REG - Lansdowne Oil & Gas - Barryroe Update

Lansdowne Oil & GasAnnouncement

04/02/2022 12:05

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220204:nRSD7694Aa&default-theme=true

RNS Number : 7694A  Lansdowne Oil & Gas plc  04 February 2022

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via
Regulatory Information Service ("RIS"), this inside information is now
considered to be in the public domain. If you have any queries on this, then
please contact Steve Boldy, the Chief Executive Officer of the Company
(responsible for arranging release of this announcement).

 

4 February 2021

Lansdowne Oil & Gas plc

("Lansdowne" or the "Company")

Barryroe Update

Lansdowne Oil & Gas plc (AIM: LOGP), the North Celtic Sea focused, oil and
gas company, announces today the results of technical studies and resulting
resources estimates carried out on the Barryroe Field, which lies in shallow
water of about 100m some 50km off the south coast of Ireland and also welcomes
the announcement today by the Operator, Providence Resources PLC
("Providence"), providing an update on the outcome of its strategic review.

 

In September 2021, Providence announced that it had commenced a strategic
review of the optimum way forward for Barryroe and the preliminary outcome of
this was announced in December 2021 in relation to a phased development
programme, involving a Phase 1A development commencing with a potential
appraisal well, to be followed by the Phase 1B development.

 

Today's announcement by Providence of the conclusion of its review, now
confirms that an appraisal well is a vital next step in moving the Barryroe
Field forward under a phased development programme.

 

The 48/24-10z well on the Barryroe Field established good oil flow rates from
the Basal Wealden A Sand (3,504 bpd), as well as strong gas flow rates from
the overlying gas bearing Basal Wealden C Sand.

An area up-dip of the 48/24-10z well was identified as optimal for appraisal
and this was designated the K area.  A site survey was acquired successfully
in November 2021 over the K area, with the work completed on time and under
budget.

 

During 2021, a number of important third-party technical studies were carried
out to evaluate the potential of a first phase of development of the Barryroe
Field, centred around the 48/24-10z well and surrounding central parts of the
Barryroe Field.  These studies included reservoir modelling of the sub-area
to be targeted in the Phase 1 development, updated well design and costings,
and an updated conceptual development study, focused only on the oil-bearing
Basal Wealden A Sand.

 

These technical studies fed into a new Competent Person's Report produced by
RPS ("RPS CPR"). The RPS CPR has addressed the potential oil volumes in the
Basal Wealden A Sand, the reservoir reviewed in the earlier full-field CPR
carried out by Netherland Sewell & Associates Inc. ("NSAI") in 2012.
Importantly, it has not addressed the gas volumes present in the overlying C
Sand and, furthermore, it has only addressed oil volumes in the sub-area of
the Barryroe Field to be potentially targeted by the proposed Phase 1A and
Phase 1B development.

 

The RPS CPR concluded that the Phase 1A development, in the P50 Case, has the
potential to recover 58.3 million barrels of oil gross (11.66 million barrels
net to Lansdowne), from a Best Estimate of 173 million barrels in place
(STOIIP), held in fault blocks 1, 2 and 3.  This development scenario
involves the drilling of 5 producer wells, 4 water injector wells and a single
gas-injection well, with estimated plateau oil rate production of 20,000 bpd
gross (4,000 bpd net to Lansdowne), produced from sub-sea wells, tied back to
a Floating Production and Storage and Offloading vessel ("FPSO").

 

The Phase 1A development is expected to be followed by the Phase 1B
development, targeting an additional Best Estimate 105 million barrels in
place in the more southerly Fault Block 4, which has the P50 potential to
deliver an additional 22.9 million barrels of oil gross (4.58 million barrels
net to Lansdowne).  The Phase 1B development involves the drilling of an
additional 3 Producer and 2 water injector wells.

 

The total P50 volumes estimated for the combined Phase 1A and 1B developments
amount to 81.2 million barrels of oil recoverable gross (16.24 million barrels
net to Lansdowne) from a Best Estimate of 278 million barrels of oil in place
(STOIIP).

 

An economic evaluation, documented in the RPS CPR, covers both Phase 1A and 1B
developments and in the 2C oil resources case, delivers an NPV10% for
Lansdowne's 20% share of $104 million under a Brent Oil Price assumption of
US$68 per barrel in 2027, rising to $70/bbl in 2028 and 2029 and inflated at
2% per annum thereafter.  This equates to a NPV10% of $6.40/bbl.  Lansdowne
notes that the current Brent Oil Price is now around US$90 per barrel.

