate
development plan. The critical contingencies have been identified
and are reasonably expected to be resolved within a reasonable
period. Note that disappointing appraisal/ evaluation results could
lead to a re- classification of the project to "On Hold" or "Not
Viable" status.
The project "decision gate" is the decision to undertake further
data acquisition and/or studies designed to move the project to a
level of technical and commercial maturity at which a decision can
be made to proceed with development and production.
Development Unclarified or in Hold: A discovered accumulation
where project activities are on hold and/or where justification as
a commercial development may be subject to significant.
The project is seen to have potential for eventual commercial
development, but further appraisal/ evaluation activities are on
hold pending the removal of significant contingencies external to
the project, or substantial further appraisal/ evaluation
activities are required to clarify the potential for eventual
commercial development. Development may be subject to a significant
time delay. Note that change in circumstances, such that there is
no longer a reasonable expectation that a critical contingency can
be removed in the foreseeable future, for example, could lead to a
reclassification of the project to "Not Viable" status.
The project "decision gate" is the decision to either proceed
with additional evaluation designed to clarify the potential for
eventual commercial development or to temporary suspend or delay
further activities pending resolution of external
contingencies.
Development Not Viable: A discovered accumulation for which
there are no current plans to develop or to acquire additional data
at the time due to limited production potential.
The project is not seen to have is not seen to have potential
for eventual commercial development at the time of reporting, but
the theoretically recoverable quantities are recorded so that the
potential opportunity will be recognized inthe event of amajor
change in technology or commercial conditions.
The project "decision gate" is the decision not to undertake any
further data acquisition or studies on the project for the
foreseeable future.
PROSPECTIVE RESOURCES
Those quantities of petroleum which are estimated, as of a given
date, to be potentially recoverable from undiscovered
accumulations.
Potential accumulations are evaluated according to their chance
of discovery and, assuming a discovery, the estimated quantities
that would recoverable under defined development projects. It is
recognized that the development programs will be of significantly
less detail and depend more heavily onanalog developments in the
earlier phases of exploration.
Prospect: A project associated with a potential accumulation
that is sufficiently well defined to represent a viable drilling
target.
Project activities are focused on assessing the chance of
discovery and, assuming discovery, the range of potential
recoverable quantities under a commercial development program.
Lead: A project associated with a potential accumulation that is
currently poorly defined and requires more data acquisition and/ or
evaluation in order to be classified as a prospect.
Project activities are focused on acquiring additional data and/
or undertaking further evaluation designed to confirm whether the
lead can be matured into a prospect. Such evaluation includes the
assessment of the chance of discovery under feasible development
scenarios.
Play: A project associated with a prospective trend of potential
prospects, but which requires more data acquisitions and/ or
evaluation to define specific leads or prospects.
Project activities are focused on acquiring additional data and/
or undertaking further evaluation designed to define specific leads
or prospects for more detailed analysis of their chance of
discovery and, assuming discovery, the range of potential recovery
under hypothetical scenarios.
Table 2: Reserves Status Definitions and Guidelines
DEVELOPED RESERVES
Developed Reservesareexpected quantities to berecovered from
existing wells and facilities.
Reserves are considered developed only after the necessary
equipment has been installed, or when the costs of a well. Where
required facilities become unavailable, it may be necessary to
reclassify Developed Reserves as Undeveloped. Developed
Reservesmaybefurther sub-classified asProducing
orNon-Producing.
Developed Producing Reserves: Developed Producing Reserves are
expected to be recovered from completion intervals that are open
and producing at the time of the estimate.
Improved recovery reserves are considered producing only after
the improved recovery project is in operation.
Developed Non-Producing Reserves: Developed Non-Producing
Reserves include shut-in and behind-pipe Reserves.
Shut-in Reserves are expected to be recovered from (1)
completion intervals which are open at the time of the estimate but
which have not yet started producing, (2) wells which were shut-in
for market conditions or pipeline connections, or (3) wells not
capable of production for mechanical reasons. Behind-pipe Reserves
are expected to be recovered from the zones in existing wells which
will require additional completion work or future re-completion
prior to start of production.
In all cases, production can be initiated or restored with
relatively low expenditure compared to the cost of drilling a new
well.
UNDEVELOPED RESERVES
Undeveloped Reserves are expected quantities expected to be
recovered through future investments:
(1) from new wells on un-drilled acreage in known accumulations,
(2) from deepening existing wells to a different (but known)
reservoir, (3) from infill wells that will increase recovery, or
(4) where a relatively large expenditure (e.g. when compared to the
cost of drilling a new well) is required to (a) re-complete and
existing well or (b) install production or transportation
facilities for primary or improved recovery projects.
Table 3: Reserves Category Definitions and Guidelines
PROVED RESERVES
Proved Reserves are those quantities of petroleum, which by
analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be commercially recoverable, from given
date forward, from known reservoirs and under defined economic
conditions, operating method, and government regulations.
