REG - ADM Energy PLC - Barracuda CPR

Adm EnergyAnnouncement

30/03/2022 07:00

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RNS Number : 4737G  ADM Energy PLC  30 March 2022

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.

 

30 March 2022

 

ADM Energy PLC

("ADM" or the "Company")

 

Barracuda CPR

 

ADM Energy PLC (AIM: ADME; BER and FSE: P4JC), a natural resources investing
company, announces the result of a competent person's report on the Barracuda
prospect in OML141, offshore Nigeria.

 

As announced on 28 April 2021, the Company acquired a 51 per cent. stake in
K.O.N.H (UK) Limited ("KONH") and through that a controlling interest in a
Risk Sharing Agreement ("RSA"), for which KONH holds a 70 per cent. interest.
The Company, together with a consortium of parties with an interest in the
RSA, intends to provide or procure funding for all capital expenditure
("Capex"), subject to the joint operators' approval to develop any discovered
hydrocarbons, in return for 235 per cent. of approved Capex to be recovered
plus a 15 per cent. net profit interest ("NPI"). The equity owners of OML 141
are Emerald Energy Resources Limited ("Emerald") (54 per cent.), Amni
International Petroleum Development Company Limited (44 per cent.) and
Supernova Energy B.V. (2 per cent.).

 

ADM commissioned Xodus Group Limited ("Xodus") to prepare a CPR on the
Barracuda area and Xodus has calculated gross, unrisked Prospective Resources
for the RSA using standard geological and engineering approaches applied to
the data made available by ADME.

 

OML 141 lies predominately within the coastal swamp in the Niger Delta in
Nigeria. The Barracuda area is located in the northwest of OML 141 in which
four exploration wells have previously been drilled. Three wells were drilled
in 1967 and the most recent exploration well, Barracuda-4 (BX-1), was drilled
in 2007 by Emerald and CNOOC Ltd. This well provides the most relevant data
for classifying the resources. Prior to the publication of this CPR by Xodus,
the Barracuda RSA was the subject of a CPR undertaken by Ryder Scott in 2016.
Xodus has reviewed the available relevant Barracuda data and has not
identified convincing evidence as to the presence of light, producible
hydrocarbons. There are, however, numerous indications as to the presence of
heavy, residual hydrocarbons from past migration and both Ryder Scott (in
2007) and Xodus have concluded that the Barracuda resources should be
classified as prospective.

 

The Company and Xodus identified four potential Agbada Sandstone reservoirs:
C, D1A and D1B plus a 'Deep Prospect'. STOIIPs for these reservoirs were
calculated probabilistically. The prospective resource has been assessed
separately for each individual reservoir unit and collectively for the
combined reservoirs. This approach aligns with that of previous evaluations.
In all cases, Xodus used a slab model (a range of constant thicknesses over
the fixed areas of reservoir extent).

 

The estimate of STOIIP pertaining to the combined reservoirs, C3, D1A, D1B and
'Deep Prospect' is shown below:

 

 STOIIP (UNRISKED)  GROSS VOLUMES
 Reservoir          P90       P50       P10       CoS %

                    (mmbbl)   (mmbbl)   (mmbbl)
 C3                 106       193       343       15%
 D1A                15        25        43        30%
 D1B                70        103       149       18%
 Deep Prospect      20        51        131       25%
 Combined           275       397       574

 

Source: Xodus Group Limited

 

Xodus based its estimates of reservoir and production parameters on data
provided by ADME supplemented with data from nearby analogue fields. Xodus
used the same drilling and development schedule as described in the economic
model provided by ADME to calculate prospective resource ranges. These
represent resources for a first phase development plan which ADME designed to
exploit any future discovery in the D1A/B reservoirs. Discovery of larger
volumes would require additional phases of development to recover the
hydrocarbons.

 

The economic model supplied by ADME has been reviewed against the RSA scope
and provisions to confirm that the economic model represents the RSA
accurately. Xodus has used this model with its independent production
profiles, and CAPEX and OPEX adjustments to assess the economics of the RSA.
For the 2U (P50) case the NPV10 is +$99mm with an IRR of 45% and therefore the
prospect is considered to be robust for development, assuming at least 70mmbbl
STOIIP is discovered.

 

 

 PROSPECTIVE RESOURCES  (RISKED)   GROSS VOLUMES                 OPERATOR
                                   1U        2U        3U

                                   (mmbbl)   (mmbbl)   (mmbbl)
 Barracuda RSA OML 141             20.7      24.0      27.8

                                                                 Emerald Energy Resources Limited

 

Source: Xodus Group Limited

 

 

Osamede Okhomina, CEO of ADM Energy, said: "Following the rigorous independent
analysis from Xodus, the results of the CPR covering the Barracuda prospect in
OML141 show that the prospect is considered prospective and robust for
development, with a 2U (P50) case, the NPV10 is +$99mm with an IRR of 45%.

