REG - Predator O&G Hldgs - End of Year Operations Update

Predator Oil & Gas HoldingsAnnouncement

15/12/2021 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211215:nRSO6593Va&default-theme=true

RNS Number : 6593V  Predator Oil & Gas Holdings PLC  15 December 2021

FOR IMMEDIATE RELEASE

15 December 2021

 

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")

 

 
                                              End
of Year Operations Update

 
Highlights

·    Extended MOU-1 well testing programme to commence in Morocco

 

·    Fully funded for MOU-1 well testing operations

 

·    Moroccan end users for gas urgently seeking new gas supplies

 

·    Opportunity for early monetisation for Compressed Natural Gas
deliveries

 

·    MOU-4 Fan Prospect tested and de-risked by MOU-1 - 32km² confirmed

 

·    MOU-4 Competent Persons Report due to be published early in 2022
pre-MOU-1 testing

 

·    Irish gas demand re-vitalised and requiring the equivalent of the
discovery of another Corrib gas field

 

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 an operations update for the end of 2021 together with plans for
extended well testing of the MOU-1 gas discovery.

 

Morocco - The Moulouya Gas Project

 

As previously reported the MOU-1 well was successfully drilled, logged and
completed for rigless testing within budget and without any subsurface
operational issues.

 

The area around the well site has been restored to the highest environmental
standards to preserve the pre-drill natural environment.

(www.predatoroilandgas.com/sitephotograph
(http://www.predatoroilandgas.com/sitephotograph) ).

 

Post well evaluation studies have now been completed that included
state-of-the art log analysis carried out by NuTech in Houston, Texas. This
has re-confirmed two zones for perforating and potential gas flow between
1,231 - 1,241 metres TVD KB and 1,276 - 1,300 metres TVD KB. Reservoir
characterisation supports the presence of a submarine fan sequence with
multiple thin-bedded higher permeability layers.

(www.predatoroilandgas.com/loganalysis
(http://www.predatoroilandgas.com/loganalysis) ).

 

The reservoir interval is over-pressured. MOU-1 encountered pressures not seen
before in the Rharb Basin at the depth of the reservoir in MOU-1. The
pressures encountered at this depth were up to 500 psi higher compared to
pre-drill prognosis based on the offset well GRF-1 drilled in 1972 and located
only 1.25 km to the southeast of MOU-1 but separated from MOU-1 by a
basin-defining transfer fault. As a result of the unexpected pressures whilst
drilling the mud weight had to be increased to 12.56 pounds per gallon to
successfully control the well. A major pre-drill risk was identified as being
the potential for stuck drill pipe through the geological interval penetrated
by MOU-1, as has been a historical problem in some wells in the Rharb Basin.
Despite the unexpected formation pressures the Company's small but highly
experienced drilling team and management working in consultation with its
service providers and the Star Valley drilling rig team managed to deliver the
well without any of the downhole issues previously experienced in the Rharb
Basin.

 

Conventional well logs delivered at the end of the well did not have
sufficient resolution to correctly characterise the reservoirs penetrated by
MOU-1. Additional logs were not run as the priority was to secure the well for
rigless testing rather than risk logging tools getting stuck in areas of poor
borehole integrity, which could have created a significant financial lability.
Post-well NuTech log analysis identified permeable thin sands. High mud
weights with some drilling mud invasion of the permeable zones are forecast to
have reduced the calculated gas saturations.

 

Based on the depth of the primary target encountered in MOU-1, the pre-drill
seismic amplitude anomaly is now confirmed to be a 32 km² submarine fan (the
"MOU-4 Fan"). Independent third-party, post-well remapping confirms the
presence of the MOU-4 Fan, connected and in continuity with the MOU-1 gas
discovery.

 

MOU-1 penetrated only the extreme western edge of the MOU-4 Fan.

(www.predatoroilandgas.com/fanmap (http://www.predatoroilandgas.com/fanmap) ).

 

Based on the re-mapping of the MOU-4 Fan, the next step-out well location
(MOU-4 well) will be

approximately 8 kms. east of MOU-1 but within the same common structural
closure as MOU-1.

