REG - Predator O&G Hldgs - Drilling and Operations Update

Predator Oil & Gas HoldingsAnnouncement

19/07/2022 07:00

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RNS Number : 8846S  Predator Oil & Gas Holdings PLC  19 July 2022

 

FOR IMMEDIATE RELEASE

19 July 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")

 

Drilling and operations update

Highlights

·    MOU-1 step-out well MOU-2 to target 295 BCF net Contingent Resources

·    Unrisked NPV US$592 million

·    MOU-2 well pad construction will commence this month

·    September - October drilling schedule

·    Targeting 110 metre potential gross reservoir interval in Moulouya
("MOU-4") Fan

·    Planning for extended production test for early CNG sales and gas
revenues

·    Memorandum of Understanding for Gas Sales Agreement and leasing of
CNG equipment being discussed

Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas
Company with operations in Morocco, Ireland and Trinidad is pleased to
announce a drilling and operations update.

 

 

Guercif Drilling Programme

 

Current status

 

The Company is in the process of completing local permitting for the second of
two alternative locations for the step-out well to the MOU-1 well which was
completed for rigless testing in 2021. The final location will be agreed
following the integration of reprocessed 2D seismic data that have recently
been received. Civil engineering works will commence this month to construct
the well pad for the step-out well now designated MOU-2.

 

Long lead equipment including well heads, casing, cement, chemicals, drill
bits mud motors and downhole tools as well as mud and cementing services have
been sourced out of the UK, France, USA, Canada, Egypt and the Netherlands.

 

The well is anticipated to be drilled and completed for rigless testing
between September and October this year. The drilling window will be updated
as well inventory arrives in Morocco from overseas. Star Valley Rig 101 is
prepared to commence drilling operations on instructions from the Company.

 

The geological well programme and drilling programme are currently being
updated.

Well objectives

 

The well will test the Moulouya Fan, previously designated the "MOU-4 Fan".
The extreme western feather edge of the Moulouya Fan was penetrated in MOU-1
located approximately 8 kms. to the southeast of the new step-out well. MOU-1
established the presence of gas in the target section and confirmed an
over-pressured mudstone seal. Post-well seismic ties validated a seismic
amplitude signature for the MOU-4 Fan covering an area of greater than 30
km².

 

MOU-2 will test the core of the Moulouya Fan in a shelf slope position where
seismic signatures indicate the presence of major channel systems. The well
will provisionally be drilled to 1,500 metres TVD KB and is expected to
encounter the top of the Moulouya Fan between 1,130 and 1,200 metres TVD KB.
At this location the well will be targeting a gross potential Moulouya Fan
reservoir sequence of 110 metres. The potential for multiple gas-water
contacts may exist as is the case in the Anchois discovery and appraisal
wells. However at this well location there is little seismic evidence for
compartmentalisation of the target reservoir section.

 

The well has been designed to test an independent structural closure within
the Moulouya Fan covering up to 11 sq. km., twice the area of the original
Anchois discovery well. Vertical relief on this closure is approximately 75
metres and is sufficient to test for lowest known gas in the 110 metre gross
potential reservoir interval. Gas deeper than structural closure will help
establish the validity of a single stratigraphic trap covering up to 30km²
defined by the seismic amplitude signature tested in MOU-1.

 

MOU-2 is targeting net Best Estimate resources to the Company of 295 BCF
(Table 1) based on the independent SLR Consulting Ireland Ltd. ("SLR")
Competent Persons Report ("CPR"), (February 2020 and January 2022 "MOU-4"
updated). Gas deeper than the mapped structural closure tested by MOU-2 would
support the SLR High Estimate of gas resources net to the Company of 708 BCF.

 

 

Table 1 Prospective and Contingent ("MOU-4" now Moulouya Fan) Resources
Guercif Permit

 

                                                    Gross                                       Net Attributable
 Gas Prospective Resources  GIIP   Recovery Factor  Low Estimate  Best Estimate  High Estimate  Low Estimate  Best Estimate  High Estimate  Operator

 BCF
 Guercif Tertiary           646    66%              148           426            879            111           320            659            Predator

 Guercif MOU-4 Prospect     595    66%              146           393            944            110           295            708            Predator
 Guercif Triassic           515    40%              77            206            378            58            155            283            Predator
 Total                      1,676                   371           1,025          2,201          279           769            1,651

Source - SLR Consulting Ireland Ltd

 

 

 

 

 

Supportive desktop studies

 

Recently completed post-well geochemical, sedimentological and biostrat
studies on well cuttings have confirmed that the distal part of the Moulouya
Fan was deposited in a deep marine setting. The presence of very fine grained
sandstones was established as indicated as interpreted from the high
resolution NuTech post-well log analysis. These are moderately well sorted and
have undergone very little compaction. At deposition the independent studies
indicated that these sediments were likely to have 35 - 40% porosity and
permeabilities between 2000 and 5000 Md. Lack of compaction and consolidation
suggests that poroperm conditions would not have been significantly impacted
through burial and therefore good reservoir quality would potentially be
retained, as supported by the post-well NuTech log analysis.

 

The new desktop studies will be used to update and refine the MOU-1 testing
programme.

 

Geochemical source rock studies unexpectedly showed that the section between
800 and 1500 metres frequently had Total Organic Carbon content of between
0.85 and 1% raising the possibility of not only a thermogenic dry gas source
but also a biogenic gas source.

 

Potential for early monetisation

 

Plans are being advanced to place MOU-2 in a success case on an extended
production test for an initial CNG development. This does not require the
issue of an Exploitation Concession licence, which can be applied for in due
course following the extended production test.

