REG - Predator O&G Hldgs - Corporate Update

Predator Oil & Gas HoldingsAnnouncement

13/01/2022 07:05

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RNS Number : 2826Y  Predator Oil & Gas Holdings PLC  13 January 2022

FOR IMMEDIATE RELEASE

13 January 2022

 

Predator Oil & Gas Holdings Plc / Index: LSE / Epic: PRD / Sector: Oil
& Gas

Predator Oil & Gas Holdings Plc

("Predator" or the "Company" and together with its subsidiaries "the Group")

 

                           Corporate update -
Independent valuation of contingent gas resources

 
Highlights

·    CPR establishes gross Contingent Resources of 393 BCF following MOU-1

 

·    Estimated Net Present Value (unrisked) for Predator's 75% interest
US$592 million

 

·    Fully funded for  MOU-1 extended rig-less well testing operations

 

Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas
Company with operations in Morocco, Trinidad and Ireland and focussed on gas
as a sustainable lower carbon fuel for the Energy Transition, is pleased to
announce, as previously referenced in the Operations Update released on 15
December 2021, the completion by SLR Consulting (Ireland) Ltd. ("SLR") of a
Competent Persons Report ("CPR"). The CPR comprises of an independent
re-assessment and valuation of the "Guercif MOU-4 Prospect" as evaluated by
SLR in the CPR referenced in the Operations Update released on 7 December 2020
and now defined as the Tertiary Moulouya Turbidite Fan Appraisal Project (the
"Appraisal Project") following the incorporation of the positive MOU-1
drilling results.

 

CPR summary results (third party CPR available shortly at
www.predatoroilandgas.com/ (http://www.predatoroilandgas.com/) cpr2022).

 

Contingent resources

 

The Best Estimate assessment uses a gas initially in place ("GIIP") estimate
of 595 BCF based on an area of closure following the drilling of MOU-1 of 31.7
km². MOU-1 established a common structural closure with the original MOU-4
Prospect and calibrated the pre-drill seismic amplitude anomalies over this
area with the gas-bearing interval encountered in MOU-1.

 

The gross Best Estimate for the Appraisal Project based on a conservative 66%
gas recovery over 13 years is 393 BCF (295 BCF net attributable to Predator's
75% interest). SLR indicate a High Estimate of 708 BCF net attributable to
Predator's 75% interest based on a higher GIIP estimate for thicker
reservoirs.

 

The results of the MOU-1 well have confirmed and de-risked the previously
reported pre-drill CPR assessment of Prospective Resources.

 

As a consequence the CPR has moved the pre-drill Prospective Resources to
Contingent Resources and defines the Best Estimate of 295 BCF net to the
Company's 75% interest to be "potentially recoverable from a known
accumulation by the application of a development project". The CPR concludes
that "based on the potential size of the MOU-4 structure, the project is
likely to be commercially viable".

 

Expected net present value ("ENPV")

 

The definition of Contingent Resources has resulted in an ENPV of US$148
million based on 25% of the 295 BCF (74 BCF) of the net resources attributable
to the Company's 75% interest. The 25% chance of proceeding to development
reflects the remaining production, transport, legal, contractual and
environmental issues relating to a large-scale gas-to-power development.
Unrisked ENPV is US$592 million. The CPR states that "the chance of
commerciality for a pilot Compressed Natural Gas ("CNG") development supplying
lower volumes of gas to industrial markets is likely to be considerably
higher", based on a higher reported average gas price to the Moroccan industry
of US$11.40/mcf in 2021.

 

A CNG development is the preferred development option for the Company. Net
capital costs for the Company's 75% interest required for a CNG pilot
development are reported in the CPR to be "US$12.21 million with operating
costs of US$2.3/mcf". At US$11/mcf gas sales price to industry this "provides
a commercial model for CNG". CNG is adaptable to the dispersed nature of the
Moroccan industrial gas market. It also enables accelerated monetisation of
gas with minimal initial investment in drilling as the production profile is
very flexible and can be tailored to mobile trucking and individual customer
requirements without the need for extensive drilling to establish a
substantive threshold gas profile with which to justify investment in pipeline
costs to secure minimum throughput to recover fixed infrastructure investment.
The continued availability of the Star Valley rig in Morocco makes scaling up
of a pilot CNG development achievable.

 

Gas confirmed and future follow-up activity

 

The CPR confirms that the MOU-1 well penetrated the extreme western limit of
the Tertiary MOU-4 submarine fan  Even at this extremity the CPR notes that
"petrophysical log analysis by NuTech confirms 10 metres of net gas pay within
thin sands within a gross section of more than 60 metres".

 

MOU-1 testing is planned for Q2 2022 following the anticipated relaxation of
COVID travel restrictions in Morocco. The Company is fully funded to carry out
an extended rig-less testing programme.

 

Pre-drill preparations for the MOU-4 step-out well 8 kms. to the east of MOU-1
on the same structure de-risked by MOU-1 is progressing as planned at a
location where the maximum thickness of reservoirs sands is interpreted to be
present. The CPR confirms the "analogy of MOU-4 to the Anchois-1 gas discovery
in the offshore Rharb Basin".