If deterministic methods are used, the term reasonable certainty
is intended to express a high degree of confidence that quantities
will be recovered. If probabilistic methods are used, there should
be at least a 90% probability that the quantities recovered will
equal or exceed the estimate.
The area of the reservoir considered as Proved includes (1) the
area delineated by drilling and defined by fluid contacts, if any,
and (2) adjacent undrilled portions of the reservoir that can
reasonably be judged as continuous with it and commercially
productive on the basis of available geoscience and engineering
data.
In the absence of data on fluid contacts, Proved quantities in a
reservoir are limited by the lowest known hydrocarbon (LKH) as seen
in a well penetration unless otherwise indicated by definitive
geoscience, engineering, or performance data. Such definitive
information may include pressure gradient analysis and seismic
indicators. Seismic data alone may not be sufficient to define
fluid contacts for Proved reserves (see"2001 Supplement
Guidelines," Chapter 8).
Reserves in undeveloped locations may be classified as Proved
if:
- The locations are in undrilled areas of the reservoir that can
be judged with reasonable certainty to be productive.
- Interpretations of available geoscience and engineering data
indicate with reasonable certainty that the objective formation is
laterally continuous with the drilled Proved locations.
For Proved Reserves, the recovery efficiency applied to these
reservoirs should be defined based on a range of possibilities
supported by analogs and sound engineering judgment considering the
characteristics of the Proved area and the applied development
program.
PROBABLE RESERVES
Probable Reserves are those additional Reserves which analysis
of geoscience and engineering data indicate are less likely to be
recovered than Proved Reserves but more certain to be recovered
than Possible Reserves.
It is equally likely that actual remaining quantities recovered
will be greater than or less than the sum of the estimated Proved
plus Probable Reserves (2P). In this context, when probabilistic
methods are used, there should be at least a 50% probability that
the actual quantities recovered will equal or exceed the 2P
estimate.
Probable Reserves may be assigned to areas of a reservoir
adjacent to Proved Reserves where data control or interpretations
of available data are less certain. The interpreted reservoir
continuity may not meet the reasonable certainty criteria.
Probable estimates also include incremental recoveries
associated project recovery efficiencies beyond that assumed for
Proved.
POSSIBLE RESERVES
Possible Reserves are those additional Reserves which analysis
of geoscience and engineering data indicate are less likely to be
recovered than Probable Reserves.
The total quantities ultimately recovered from the project have
a low probability to exceed the sum of Proved plus Probable plus
Possible (3P), which is equivalent to the high estimate scenario.
When probabilistic methods are used, there should be at least a 10%
probability that the actual quantities recovered will equal or
exceed the 3P estimate.
Possible Reserves may be assigned to areas of a reservoir
adjacent to Probable where data control and interpretations of
available data are progressively less certain. Frequently, this may
be in areas where geoscience and engineering data are unable to
clearly define the area and vertical reservoir limits of commercial
production from the reservoir by a defined project.
Possible estimates also include incremental quantities
associated with project recovery efficiencies beyond that assumed
for Probable.
PROBABLE AND POSSIBLE RESERVES
(See above for separate criteria for Probable Reserves and
Possible Reserves.)
The 2P and 3P estimates may be based on reasonable alternative
technical and commercial interpretations within the reservoir and/
or subject project that are clearly documented, including
comparisons to results in successful similar projects.
In conventional accumulations, Probable and/ or Possible
Reserves may be assigned where geoscience and engineering data
identify directly adjacent portions of a reservoir within the same
accumulation that may be separated from Proved areas by minor
faulting or other geological discontinuities and have not been
penetrated by a wellbore but are interpreted to be in communication
with the known (Proved) reservoir. Probable or Possible Reserves
may be assigned to areas that are structurally higher than the
Proved area. Possible (and in some cases, Probable) Reserves may be
assigned to areas that structurally lower than the adjacent Proved
or 2P area.
Caution should be exercised in assigning Reserves to adjacent
reservoirs isolated by major, potentially sealing, faults until
this reservoir is penetrated and evaluated as commercially
productive. Justification for assigning Reserves in such cases
should be clearly documented. Reserves should not be assigned to
areas that are clearly separated from known accumulation by
non-productive reservoir (i.e. absence of reservoir, structurally
low reservoir, or negative test results); such areas may contain
Prospective Resources.
In conventional accumulations, where drilling has defined a
highest known oil (HKO) elevation and there exists the potential
for an associated gas cap, Proved oil Reserves should only be
assigned in the structurally higher portions of the reservoir if
there is reasonable certainty that such portions are initially
above bubble point pressure based on documented engineering
analyses. Reservoir portions that do not meet this certainty may be
assigned as Probable and Possible oil and/ or gas based on
reservoir fluid properties and pressure gradient
interpretations.
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
MSCSEUEFDFASEFU
(END) Dow Jones Newswires
September 24, 2018 02:01 ET (06:01 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