REG - Predator O&G Hldgs - Operations Update and Directorate Changes

Predator Oil & Gas HoldingsAnnouncement

12/05/2022 07:00

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RNS Number : 1885L  Predator Oil & Gas Holdings PLC  12 May 2022

FOR IMMEDIATE RELEASE

12 May 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")

 

 
             Operations update and directorate changes

 
Highlights

·    Purchase orders being issued for sourced long-lead well items,
including 4 wellheads

 

·    Schedule for rigless testing MOU-1 to be aligned with mobilisation of
drilling services

with option to include additional shallower sand for perforating

 

·    Environmental Impact Assessment for MOU-4, MOU-5 and MOU-NE well
locations approved

 

·    Civil works contract awarded to build first well location

 

·    Star Valley rig option secured as previously negotiated for MOU-1
drilling contract

 

·    MOU-4 and MOU-5 to potentially prove up High Estimate 708 BCF net
recoverable

 

·    MOU-NE Prospect seismic mapping confirms area of closure of 102 km²
for Jurassic target

 

·    Fully funded to meet all well planning and well preparation
activities in Morocco.

 

·    Two potential farminees for the Guercif Licence selected from initial
responders for further discussions

 

·    Company's commercial proposal includes past costs; disproportionate
share of costs for 3-well drilling programme and "Put Option" to buy out
residual project equity

 

·    Final information provided to the regulatory authorities for Ram Head
and Corrib South applications for successor authorisations prior to a decision
being made

 

·    Commercial terms provided to FRAM Exploration Trinidad for an asset
swap to settle issues relating to the terminations of the  Inniss-Trinity
Pilot CO2 EOR Project

 

·    Green hydrogen option being pursued with initial focus on Romanian
opportunities

 

·    Board refreshed with two new Non-executive Directors with experience
compatible with the medium-term financial requirements of the Company's
business development strategy

 

 

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

 

 

Morocco

 

In respect of the 2022 Moroccan drilling programme the sources of long lead
drilling inventory have been identified and purchase orders are being issued
to secure critical items, including four wellheads, to enable the drilling
programme to commence at the earliest opportunity. The drilling schedule will
be updated only when there is certainty on the dates of delivery of long-lead
items, for the reasons expanded upon below.

 

Rigless testing of MOU-1 will be aligned with the presence of in-country
drilling services, materials and equipment mobilised from overseas for the
start of the 2022 drilling programme. It will be carried out cost-effectively
in conjunction with the testing in a success case of up to 3 wells.

 

The situation between Russia and Ukraine has meant that the supply chain of
key pieces of inventory used by the oil and gas sector has been constrained
and delayed  by its impact  on the manufacture of components that require
steel. This is not just a problem for the oil and gas sector but also for the
renewable energy sector and particularly wind turbines, as was reported at
Ireland's recent National Energy Summit.

 

The Company's experienced management team has managed to secure critical
inventory based on its network of industry relationships that has allowed the
Company to progress as planned its three-well drilling programme in the
Guercif licence.

 

Predator Gas Ventures Ltd. has received final approval for the Environmental
Impact Assessment for the MOU-4, MOU-5 and MOU-NE proposed drilling locations.

 

The civil works contract to build the first of the three well locations has
been awarded to Skayavers Sarl.

 

An exclusive option on the in-country Star Valley drilling rig has been
secured as previously negotiated and announced for the MOU-1 drilling
contract.

 

MOU-4 and MOU-5 will appraise the gas-supported seismic amplitude anomaly
successfully penetrated by the MOU-1 well drilled in 2021. Geological
interpretation of this feature integrating seismic, well and surface outcrop
data supports the development of an over-pressured Tortonian submarine fan
system covering at least 30km². MOU-4 and MOU-5 will target "sweet spots"
where seismic character, basin position and geological interpretation support
the potential development of a thick reservoir sequence analogous to the
gas-bearing sequences penetrated in the offshore wells Anchois-1 and
Anchois-2. This is interpreted by the Company to be in the same petroleum
system as was proven by the MOU-1 well results in the Guercif Basin. Each well
will be drilled to a provisional depth of 1,500 metres TVD KB with the primary
target expected to be penetrated between 1,150 and 1,350 meters TVD KB. MOU-1
took 12 days to reach the proposed total depths for MOU-4 and MOU-5.

 

MOU-4 and MOU-5 are seeking to prove up the currently defined Best Estimate
gross contingent gas resources of 295 BCF, net attributable to Predator's 75%
interest, which is based on a conservative 66% gas recovery over 13 years. SLR
Consulting Ireland Ltd. also indicated a High Estimate of 708 BCF net
attributable to Predator's 75% interest based on a higher GIIP estimate for
thicker reservoirs that are the targets for these wells.