 

"The report provides a solid foundation to continue to the next stage of
technical review which will include further subsurface analysis.  We will
also look to procure more analogue data from neighbouring fields to better
understand the trap mechanisms. This additional work will be required to
further appraise the asset and will bring us closer to making an investment
decision."

 

 

 

Enquiries:

 

 ADM Energy plc                                      +44 20 7459 4718
 Osamede Okhomina, CEO
 www.admenergyplc.com (http://www.admenergyplc.com)

 Cairn Financial Advisers LLP                        +44 20 7213 0880
 (Nominated Adviser)
 Jo Turner, James Caithie

 Hybridan LLP                                        +44 20 3764 2341
 (Broker)
 Claire Louise Noyce

 ODDO BHF Corporates & Markets AG                    +49 69 920540
 (Designated Sponsor)
 Michael B. Thiriot

 Luther Pendragon                                    +44 20 7618 9100
 (Financial PR)
 Harry Chathli, Alexis Gore, Tan Siddique

 

 

About ADM Energy PLC

 

ADM Energy PLC (AIM: ADME; BER and FSE: P4JC) is a natural resources investing
company with an existing asset base in Nigeria. ADM Energy holds a 9.2% profit
interest in the oil producing Aje Field, part of OML 113, which covers an area
of 835km² offshore Nigeria. Aje has multiple oil, gas, and gas condensate
reservoirs in the Turonian, Cenomanian and Albian sandstones with five wells
drilled to date.

 

ADM Energy is seeking to build on its existing asset base in Nigeria and
target other investment opportunities across the West African region in the
oil and gas sector with attractive risk reward profiles such as proven nature
of reserves, level of historic investment, established infrastructure and
route to early cash flow.

 

Forward Looking Statements

 

Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. The Company cautions shareholders and prospective
shareholder holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the date of this
announcement. The forward-looking statements made in this announcement relate
only to events as of the date on which the statements are made. The Company
will not undertake any obligation to release publicly any revisions or updates
to these forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement except as
required by law or by any appropriate regulatory authority.

 

About Xodus

 

Xodus is an independent, international energy consultancy. Established in
2005, the company has over 400 subsurface and surface focused personnel spread
across the globe. The wells and subsurface division specialise in petroleum
reservoir engineering, geology and geophysics and petroleum economics. All of
these services are supplied under an accredited ISO9001 quality assurance
system.

 

As a global energy consultancy, Xodus unites unique and diverse people to
share knowledge, innovate and inspire change within the energy industry. We
provide support across the energy spectrum, from advisory services to supply
chain advice. Including all of the engineering and environmental expertise
needed in between. Our people strive to ensure global energy supply as we all
work together to realise a net zero world.

 

 

Standard

 

In compiling the CPR, Xodus used the definitions and guidelines set out in the
2018 update of the Petroleum Resources Management System ("PRMS") prepared by
the Oil and Gas Reserves Committee of the Society of Petroleum Engineers
("SPE") and 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").

 

CPR and Competent Person's Review

 

This announcement has been reviewed by Wim Burgers, technical consultant for
the Company, a qualified production geologist with more than 40 years'
experience in the oil and gas industry, who has also reviewed the CPR report
to which it relates.

 

This announcement has also been reviewed by Jonathan Fuller, a qualified
petroleum engineer and employee of Xodus, the Competent Person for the
purposes of the CPR.

 

The information above has been extracted from the CPR and shareholders are
advised to read the CPR in full. A copy of the CPR will shortly be available
on the Company's website, www.admenergyplc.com (http://www.admenergyplc.com) .

 

Glossary

 

 1U, 2U and 3U  1U, 2U and 3U represent low, best and high case estimates of Prospective
                Resources respectively as defined in PRMS.
 P10, P50, P90  The probability, being a 10 per cent., 50 per cent. or 90 per cent. chance,
                that the actual volume will be greater than or equal to that stated.
 bbls           barrels
 bopd           barrels of oil per day
 CoS (%)        Exploration or geological chance of success. The probability, typically
                expressed as a percentage that a given outcome will occur.
 gross          100% of the resources attributable to the licence.
 MMbbls         Million barrels
 Prospective    Prospective Resources are those quantities of petroleum estimated, as of a
                given date, to be potentially recoverable from undiscovered accumulations by
                application of future development projects. Prospective Resources have both an
                associated chance of discovery and a chance of development. Prospective
                Resources are further subdivided in accordance with the level of certainty
                associated with recoverable estimates assuming their discovery and development
                and may be sub-classified based on project maturity.
 Reserves       Those quantities of petroleum anticipated to be commercially recoverable by
                application of development projects to known accumulations from a given date
                forward under defined conditions on production, approved for development or
                justified for development.  Reserves are also classified according to the
                associated risks and probabilities (1P, 2P and 3P).
 Risked         With the application of a geologic risk assessment
 STOIIP         Stock tank oil initially in place
 Unrisked       Without the application of a geologic risk assessment

 

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