 

MOU-4 will test the same seismic amplitude anomaly as MOU-1 successfully
encountered but in an area where a maximum provisional thickness of gross
reservoir interval is interpreted to be 293 metres compared to approximately
70 metres seen in MOU-1. MOU-4 will target a sub-area of the MOU-4 Fan with an
independent 4-way dip closure covering 7.3 km² and characterised by a
favourable seismic amplitude response, seismic flat spots potentially related
to gas-water contacts and a potential "gas cloud" developed at the eastern
limit of structural and possibly stratigraphic closure.

(www.predatoroilandgas.com/seismic (http://www.predatoroilandgas.com/seismic)
).

 

Forward Programme

 

Following the completion of the NuTech reservoir characterisation studies,
seismic re-mapping and the analysis of the MOU-1 pressures whilst drilling,
the Company has identified all the specialist testing equipment and size of
perforating guns it requires in-country to commence rigless testing, subject
to partner approval, of MOU-1 at the earliest opportunity in 2022, allowing
for any potential COVID restrictions that may or may not impact personnel
movements. The objective will be to establish commercial gas flow rates and to
analyse pressure data to estimate volume of gas connected to the MOU-1
wellbore.

 

The Company has completed a pilot CNG study. The Company's own project
economics indicate that a  pilot CNG development in the range 2 to 5 mm cfgpd
is economic based on the prices paid for gas in Morocco by the industrial
sector.

 

The Company is of the opinion, subject to partner approval, that a fast-track
approach to a CNG pilot development based initially solely on MOU-1 gas
volumes would be possible subject to the final results of the MOU-1 testing
programme.

 

Current industrial users of gas in Morocco may urgently require new gas
supplies during the early part of 2022. Potential MOU-1 gas would be offered,
subject to partner approval, on a first come first served basis to those
wanting exclusivity over a new gas supply. There is no other short-term option
for access to a new gas supply in Morocco. The Company would not guarantee
minimum delivery volumes from MOU-1, in order to eliminate the commercial risk
of non-delivery of gas on any particular day. Delivery risk would be shared
with the end user. There is no other alternative at present for end users and
the proposed commercial model would encourage end users to enter into a joint
venture agreement with the Company to help finance and develop incremental CNG
gas resources through drilling and completion of additional production wells.
The Company is a proven, competent and low cost operator in Morocco with
significant "running room" to expand gas sales based on a CNG development
concept and a potential gas structure covering 32 km² connected to the MOU-1
gas discovery.

 

A new Competent Persons Report for the MOU-4 Fan penetrated by MOU-1 is being
generated by SLR Consulting (Ireland) Ltd. and will be released at the
earliest opportunity at the beginning of 2022.

 

The Company is fully funded to carry out the extensive MOU-1 testing
programme.

 

Going forward and subject to potential joint venture partnerships with end
users, the programme for the Moulouya Gas Project includes further drilling
according to the schedule defined shown at

www.predatoroilandgas.com/schedule (http://www.predatoroilandgas.com/schedule)
.

 

Ireland  - LNG and Gas Storage

 

During the year the Company has focussed on the importance of gas in Ireland
as a sustainable greener fuel of choice during the Energy Transition and the
importance of security and diversity of gas supply.

 

In order to maintain its presence in Ireland, during a difficult time for the
fossil fuel industry, the Mag Mell Floating Storage and Regasification Project
("FSRUP") was included in public consultation submissions to the County Cork
Development Plan and for the proposed decommissioning of the Kinsale gas
pipeline and onshore gas terminal facilities.

 

Subsequently the Company has generated a "Close Out Report" as requested by
the GeoScience Regulation Office of the Department for the Environment,
Climate and Communications for its Ram Head Licensing Option, which is the
subject of an application for a successor authorisation. In response to
Ireland's lack of any operational gas storage facility, the Ram Head technical
evaluation included a potential solution to develop a 10 to 15 bcf gas storage
facility in an existing gas discovery based on management's 20 years of
experience in the Celtic Sea in identifying potential gas storage reservoirs
and developing gas storage desktop projects. Such a facility would link in to
the FSRUP project to provide summer storage of gas and security of indigenous
gas resources during times of peak gas demand and volatility in gas prices.