 

Initial results of the seismic reprocessing by DUG Geophysical, applying
high-end seismic technology,  of 278 kms. of 2D seismic data in the area to
be tested by MOU-4 and MOU-5 support the presence of two potential additional
shallower gas targets for the MOU-5 well within a depth window of 750 to 950
metres TVD KB. The shallowest of which had a strong formation gas show in
MOU-1 where a potential gas sand was indicated on the wireline logs acquired.
This zone is currently not included in the Company's proposed rigless testing
programme for MOU-1 due to poor borehole conditions at this shallower level.
The MOU-5 well design is incorporating an ability to rigless test the
shallower targets too should this be warranted after wireline logging.

 

Analysis of the MOU-1 well cuttings has begun with the laboratory work being
carried out by Petrostrat (biostratigraphy, sequence stratigraphy and
QEMSCAN), Rockwash (sedimentology) and APT (geochemical source rock and
maturity analysis). The purposes of these studies is to re-affirm and refine
the intervals to be perforated in the rigless testing programme for MOU-1 and
potentially to add additional shallower sands.

 

The Company is fully-funded to meet all the above well planning and
preparation activities in Morocco.

 

The MOU-NE drilling lead has now been mapped at the base of the forecast
reservoir sequence with a structural closure covering 102 km². The next step
is to finalise a drilling location based on defining the highest point on the
structure with the maximum potential for leached reservoir development (18
metres of reservoir were encountered approximately 2,200 metres downdip in
well TRF-1 about 15 kms. to the southeast of the MOU-NE structure  beneath a
zone of gas shows. MOU-NE well will be targeting a gross reservoir sequence of
approximately 200 metres within which the potential for good quality reservoir
is increased due to its structurally elevated position relative to TRF-1.
MOU-NE is adjacent to the gas-generating basin defined by the MOU-1 well
results. Oil and gas shows are present on trend to the west of Guercif in the
target reservoirs in the depleted Boudraa and Tselfat oil fields and in the
DGR-1 and DGR-3 wells, demonstrating an active petroleum system to the west
that will be tested by MOU-NE.

 

Two primary candidates for a potential farmin to the Guercif Licence have been
chosen from the initial responses to a targeted marketing exercise by the
Company's experienced management team. The Company is proposing to offer the
successful candidate a sixty day period of exclusivity to complete technical
due diligence and to negotiate commercial terms.

 

Given that the drilling programme is well advanced and taking into account the
scale of the opportunity the Company has to offer in the 7,269 km² area of
the Guercif Licence, equivalent to approximately 60 North Sea blocks; the
de-risking of a new gas basin by MOU-1; the ability for early monetisation
through sale of Compressed Natural Gas to the Moroccan industrial market; and
the immediate proximity to infrastructure that could provide a link to the
critical European gas market to support security and diversification of gas
supply, the Company has defined that the granting of exclusivity will be based
on the following commercial terms to form a basis for commercial discussions:

 

·    farminee to pay a disproportionate share of the cost of the
three-well drilling programme;

 

·    the maximum equity available will be 25% (33.33% inclusive of ONHYM
carry);

 

·    past costs and a share of the Guercif Bank Guarantee must be
reflected in the disproportionate share of the costs of the drilling
programme;

 

·    The Company to have a "Put Option" to the farminee for a buy-out of
all or part of Predator Gas Ventures Ltd.'s remaining post-farmin equity in
the Guercif Licence to be exercised within six months of completion of the
3-well drilling programme.

 

There is no guarantee that a successful conclusion to the farmout negotiations
will be achieved and if any transaction were concluded it would be subject to
regulatory and partner consent.

 

Ireland

 

The Company attended Ireland's National Energy Summit on 26(th) April 2022 at
Croke Park Dublin in its capacity as a gold sponsor.

 

Links to feedback on the Conference are available on the Company's website at
https://www.predatoroilandgas.com (https://www.predatoroilandgas.com)

 

In summary, the National Energy Summit only served to highlight that immediate
goals for increasing the renewable energy share of the electricity generation
in Ireland by 2030 were not realistic following the development of the
situation between Ukraine and Russia. The security and cost of gas supply in
Ireland was not adequately addressed and there was no credible plan presented
to determine how Ireland was to create an independent ability to meet the
European Union's guidance for Member States to have 80% gas storage capability
by winter 2022/2023.

 

The Energy Transition was not addressed in detail and the role of LNG in
support of Europe's drive to diversify the sources of their gas away from
Russia was not mentioned as an imperative action to be taken.

 

Following the Conference the Company was requested by a number of sufficiently
interested parties to provide details of the Mag Mell FSRU LNG project.