 

Lansdowne's 20% interest in the Barryroe Field has a higher economic NPV10%
value per barrel for its working interest share than Providence's, as
Lansdowne's is free from the San Leon 4.5% Net Profits Interest ("NPI") held
over Providence's working interest.

 

The application for a Lease Undertaking for the Barryroe Field remains under
consideration by the Irish Department of the Environment, Climate and
Communications (DECC) and requires Ministerial approval.  Award of a Lease
Undertaking is an essential precursor to returning to active operations and
moving the project forward.

 

Steve Boldy, CEO of Lansdowne Oil & Gas, commented:

"These new studies have indicated that an oil development of the core area of
Barryroe through both the Phase 1A and 1B developments, could deliver c.
20,000 bpd of oil (gross).  This equates to around 15% of Ireland's current
oil consumption, which continues to run at around 130,000 bpd of oil, 100% of
which is currently imported.  Such indigenous oil production would have a
much lower carbon footprint than imported oil and would increase security of
supply in these uncertain times.

Encouragingly, despite more conservative assumptions on the number of wells
required and potential flow rates in the RPS CPR, the project economics of the
Phase 1A and 1B developments remain robust under a Brent Oil Price assumption
of US$68 per barrel in 2027, rising to $70/bbl in 2028 and 2029 and inflated
at 2% per annum thereafter that Lansdowne considers conservative in Iight of
the current energy price environment.

Lansdowne also highlights that the RPS CPR has only addressed the oil in the
Basal Wealden A Sand, which allows it to be corelated to the earlier work
carried out by NSAI.  Gas was proven in the Basal Wealden C Sand reservoir in
the 48/24-10z well that overlays the oil reservoir and this has previously
been estimated to hold a potential gas resource of c 400 BCF GIIP.  Lansdowne
believes this significant gas resource could make a vitally important
contribution to Ireland's energy mix as it transitions to a zero net carbon
economy and it is anticipated that any future phased development programme
will include consideration of this important gas resource.

In order to help identify the separate oil and gas potential in the K area, it
is expected that the future appraisal well will address both the A and the C
Basal Wealden Sand reservoirs respectively. "

 

Summary Tables from the RPS CPR

 

 SUMMARY OF OIL CONTINGENT RESOURCES

 As of 1(st) January 2022

 BASE CASE PRICES AND COSTS
 Asset                     Full Field Gross Resources(1) (MMstb)        Providence Net Working Interest(2, 3) (MMstb)         Pd(4)
                           1C             2C             3C             1C                2C                3C
 Barryroe Phase 1A and 1B  52.5           81.2           109.1          42.0              64.9              87.3              75%
 Notes:

 (1)Gross field Resources (100% basis) after economic limit test.

 (2)Providence holds a 80% working interest in SEL 1/11, North Celtic Sea
 Basin, Ireland

 (3)Lansdowne net Working Interest 1C, 2C, 3C Resources are 10.5, 16.2, 21.8
 MMstb

 (4)Chance of Development ("Pd") is the estimated probability that a known
 accumulation, once discovered, will be commercially developed.

 

Oil Contingent Resources Phase 1A and 1B as of 1(st) January 2022

Basal Wealden A Sands in Segments 1 to 4, Barryroe Field

                  ELT Date  Post-Tax Net Present Value (Net to Lansdowne)

                            (US$ Million, MOD)
 Discount Rate              0.0%          8.0%          10.0%         12.0%

 Phase 1A
 1C               2037      (7)           (27)          (30)          (32)
 2C               2046      247           91            68            50
 3C               2046      481           166           127           96
 Phase 1A and 1B
 1C               2046      104           8             (6)           (17)
 2C               2046      452           143           104           74
 3C               2046      788           243           180           133

Lansdowne Net Post-Tax Valuation at RPS Base Case Price Scenario as of 1(st)
January 2022

Basal Wealden A Sands in Segments 1 to 4, Barryroe Field

 

 

 

 

All Resources definitions and estimates shown in this report are based on the
2018 Petroleum Resource

Management System ("PRMS") of SPE/WPC/AAPG/SPEE/SEG/SPWLA/EAGE.

