TIDMMSMN

RNS Number : 7027L

Mosman Oil and Gas Limited

14 January 2021

14 January 2021

Mosman Oil and Gas Limited

("Mosman" or the "Company")

Six Monthly Production and Operations update

Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration, development and production company, announces its production summary for the six months ended on 31 December 2020 and an operations update.

Falcon-1 producing gas and condensate

The Falcon-1 well at the Champion project commenced commercial production in December 2020. Falcon-1 is now producing approximately 180 boepd (gross). Mosman's net production is 90 boepd (50% working interest) which is 68 boepd after royalties.

This is a significant well for Mosman, being both the highest gross production well and the highest working interest well in Mosman's portfolio. The net effect is that daily production rates increase significantly, at this rate more than doubling net production rates compared to the average daily rate for the six months ended 31 December 2020.

Six Month Production Summary to 31 December 2020

During the period there was continued disruption from the pandemic along with the requirement for certain workovers at Stanley, but significantly the Falcon-1 well commenced production.

Net Production attributable to Mosman for the six months was 8,650 boe.

Production Details

Further details are outlined below:

 
                  6 Months to    6 Months to        6 Months to    6 Months to 
                   31 December    31 December 2020   30 June        30 June 
                   2020                              2020           2020 
                  Total Project  Net Attributable   Total Project  Net Attributable 
                  =============  =================  =============  ================ 
                  Gross boe      Net boe            Gross boe      Net boe 
                  =============  =================  =============  ================ 
Falcon*           -              -                  -              - 
                  =============  =================  =============  ================ 
Stanley           24,982         3,984              28,540         4,482 
                  =============  =================  =============  ================ 
Greater Stanley   926            185                485            97 
                  =============  =================  =============  ================ 
Arkoma***         -              -                  1,632 **       276 ** 
                  =============  =================  =============  ================ 
Welch****         5,845          4,481              6,569          5,035 
                  =============  =================  =============  ================ 
 
  Total boe         31,753         8,650              37,226         9,890 
                  =============  =================  =============  ================ 
 

Net production means net to Mosman's working interest before royalties

* Falcon production started on 11 December, but will be reported separately when known in detail

** Figures for five months of the period

*** awaiting production figures for Arkoma

**** Sale of project announced on 4 January 2021

Drilling opportunities

Mosman has an opportunity to participate in several potential wells in 2021. The intention is to participate in drilling at least one well each quarter.

The candidates for drilling include two wells at the Stanley project (where four wells have already been drilled with a 100% drilling success rate) and other wells in East Texas, including wells at Cinnabar and the Galaxie well.

The exact order and timing of wells has not been finalised and depends on the results of completion of the current round of technical work . Drilling and workovers may be funded from existing cash resources, proceeds of sale of assets, as well as other funding alternatives.

The exercise of existing warrants may provide additional funds, and there is also the potential to farmout interests in one or more wells to third parties.

Cinnabar and Champion Projects

Mosman has a 97% working interest (reducing to 85% upon drilling of the first well) in the Cinnabar lease and is now officially recorded as the Operator of the Cinnabar lease.

At Cinnabar, a Third Party Independent Report (1) has identified existing Proven plus Probable reserves of 849,000 barrels of hydrocarbons. Technical work is underway to optimise a field redevelopment of Cinnabar, including further 3D seismic evaluations on Cinnabar to ensure that it is drilled most effectively. The Company is targeting drilling two wells at Cinnabar during the calendar year 2021 subject to funding and other matters. Two wells drilled at Cinnabar in the 1980s are still producing. Flow rates from both these wells were historically over 100 bopd and Mosman anticipates that a similar production profile can be achieved from future wells at Cinnabar.

The Champion project currently consists of two leases. Mosman has a 50% interest in the Falcon lease, and a 60% working interest in the Galaxie lease. The project area has multiple prospects identified by 3D seismic that may be drilled in due course. The largest prospect is Galaxie, and this is likely to be the next prospect drilled. There is some preliminary work required to determine the exact surface location based on existing roads and pipelines, and to plan production infrastructure. The Company is using the current flow rate from Falcon to indicate the potential flow rates at Galaxie.

It is anticipated that a well will be drilled at either Cinnabar or Galaxie in the second quarter of 2021. Each project differs in attributes and costs, and further evaluation is required in order to prioritise and proceed. For example, Cinnabar is predominantly oil, whilst indications are that Galaxie is more likely to be gas.

Stanley

Stanley-3 and Stanley-4 continue to produce oil.

The operator has recently advised that to increase flow rates, a pump-jack has been installed at Stanley-2 and is now operational. A second pump-jack has also been acquired for Stanley-1 and is expected to be installed in the next two weeks.

Based on discussions with Mosman's JV partners, it is anticipated that Stanley-5 will be drilled after Stanley-1 is back on production. Subject to funding and other matters the Company is also targeting a sixth well at Stanley towards the end of calendar year 2021. Mosman anticipates that future wells at Stanley will have a similar production profile to those already drilled.

Greater Stanley

The workover at Duff-1 was not able to remove the wellbore obstruction required to recomplete in the target zone, and the well was placed back on production. The joint venture now plans to workover the other producing well in another target zone.

Sale of Welch and Arkoma

Mosman has signed a contract to sell Welch (announced on 4 January 2021) with settlement scheduled for 15 January 2021.

As announced, Mosman considers Arkoma to be a non-core asset and it is held for sale.

John W Barr, Chairman of Mosman commented : "Mosman is well positioned for strong production growth in 2021.

"We are particularly encouraged with the results from Falcon-1 and the cash-flow that will be derived from that well, as we plan the 2021 year and beyond."

Technical Glossary

 
 BBLs or bbls      Barrels 
 BOPD or bopd      barrels of oil per day 
                  =============================================== 
 BOEPD or boepd    barrels of oil equivalent per day calculated 
                    on the approximate 1:6 basis of the calorific 
                    value of the hydrocarbons, (not based 
                    on the price) 
                  =============================================== 
 MMCFPD or mmcfd   Million cubic feet per day 
  MMBTU 
                    Million British Thermal Units 
                  =============================================== 
 

(1) 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.

Qualified 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 Joint Broker 
  John W Barr, Executive Chairman     SP Angel Corporate Finance LLP 
  Andy Carroll, Technical Director    Stuart Gledhill / Richard Hail 
  jwbarr@mosmanoilandgas.com          / Adam Cowl 
  acarroll@mosmanoilandgas.com        +44 (0) 20 3470 0470 
 Alma PR                             Joint Broker 
  Justine James                       Monecor (London) Ltd trading as 
  +44 (0) 20 3405 0205                ETX Capital 
  +44 (0) 7525 324431                 Thomas Smith 
  mosman@almapr.co.uk                 +44 (0) 20 7392 1432 
 

Updates on the Company's activities are regularly posted on its website: www.mosmanoilandgas.com

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January 14, 2021 05:36 ET (10:36 GMT)