 

On 1(st) April 2022 the Company was sent correspondence from the Geoscience
Regulation Office ("GSRO") of the Department of the Environment, Climate and
Communications ("DECC") stating that prior to concluding its assessment of the
Company's applications for successor authorisations to the Corrib South
Licensing Option 16/26 and Licensing Option 16/30 Ram Head, the GSRO required
one additional piece of supporting information. The DECC confirmed that it was
not seeking any information in addition to that requested above. The
information was relayed to the GSRO and an acknowledgement receipt was
received by the Company on 19(th) April 2022.

 

Ram Head has been assuming greater significance in the context of European
security and diversity of gas supply as a result of the Ukraine-Russia crisis.
In particular Ireland's requirement to independently meet the 80% gas storage
guidance milestone set recently by the European Union for winter 2022/2023 has
to be assessed in terms of how this will be achieved in the short- and
medium-term.

 

The Ardmore field was previously discovered by Marathon Oil in the 1970's but
not developed after testing gas at a rate of 8 mmcfd. The discovery well
49/14-1 was drilled at the gas-heavy oil contact which impacted gas flow
rates. The Company's internal preliminary scoping storage capacity is targeted
at 12 BCF with a maximum send-out rate of 80 mm cfgpd.

 

In 1998 RDS Resource independently assessed the Ardmore gas field as being
capable of being developed by two wells, which based on P50 gas-in-place of
148 BCF, gave P50 gas resources of 47.4 BCF and P10 gas resources of 77.3 BCF
based on a 30 mm cfgpd initial production profile.

 

For gas storage operations, 4 to 5 production/injector wells would be required
but development costs could be financed by the blow down of gas in this virgin
field to create the gas storage capacity.

 

The much deeper Jurassic gas reservoirs discovered by Marathon Oil in 1984/5
have the potential to create a larger gas storage facility in the future
should the Ardmore gas field be successfully developed as a preliminary gas
storage facility.

 

Gas storage is a critical element of security of energy supply.

 

Trinidad

 

Lease Operators Ltd. ("LOL") has applied for a Certificate of Environmental
Clearance ("CEC") from the Environmental Management Authority in Trinidad for
CO2 EOR operations using some data and an example template provided by the
Company. Award of the CEC is expected shortly.

The Company has organised its first physical meetings in Trinidad since the
COVID pandemic scheduled for 31(st) May 2022. Using the Company's "Proof of
Concept" for CO2 EOR and CO2 sequestration in Trinidad, achieved by the
encouraging results from the Phase 3 CO2 injection in the first half of 2021
in Inniss-Trinity, the Company is now in a position to develop its CO2 EOR
services business with LOL.

The preferred business development strategy that is being pursued is for a
sale of the business and its technology, know-how, CO2 EOR surface equipment
and  its exclusivity arrangements for CO2 supply into an in-country entity
with producing assets that are suitable fields for the application of CO2 EOR.

Separately, the Company has made a proposal to FRAM Exploration Trinidad Ltd.
("FRAM"), parent company Challenger Energy Group plc, based on its assessment
of the value in the prematurely terminated Inniss-Trinity CO2 EOR project that
is defined in the Inniss-Trinity Well Participation Agreement and subsequent
amendments thereof.

The terms proposed by the Company are as follows:

·    60 day period for legal due diligence to complete any potential
transaction

 

·    Asset swap to terminate the Inniss-Trinity Well Participation
Agreement with FRAM

reflecting mutually agreed values for the assets being swapped and with any
adjustment in respective values for either or both parties being achieved by a
sliding scale royalty

 

·    Upon completion of any transaction the Company, through its
wholly-owned subsidiary Predator Oil & Gas Trinidad Ltd., to provide CO2
EOR Advisory Services, and access to any surplus liquid CO2 supply not
required by the Company, for the potential development of new pilot CO2 EOR
projects if required by FRAM's parent company.

The Company believes that this is a constructive and potentially mutually
beneficial way forward that also aligns with the objectives of Trinidad's CO2
EOR Steering Committee established in 2021.

There is no guarantee that a successful conclusion to the farmout negotiations
will be achieved and if any transaction were concluded it would be subject to
regulatory and partner consent.

 

Green Hydrogen

Following Ireland's National Energy Summit the Company is of the opinion that
synergies can be created by considering hybrid developments of green hydrogen
and natural gas using compatible infrastructure, subsurface storage reservoirs
and in-house gas marketing expertise.

As a first step the Company will commission an independent valuation of the
green hydrogen company targeted for a possible acquisition and, subject to the
results of the independent valuation, will provide initially a modest
investment for shares in the target company, subject to due diligence, to
provide additional working capital to develop an opportunity for green
hydrogen in Romania. The modest amount of investment at this time will not
exceed £50,000 and can be funded by discretionary cash on the balance sheet.

Directorate changes and Board reorganisation

 

Effective on 31(st) May 2022 Mr. Louis Castro is stepping down from the Board.
The Company's activities have expanded to such an extent whereby they are
impacting Louis's other substantive commitments.  The Board wishes to thank
him for the significant contribution that he has made to the Company during
its rapid development since his appointment on 14(th) July 2020.