 

Glossary of Technical Terms

 BCF                   billion cubic feet
 Best Estimate (P50)   At least a 50% probability (P50) that the quantities actually recovered will
                       equal or exceed the Best Estimate (in statistical terms, a median).
 BPD or BOPD           barrels per day or barrels of oil per day
 BBL                   barrel of oil
 Cf/d                  Standard cubic feet per day of gas
 Contingent Resources  Those quantities of Petroleum estimated, as of a given date, to be potentially
                       recoverable from known accumulations, by the application of development
                       Project(s) not currently considered to be Commercial due to one or more
                       contingencies.
 STOIIP                Stock-tank oil initially in place
 GIIP                  Gas initially in place

 

 

Qualified Person Review

This release has been reviewed by Stephen Boldy, Chief Executive of Lansdowne,
who is a petroleum geologist with 40 years' experience in petroleum
exploration and management. Dr Boldy has a B.Sc., M.Sc., and Ph.D. in geology,
is a Fellow of the Geological Society of London and has consented to the
inclusion of the technical information in this release in the form and context
in which it appears.

 

 

For further information please contact:

 Lansdowne Oil & Gas plc             +353 1 963 1760
 Steve Boldy

 SP Angel Corporate Finance LLP      +44 (0) 20 3470 0470
 Nominated Adviser and Joint Broker
 Stuart Gledhill
 Richard Hail

 Tavira Securities Limited           +44 (0) 203 192 1739
 Joint Broker
 Oliver Stansfield

 

Notes to editors:

 

About Lansdowne

Lansdowne Oil & Gas (LOGP.LN) is a North Celtic Sea focused, oil and gas
exploration and appraisal company quoted on the AIM market and head quartered
in Dublin.

For more information on Lansdowne, please refer to www.lansdowneoilandgas.com
(http://www.lansdowneoilandgas.com) .

 

About Barryroe

Barryroe, located in the North Celtic Sea Basin, off the south coast of
Ireland, has had six wells successfully drilled on the structure.
Hydrocarbons have been logged in all six wells, with flow test results from
four wells.  Four wells were drilled in the 1970's by Esso with a further
appraisal well drilled in 1990 by Marathon Oil.  The sixth well was drilled
by Providence & Lansdowne in 2011/12.  The oil is light (43° API) with a
wax context of c. 17-20%.  The successfully tested reservoir sands are of
Cretaceous Middle and Lower Wealden age located between c. 4,500' TVDSS and
7,550' TVDSS.  The field is covered by both 2D and 3D seismic, the latter
which was acquired in 2011.

 

Following acquisition and interpretation of the new 2011 3D seismic data
together with the subsequent drilling and testing of the 48/24-10z Barryroe
appraisal well in 2012, Providence retained the services of Netherland Sewell
& Associates Inc. (NSAI) to carry out a third party contingent resource
audit (CPR) of the in-place hydrocarbon and recoverable resources for the
Basal Wealden oil reservoir.  NSAI reported that the Basal Wealden oil
reservoir has a 2C in-place gross on-block volume of 761 MMBO with recoverable
resources of 266 MMBO and 187 BCF of associated gas, based on a 35% oil
recovery factor.  A third party (CPR) audit of the overlying Middle Wealden,
which was carried out by RPS Energy (RPS) in 2011, reported a 2C in-place
gross on-block volume of 287 MMBO with technically recoverable resources of 45
MMBO and 21 BCF of associated gas, based on a 16% oil recovery factor.

 

The total combined audited gross on block 2C recoverable resources at Barryroe
therefore amount to 346 MMBOE, comprising 311 MMBO and 207 BCF.   The
following table summarises the range of total gross audited on-block Barryroe
oil resources:

 

 
 
 
  1C                       2C
         3C

(MMBO)             (MMBO)             (MMBO)

Basal Wealden STOIIP (NSAI)
                                             338
                      761
        1,135

Basal Wealden Recoverable (NSAI)
 
                                85
                      266
           511

Middle Wealden STOIIP (RPS)
                                              31
                      287
           706

Middle Wealden Recoverable (RPS)
                                          4
                    45
           113

 

TOTAL STOIIP
 
           369                      1,048
            1,841

TOTAL RECOVERABLE OIL RESOURCES
                                  89
                  311                   624

 

Note: The table above excludes recoverable solution gas (i.e. 207 BCF or 34.5
MMBOE in the 2C case)

 

Further incremental resource potential has been identified in logged
hydrocarbon bearing intervals within stacked Lower Wealden and Purbeckian
sandstones which Providence has previously estimated contains total associated
P90, P50 & P10 in place oil resources of 456 MMBO, 778 MMBO & 1,165
MMBO respectively. As there is currently limited reservoir and well test data
available over these two intervals, future well data over these specific zones
would be required in order to firm up their associated final recoverable
resource estimates.

 

 

 

 

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 (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDFLFELFEISIIF