TIDMMYN
RNS Number : 3219S
Mayan Energy Limited
25 June 2018
Mayan Energy Ltd / Index: AIM / Epic: MYN/ ISIN: VGG6622A1057 /
Sector: Oil and Gas
25 June 2018
Mayan Energy Ltd ("Mayan" or "the Company")
Acquisition and Issue of Equity
Mayan (AIM: MYN), the AIM listed oil and gas company, is pleased
to announce that it has entered into a conditional Sale and
Purchase Agreement to acquire interests in 12 well bores, including
seven additional vertical wells at the Stockdale Field in Wilson
County, and three horizontal and two vertical Austin Chalk wells in
Wilson and Gonzalez Counties, Texas (the "Acquisition") for a total
consideration of US$605,000 (the "Consideration"). Completion is
conditional on the completion of full due diligence and Mayan and
the Vendor entering into a Joint Operating Agreement ("JOA"). The
Acquisition is in line with Mayan's objective to increase net
production to 300 - 500 bopd by securing select under-exploited US
onshore assets at attractive prices and enhancing production by
applying the Company's in-house expertise and advanced technologies
and techniques. The Company will update investors when the
Acquisition has closed.
In addition, the Company also announces that it has raised
GBP850,000 gross via a Placing with a limited number of high net
worth investors (the "Placing") of 141,666,666 new ordinary shares
of no par value each (the "Placing Shares") at a price of 0.6p per
share (the "Placing Price") with a warrant for every 2 shares
subscribed exercisable at 0.9p (the "Placing Warrants"). The
Placing Price represents a discount of 11.8% to the last closing
price on 22 June 2018. The net proceeds of the Placing will be used
to fund the Consideration, new work-overs at Stockdale and Austin
Chalk, and general working capital. The Placing was arranged by
Mayan and Novum Securities Limited ("Novum") who have been
appointed as broker to replace Cornhill Securities following this
Placing. In addition to the Placing, Mayan has also agreed to issue
US$175,000 of new ordinary shares at a price of 0.7p per share in
settlement of outstanding creditors ('Settlement Shares').
Acquisition of seven vertical Stockdale wells and five Austin
Chalk wells
7 Stockdale Wells (Working Interest 60%/ Net Revenue Interest
45%)
-- Provides multiple opportunities to replicate the success of
the Morris#1 well at the Stockdale field which has been producing
at a gross rate of over 80bopd following a low cost workover
-- Production at Stockdale is highly profitable due to low
operational costs which at current oil prices generates excellent
netbacks
o All-in operating costs at Morris#1 are expected to average
less than US$14 per barrel based on an expected production level of
2,760 gross BOPD over a 30-day month
-- Low cost development programme will involve reworking
Stockdale wells using the techniques and technologies that were
successfully deployed on the Morris #1 well
o All seven vertical wells will be completed in both upper and
lower Anacacho zones as well as the lower Escondido sand where the
Morris#1 encountered natural gas
o Water to be piped into existing salt water disposal well
("SWD")
o Due to work previously undertaken by Mayan to get the SWD well
operational it will be able to quickly workover and tie-in
production from new wells
5 Austin Chalk Wells (Working Interest 60%/ Net Revenue Interest
50.25%)
-- Near term workover and exploitation potential on three Austin
Chalk horizontal wells and two vertical wells using low-cost
techniques proven on Morris #1 well
-- The Company intends to use a coiled tubing rig to clean out;
work-over; and, acidize Austin Chalk zone in each of the horizontal
laterals with estimated potential production of 60-80 barrels per
day per well
-- The Company estimates that the workover and acidization
procedure on each well will require no more than two days rig time
allowing for near term, high impact results to be realized
-- Longer-term potential to re-frac wells targeting zones
identified with the Roke Quad Neutron log tool
-- None of the wells have been re-entered or stimulated in any
way suggesting significant upside potential from low cost
stimulation and production enhancement techniques and
technologies
-- The Company has established a 300 bopd (Gross) target from
the five well package with potential for upside if the Company
achieves the higher end of its expectation range on each well
-- Operating cost per barrel estimated to be US$18-20 per barrel
as water from these wells will be transported via truck for
disposal
Update on Forest Hill Field work programme
-- Workovers on an additional 2 - 4 producing wells at Forest
Hill Field due to recommence in July 2018 - follows satisfactory
resolution of issues relating to access and rights regarding
certain leases with a neighbouring operator
-- Production at Forest Hill is highly profitable due to low
costs which at current oil prices generates excellent netbacks
o Realised oil price is WTI plus US$2.00
o All-in operating costs are expected to average less than US$15
per barrel of oil based on an expected production level of 5,730
gross BOPD over a 30 day month
Eddie Gonzalez, Managing Director, said: "Whilst the SPA remains
conditional on the agreement of the JOA and completion of due
diligence, Mayan is confident of closing the Acquisition given its
knowledge of the formations and work done to date on the
Transaction. With the potential addition of these 12 new wells plus
ongoing work programmes at Forest Hill and now at Zink Ranch we are
well positioned to push daily production towards our target range
of 300 to 500 net bopd. Our technical team has successfully
demonstrated the capability to achieve excellent results by
exploiting existing well bores using cutting-edge and proprietary
tools and techniques. Thanks to today's agreement, our team now has
many more opportunities to replicate this success. I expect
Stockdale and the nearby Gonzalez County wells to form the backbone
of our production, augmented by important contributions from Forest
Hill and Zink Ranch.