 

The Company is currently negotiating a Memorandum of Understanding with a
significant entity in the downstream marketing of gas to work together in an
exclusive relationship to determine the potential market for FSRU gas and for
gas from seasonal storage operations in order to optimise the technical
specifications of the FSRU and gas storage facilities for gas send-out to meet
periods of high demand and high gas prices.

 

Towards the end of 2021 it was announced that 2 GW of new gas-fired power
generation would be required to be built. Gas supply required for full
operation of the power plants would be 300 mm cfgpd, equivalent to discovering
another Corrib gas field (in the Company's adjacent Corrib South prospect,
which is also the subject of an application for a successor authorisation) or
developing the deep discovered gas at Ram Head. The additional
power-generating capacity is designed to provide security of energy supply at
peak times of demand. This would coincide with peak periods of demand in the
European gas market when gas prices are most volatile and gas supplies may be
stretched to meet demand. Ireland currently would import the gas required at
these peaks times via the interconnector with the UK. Gas price volatility
would not be addressed in this manner and electricity prices would continue to
come under pressure, having risen 57% in Ireland just this year.

 

The Company offers a practical, socially responsible and pragmatic solution to
addressing security and diversity of gas supply in Ireland during the Energy
Transition and will continue to promote its solutions during 2022. Our
projects can deliver the required goals by 2024 subject to proactive
regulatory engagement.

 

Trinidad

 

During the first half of the year CO2 EOR operations continued at
Inniss-Trinity despite COVID restrictions.

 

In July 2021 Fram Exploration Trinidad Ltd.'s parent company unilaterally
decided to terminate the CO2 EOR operations at very short notice. This was an
unforeseen event and the Company continues to evaluate all of its different
options to seek redress.

 

During the latter part of 2021 the Company has been reviewing a number of
interesting options with local operators. The Company has presented a
commercial model for partnering on CO2 EOR operations to each of these
operators based on a sale of Predator Oil & Gas Trinidad Ltd into a new
dedicated in-country CO2 EOR services operator. Discussions will continue
during the early part of 2022.

 

The Company's view is that it does not wish to be burdened with operating in
Trinidad at the expense of efficiently managing it's potentially valuable
assets in Morocco and Ireland where the potential for high-impact returns for
shareholders are substantially greater. Maintaining an equity position in a
dedicated CO2 EOR services company with a technical advisory role is the
Company's preferred business strategy going forward into 2022, particularly as
Trinidad is currently suffering a new COVID wave.

 

Shareholders webinar

 

At the earliest opportunity after release of the MOU-4 Competent Persons
Report early next year the Company will hold a virtual shareholders' webinar
to answer questions regarding this operational update and the Competent
Persons Report.

 

 

 

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

"Despite the COVID pandemic 2021 has been an exceptionally busy year for the
Company. The MOU-1 gas discovery has  been fully evaluated and the testing
programme will now be executed first before any potential additional drilling
commences. This is to reflect the commercial opportunity that has crystallised
in the last couple of months of 2021 in respect of the situation for current
end users of gas in Morocco.

 

Ireland has been transformed in 12 months. At the beginning of the year gas
was side-lined in Ireland. At the end of the year another Corrib gas field is
required to supply 9 new gas-fired power stations. Our strategy of hanging in
there and providing a technocrat's view of the Energy Transition has served
the Company well.

 

Trinidad has not delivered yet. Not through technical failure, but through an
unforeseen and bizarre event that can be put in the context of what others
think is an acceptable approach to making a small but positive contribution to
addressing Climate Change Concerns.

 

2022 is set to be an eventful year for the Company in Morocco and we are
optimistic about the outcome.

 

We thank our shareholders for their continued support and patience during yet
another difficult year created by the COVID pandemic. Our management strives
to deliver success and results based on strict cost control, relevant
operational experience and high technical and environmental standards. We are
not perfect but we believe trust in management is a valuable asset and should
be continually nurtured. "

 

 

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 Regassification 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.

 

 

 

 

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  UPDDZMMZRDDGMZM