 

The Board is pleased to announce the appointments of Mr. Tom Evans and Mr.
Alistair Jury as Non-executive Directors with immediate effect.

 

Tom has 33 years in the industry and the City starting his career as a
financial executive with Extel Financial Ltd, before moving to Corporate
Broking at Barclays de Zoete Wedd Ltd; before he then transferred to the
Global Resources lending team of Barclays Capital Ltd project financing
resource projects across the globe. He moved to London with RBC Dominion
Securities Limited as a specialist resources equity salesman, before joining
CIBC World Markets Limited as a director focusing on resource equities from an
institutional sales and trading perspective. Tom founded Bishopsgate Capital
Management Ltd in 2000 dealing in institutional fund management and hedge fund
strategies for CTA funds; Bishopsgate was merged with Athanor Capital Partners
Ltd where he assumed the role of Chief Investment Officer, expanding all the
combined entities FSA regulated permitted businesses. He established TME
Consulting creating UCITS compliant umbrella structure to be marketed to both
retail and wholesale clients. He was CEO and founder of the Caplain group
created to acquire stockbroking and wealth management entities and Aerarius
PCC Ltd (Guernsey) fund structure for European investment strategies.  In
2017 he joined Pennpetro Energy plc (PPP) initially as a consultant and then
latterly as CEO, he successfully led a pre IPO funding round before
introducing the company to the standard segment of the London Stock
Exchange.  Since listing PPP the company has moved from a passive investor
to a 100% working interest and operator in Gonzales, Texas; creating a
technical hub in Houston.   Tom recently led the company into its first
foray outside of North America by acquiring an 80% working interest in the
Saouf permit in Tunisia. Financial Services Authority (UK) Ltd previously
approved for the following control functions - CF1 Director, CF3 Chief
Executive, CF8 Appointment & Oversight, CF27 Investment Management. Away
from listed and regulated environments Tom, in recent times, has focused on
private companies and intellectual property developing energy transition,
carbon capture, green/ blue hydrogen production, and waste to energy corporate
enterprises globally.

 

Alistair  has over 25 years' experience in the energy industry in a variety
of finance and commercial roles with ExxonMobil, Unocal, Murphy, Svenska
Petroleum and a number of AIM and business start-ups in the energy sector.

 

He sits on the Board of several UK and overseas energy and consulting
companies and is an associate of Columbus Energy Partners involved in
evaluating renewable and sustainable energy projects worldwide.

 

He is a Fellow member of the Association of Chartered Certified Accountants
and has a degree in Geology from University of London.

 

The Audit and Remuneration Committees comprise both of the two new
Non-executive Directors.

 

A proposal will be put to the Board that Paul Griffiths, currently Chief
Executive Officer, will move to Executive Chairman, and that Lonny
Baumgardner, currently Chief Operating Officer, will move to Managing
Director. Governance will be maintained by the Board resolving that the two
Non-executive Directors will have the casting vote on all decisions and
resolutions of the Board.

 

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

"Executing the Moroccan drilling programme simultaneously with the MOU-1
rigless testing remains at the forefront of the Company's 2022 business
development plans. Management has been proactive in taking all the necessary
steps to ensure that we remain on track to deliver an exciting 2022 for our
shareholders. This has been achieved against a background of a vastly
different set of new post-COVID logistical challenges brought about by the
situation between Ukraine and Russia by using management's significant
industry experience and professional network. No-one should be under any
illusion that there will continue to be potentially significant challenges
ahead for everyone in the energy sector, including renewables.

 

Management's job is to rise to such challenges. We are pleased to be
progressing potential partner participation in our projects, particularly
Morocco, however we have set terms for a period of farmin exclusivity that we
believe reflect the value of the opportunity we present and will not cause the
Company to waste valuable man-time pursuing parties that are not aligned with
our commercial proposition.

 

There are positive developments too in Ireland and Trinidad. These projects
are under-represented in the current perception of shareholder value.

 

The proposed venture into Green Hydrogen is an exciting development but is not
a drain on the Company's financial resources.

 

The Board has been refreshed with the addition of two Non-executive Directors
who have a wealth of experience that complements the experience offered by the
Executive Directors. Seeking areas of potential asset-based project funding
and building relationships with financial institutions and equity markets
based on a green dividend secured by a credible Energy Transition will be a
key task going forward.

 

Our strengthened and refreshed team now has the tools to focus on the next
stage of the business growth of the Company that builds on the success of
MOU-1 and the niche positions patiently carved out and protected over time in
Ireland and Trinidad. "

 

 

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               Chief Executive Officer                 Info@predatoroilandgas.com (mailto:Info@predatoroilandgas.com)

 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

 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 (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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