 

MOU-1 confirmed for the first time a working hydrocarbon system in the Guercif
Basin for thermogenic dry gas originating from a much deeper source interval.
It defined a new gas province in Guercif and de-risked multiple gas prospects
over an area of at least 200 km² to be followed up in the future. The
immediate focus is on appraising and developing the MOU-4 Appraisal Project.

 

The Anchois area is a proven offshore extension of the Rharb Basin and with
MOU-1 Guercif is now proven to be the eastern onshore extension of the Rharb
Basin. Together this re-emerging gas province is a continuous geological unit
extending over 250 kms. from west to east and beginning to generate
substantive gas discoveries much larger than any encountered to date in the
onshore Rharb Basin. The gas province is well positioned geographically to
serve the domestic gas market and to access infrastructure - road, rail and
gas pipelines. In addition the area is connected to Europe via the Maghreb Gas
Pipeline.

 

The Guercif licence covers an area of 7,269 km². MOU-1 de-risked the
petroleum system in Guercif by proving migration pathways for deep thermogenic
gas from a much deeper source rock. In addition to the Tertiary gas, which is
the Company's near-term focus, multiple deeper Jurassic oil and gas
prospective leads have been identified for future evaluation and drilling. The
location for one of these features, "MOU-NE", is included in the Company's
Environmental Impact Assessment for its currently scheduled drilling programme
for the MOU-4 Appraisal Project. MOU-NE lies updip from an abundant
micro-seepage with an oil signature identified by a Geo-Microbial Technologies
micro-seepage survey in 2006 and 2007 (as referenced in the current CPR).

 

Corporate update

 

The success of the MOU-1 well in de-risking a working petroleum system in the
Guercif licence area covering 7,269km² creates a significant challenge for
the Company in terms of accelerating the evaluation of the full potential of
the licence area. This will require securing the longer term financing and
joint venture partnerships required to realise shareholder value at a time
when the oil and gas sector is being strongly impacted by climate change
concerns.  The Company's current public market capitalisation no longer
reflects the value of its Guercif asset in terms of its development potential.
Guercif represents one of the largest onshore licences in Morocco with gas
prospectivity established by MOU-1.

 

The Company will consider all options to monetise its asset during 2022.

Paul Griffiths, CEO of Predator Oil & Gas Holdings Plc commented:

"We are pleased to report the results of the CPR confirming the continuity of
the MOU-1 and MOU-4 structures which has established material Contingent Gas
Resources net to the Company of 295 BCF and an unrisked ENPV of US$592million.

 

The realisation of Contingent Gas Resources gives the Company an additional
option for shareholder monetisation. In order to create greater financial
substance a reversal into an entity wanting exposure to the Guercif
opportunity should not be discounted as a future option.

 

Management and the largest individual shareholder would be very supportive of
such a move if the value proposition was sufficiently attractive for
shareholders and guaranteed accelerated exploitation of the full potential of
the Guercif licence area.

 

The ENPV versus current market capitalisation demonstrates an imbalance that
does not reflect potential shareholder value."

 

This announcement contains inside information for the purposes of Article 7 of
the Regulation (EU) No 596/2014 on market abuse

 

For more information please visit the Company's website
at www.predatoroilandgas.com (http://www.predatoroilandgas.com/) :

 

 

 

Enquiries:

 Predator Oil & Gas Holdings Plc                                      Tel: +44 (0) 1534 834 600

 Dr. Stephen Staley     Non-executive Chairman                        Info@predatoroilandgas.com (mailto:Info@predatoroilandgas.com)

 Paul Griffiths               Chief Executive Officer

 Lonny Baumgardner  Chief Operating Officer

 Novum Securities Limited                                             Tel: +44 (0) 207 399 9425

 Jon Belliss

 Optiva Securities Limited                                            Tel: +44 (0) 203 137 1902

 Christian Dennis

 Flagstaff Strategic and Investor Communications                      Tel: +44 (0) 207 129 1474

 Tim Thompson                                                         predator@flagstaffcomms.com (mailto:predator@flagstaffcomms.com)

 Mark Edwards

 Fergus Mellon

 

Notes to Editors:

 

Predator is operator of the Guercif Petroleum Agreement onshore Morocco which
is prospective for Tertiary gas in prospects less than 10 kilometres from the
Maghreb gas pipeline.  The MOU-1 well has been completed and a follow-up
testing programme is being developed and a further drilling programme is under
review.

 

Predator is seeking to further develop the remaining oil reserves of
Trinidad's mature onshore oil fields through the application of CO2 EOR
techniques and by sequestrating anthropogenic carbon dioxide to produce
"greener" oil.

 

In addition, Predator also owns and operates exploration and appraisal assets
in licensing options offshore Ireland, for which successor authorisations have
been applied for, adjoining Vermilion's Corrib gas field in the Slyne Basin on
the Atlantic Margin and east of the decommissioned Kinsale gas field in the
Celtic Sea.

 

Predator has developed a Floating Storage and Regasification Project ("FSRUP")
for the import of LNG and its regassification for Ireland and is also
developing gas storage concepts to address security of gas supply and
volatility in gas prices during times of peak gas demand.

 

The Company has a highly experienced management team with a proven track
record in operations in the oil and gas industry.

 

 

 

 

 

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