"Importantly following my appointment, Mayan today is a
streamlined organisation with low overheads. Together with our
growing production base, we are able to deploy the majority of our
new capital into the ground to add yet more production and in turn
drive Mayan's profitability and future growth. We now have an
inventory of wells with which to take the next major step forward
in terms of building the scale an oil and gas company requires to
be successful over the long term. With work progressing across our
asset base, the summer and the fall of 2018 will not be short of
high impact news flow."
Sale and Purchase Agreement ("SPA")
Mayan has conditionally entered into the SPA with Smart Bit LLC,
a limited liability company incorporated in the US state of
Wyoming. The terms of the SPA, which is subject to completion of
full due diligence and entering into a Joint Operating Agreement
("JOA"), are as follows:
-- US$40,000 in cash within seven days of execution of the SPA
-- Closing of transaction within 30 days subject to satisfaction
or waiving of the following Condition Precedents:--
o Verification of the Stockdale Lease package and the Austin
Lease package, including Material Contracts, title information,
operating agreements, well files, geologic data, and environmental
information as may currently exist
o Execution of a mutually agreed upon JOA based on the AAPL
Model JOA Form 610 with appropriate Exhibits
o Delivery by Smart Bit of an Assignment of leases
-- US$565,000 at Closing in the form of 50% cash and 50%
ordinary shares of Mayan Energy Limited issued based on the seven
day volume weighted average price prior to Closing
-- Smart Bit LLC and Mayan to fund their respective working
interests for capital costs on the wells which are estimated at
totaling approximately US$410,000 net to Mayan for the 12 well
programme.
The Placing
Mayan has raised gross proceeds of GBP850,000 through the
placing of 141,666,666 Ordinary Shares at the Placing Price. The
Placing is conditional on Admission and application will be made
for the Placing Shares, which will rank pari passu with the
existing Ordinary Shares, to be admitted to trading on AIM (the
"Admission").
Placing Warrants
Mayan has issued 70,833,333 Placing Warrants to subscribers in
the placing exercisable at 0.9p per ordinary share for a period of
two years from the date of issue.
Broker Warrants
Mayan has issued 9,916,666 broker warrants exercisable at the
placing price of 0.6p per ordinary share for a period of two years
from the date of issue.
Issue of Equity to Creditors
Issue of 18,782,869 Ordinary shares to creditors to settle
amounts owed and certain advisors at the Placing Price (the
"Settlement Shares").
Total Voting Rights ("TVR")
In total 160,449,535 Ordinary shares will be issued at the
Placing Price, and it is expected that Admission will become
effective and dealings in the Placing and Settlement Shares will
commence on or around July 6(th) 2018.
Following the issue of the 141,666,666 Ordinary Shares and the
18,782,869 Settlement Shares, the Company's issued share capital
will consist of 1,383,385,465 Ordinary Shares with voting rights.
No Ordinary Shares are held in treasury at the date of this
announcement and therefore following the Admission, the total
number of Ordinary Shares in the Company with voting rights will be
1,383,385,465.
The above total voting rights figure may be used by shareholders
as the denominator for the calculation by which they will determine
if they are required to notify their interest in, or a change to
their interest in the Company.
Special note concerning the Market Abuse Regulation
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014
("MAR"). Market soundings, as defined in MAR, were taken in respect
of the Placing, with the result that certain persons became aware
of inside information, as permitted by MAR. That inside information
is set out in this announcement. Therefore, those persons that
received inside information in a market sounding are no longer in
possession of inside information relating to Mayan and its
securities.
**ENDS**
For further information visit www.Mayanenergy.com or contact the
following:
+ 1 469 394
Eddie Gonzalez Mayan Energy Ltd 2008
+44 7971 444
Charlie Wood Mayan Energy Ltd 326
Beaumont Cornish +44 20 7628
Roland Cornish Ltd 3396
Beaumont Cornish +44 20 7628
James Biddle Ltd 3396
Novum Securities +44 207399
Colin Rowbury Limited 9400
Frank Buhagiar/Gaby +44 20 7236
Jenner St Brides Partners 1177
Notes:
Mayan Energy Limited is an AIM listed (London Stock Exchange)
North American based energy Company. The Company is actively
pursuing a primary recovery oil strategy focused on re-stimulating
wells within mature producing basins with immediate cash flow
leveraging commercially available technologies and projects that
are shallow, low risk with low levels of capex and infrastructure
already in place. It also remains interested in creating
shareholder value by strategic investments in similar projects with
high cash generative potential and by forming beneficial
development partnerships that enable the use of pioneering and
leading extraction technologies. The Company is currently primarily
focussed on building out production at its Stockdale and Forest
Hill oil fields in Texas.
Technical sign off
All of the technical information, including information in
relation to reserves and resources that is contained in this
announcement has been reviewed by, Mr Stephen Brock. Mr Brock is a
production engineer and member of the Society of Petroleum
Engineers who is a suitably qualified person with over 20 years'
experience in assessing hydrocarbon reserves and has reviewed the
release and consents to the inclusion of the technical
information.
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
MSCUSRRRWRANUUR
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