 

Initial gas sales are likely to be constrained to a plateau of 10 mm cfgpd
(using MOU-2 and MOU-1). Reservoir characteristics are encouraging and well
deliverability may potentially be significantly higher than this plateau. For
early monetisation and the generation of near-term gas sales revenues a
cautious approach is being adopted to ensure that any exposure to shortfall in
gas deliveries due to operational reasons is manageable through a flexible Gas
Sales Agreement to end users with an alternative LPG back-up.

 

CNG sales can be upscaled with additional development wells to reach the next
threshold production target of 50 mm cfgpd.

 

First CNG gas sales are being targeted for within 6 months of the completion
of rigless testing for MOU-1 and MOU-2. Timing will depend on maintaining a
momentum in the logistical supply chain.

 

To further its commercial objectives the Company is in discussion with the
Moroccan industrial market to secure a Memorandum of Understanding for a Gas
Sales Agreement that will be implemented upon the completion and announcement
of the MOU-2 and MOU-1 rigless test results.

 

To assist the financing of the CNG development the Company is seeking to have
in place before MOU-2 is drilled a Memorandum of Understanding with an
international CNG utility company to finance through a leasing agreement the
initial CNG development. The lack of fixed pipeline development costs;
accelerated timescale to first gas; and higher gas prices achieved in the
Moroccan industrial market versus the power sector generates the scale of
revenues necessary to make commercially attractive such leasing agreements. A
Memorandum of Understanding for a Leasing Agreement would  be implemented
upon the completion and announcement of the MOU-2 and MOU-1 rigless test
results.

 

Potential scoping revenues and indicative valuation

 

The SLR CPR (January 2022) gives an unrisked NPV per BCF of discovered gas of
US$1.99 million. This is based on a large-scale gas-to-power development using
a gas price of US$9/mcf and results in a low net-back of just US$1.99/mcf.

 

Conservatively therefore a 10 mm cfgpd CNG project would generate a NPV of
US$7.26 million annually rising to US$36.3 million through scaling up to 50 mm
cfgpd.

 

SLR recognise that a 10 mm cfgpd CNG development could potentially generate
significantly higher revenues based on a CNG operating cost of US$2.3/mcf and
a net CAPEX cost of US$12.21 million and an average gas sales price of
US$11/mcf, before allowing for recent cost and gas price inflation as a result
of the European energy crisis.

 

The SLR CPR gave an unrisked NPV of US$592 million for the net Best Estimate
resources of 295 BCF being targeted by the upcoming MOU-2 well subject to
proving commerciality. The CNG development case provides the optimum scenario
for proving and accelerating commerciality whilst the gas market remains
influenced by the European energy crisis.

 

At an exchange rate of US$1.19/GBP1.00 this represents an unrisked 146.5 pence
per share based on the Company's fully diluted share capital of 339,582,281
shares to support the risk-reward drilling proposition.

 

Mag Mell FSRU LNG and Ram Head gas storage

 

The Company is commissioning a report through SLR Consulting Ireland Ltd. to:

 

-     develop an outline pipeline site survey plan for the existing Kinsale
Head gas export pipeline to shore and to include the foreshore;

-      prepare a draft investigative Foreshore Licence Application Form
with accompanying map;

-     apply to the Foreshore Unit of the Department of Housing, Local
Government and Heritage to request a pre-application consultation meeting.

 

This forms part of the Company's ongoing process to maintain heightened public
and regulatory awareness of the importance of protecting strategic gas
infrastructure from premature decommissioning  as the energy crisis in Europe
evolves. This is vital to diversify Ireland's gas imports and to assist with
the development of gas storage. Currently Ireland has no gas storage
facilities.

 

CO2 EOR Trinidad

 

The Company is focussed on leveraging it's CO2 EOR expertise in Trinidad
whilst preserving its cash resources in the near-term to advance drilling
activity in Morocco.

 

Working in cooperation with Lease Operators in the PS-1 Block the Company has
selected four additional sites for CO2 EOR operations. This will be the key
area of focus for the remainder of 2022.

 

Green Hydrogen

 

The Company is seeking to acquire an attractive green hydrogen opportunity to
develop once the Moroccan drilling and testing programme for 2022 has been
completed.

 

Cash resources are committed at present to the MOU-2 drilling programme but
options to secure exclusivity over early stage projects in private companies
will be considered if the Company believes that it can add value through  its
listed status to strengthen marketing of green hydrogen to potential end
users.

 

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

"Despite logistical challenges caused by the situation between Russia and
Ukraine, we are pleased that we remain on track to drill the follow-up well to
MOU-1 during September and October. The Guercif licence area has always
represented a unique risk-reward proposition for the Company and its
shareholders. This has been reinforced in the last few months as the European
energy crisis has taken a firm stranglehold.

 

We have the means to drill a sizeable onshore gas target but most importantly
a clear plan for early monetisation though a CNG development that does not
require any new gas pipeline infrastructure or any long delays in accessing
existing infrastructure.

 

The Moulouya Fan Project is a project made for the current shortage of gas
scenario in Morocco and Europe. Sometimes global events align to favour those
that were prepared to take risks in an area that was for so long neglected and
overlooked. Recognising missed opportunities is a key driver for our Company's
management as it creates our competitive edge."

 

 

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

 Paul Griffiths               Executive Chairman                 Info@predatoroilandgas.com

 Lonny Baumgardner   Managing Director

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

 Jon Belliss

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

 Christian Dennis

 Peterhouse Capital Limited                                      Tel: +44 (0) 207 220 9791

 Charles Goodfellow

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

 Tim Thompson                                                    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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