REG - Predator O&G Hldgs - Trinidad Update - FRAM Loan

Predator Oil & Gas HoldingsAnnouncement

07/06/2022 07:00

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RNS Number : 9069N  Predator Oil & Gas Holdings PLC  07 June 2022

FOR IMMEDIATE RELEASE

7 June 2022

 

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

        LEI 213800L7QXFURBFLDS54

Predator Oil & Gas Holdings Plc

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

 

 
                   Trinidad Update - FRAM Loan

 
      Highlights

·    Initiation of a litigation process for the repayment of the FRAM Loan

 

·    Recompense sought as a result of the termination of the approved
Inniss-Trinity CO2 EOR project

 

·    Further progress on rolling out multiple CO2 EOR projects

Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas
Company with operations in Trinidad, Morocco and Ireland provides, arising
from a series of positive meetings in Trinidad held with stakeholders during
the period 31 May to 3 June 2022,  the following update on the Company's
position with regard to the loan receivable (the "FRAM Loan") from FRAM
Exploration Trinidad Ltd. ("FRAM"), a wholly owned subsidiary of Challenger
Energy Group Plc ("Challenger"), in respect of the Inniss-Trinity CO2 EOR
Project (the "CO2 EOR Project"). The CO2 EOR Project was prematurely and
unilaterally terminated by Challenger on 1 August 2021.

Following the delivery by the Company of correspondence to FRAM on 23 March
2022 relating to the repayment of the Fram Loan and the settlement of other
outstanding contractual matters under the Inniss-Trinity Well Participation
Agreement (the "WPA"), the Company has failed to receive from either FRAM or
Challenger any firm proposals to allow an amicable settlement to be reached.

Regretfully therefore the Company has decided to initiate a litigation process
following the consultation trip made by the executive directors to Trinidad
during last week. The first physical trip following the relaxation of COVID
restrictions.

The scope of the litigation process will involve three areas where the Company
is seeking to be recompensed as a result of the premature termination of the
CO2 EOR Project by Challenger.

1.     The FRAM Loan outstanding to the Company is £591,065 as of 31
December 2021.

 

The FRAM Loan is reported as a receivable in the Company's audited Financial
Statements for 2020 and identified as a contingent liability in Challenger's
2020 Financial Statements.

 

On 20 April 2022 FRAM and Challenger refused in writing to comply with a
request for information from the Company via its auditors that was necessary
for its financial reporting of the FRAM Loan.

 

2.     The Company is seeking full repayment of its project costs (the
"Project Costs") invested in the CO2 EOR Project under the terms of the WPA,
which remains in place.

 

Under the WPA the Company has invested the minimum required commitment of
US$1,500,000 (inclusive of the outstanding FRAM Loan).

 

The WPA provides for repayment of the Project Costs from 100% of the profits
of enhanced oil production until repaid.

 

The Company has demonstrated enhanced oil production due to CO2 injection at
Inniss-Trinity to a number of competent stakeholders in Trinidad on the basis
of which new CO2 EOR projects have been initiated with the Company.

 

The WPA and its amendments together with the Inniss-Trinity CO2 EOR Project
Proposal PRD25092019, which was reviewed and approved by all stakeholders and
regulatory authorities, defined the duration of the Inniss-Trinity CO2 EOR
Project.

 

Phase 3 of the CO2 EOR Project was entered into and approved by all
stakeholders with the approval of the regulatory authorities in April 2021, on
the basis of which the Company continued to invest.

 

Phase 3 facilitated up to 275 days of continuous CO2  injection with enhanced
oil production through which the Company was confident of recovering its
Project Costs within the near-term.

 

Unilateral termination of the CO2 EOR Project by Challenger without
consultation with stakeholders and regulatory authorities deprived the Company
of the mechanism to recover its Project Costs.

 

Accordingly the Company seeks redress for breach of the terms of the WPA.

 

3.     The Company is seeking substantial consequential losses from
Challenger under the WPA and arising from Challenger's failure to facilitate
the execution of Phase 3 of the CO2 EOR Project as defined in the approved
Inniss-Trinity CO2 EOR Project Proposal PRD25092019. The Company's pivotal
role in executing the Inniss-Trinity CO2 EOR project has been widely
recognised and accepted by stakeholders and regulatory authorities. The
Company therefore was best-placed to make operational recommendations
regarding the direction of the CO2 EOR Project. Challenger chose to
unilaterally shut down operations without consultation and contrary to best
industry HSE practice and without providing any technical justification.

 

As a result the Company lost its ability to potentially recover 853,000
barrels of oil from the AT-4 Block through expansion of the CO2 EOR Project.
These oil resources were calculated in an independent reservoir engineering
study made available to the regulatory authorities and previously announced by
the Company.

 

Based on operating and capital investment costs established by the Company for
the CO2 EOR operations at Inniss-Trinity, the utilisation of unused tax
losses, and an average WTI spot price of US$100, the Company is attributing an
undiscounted value to these potential resources of US$30/barrel after
deduction of all taxes, royalties and operating costs, inclusive of CO2
supply. The Company therefore determines that the potential claim for
estimated consequential losses against Challenger, based on 50% of net profits
under the WPA, could be up to US$12,800,000 but may be revised upwards
depending on forward oil price projections.

 

Phase 4 of the approved Inniss-Trinity CO2 EOR Project Proposal PRD25092019
allows for the application of the CO2 EOR Pilot learnings to be applied within
new areas of the Inniss-Trinity field for upscaling CO2 EOR.

 

The SLR Consulting Ireland Ltd independent Competent Persons Report for the
Inniss-Trinity field published 19 February 2020 gives Best Estimate
recoverable CO2 EOR resources for the entire Inniss-Trinity field of 6.8
million barrels.

 

Based on 50% of net profits under the WPA this would amount potentially to
estimated undiscounted consequential losses of up to US$102 million but may be
revised upwards depending on forward oil price projections.

 

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

"We are disappointed not to have resolved our dispute amicably with
Challenger. We believe that 10 months should have been sufficient time to
reach a mutually attractive settlement. In view of the scale of the
opportunity lost to the Company at Inniss-Trinity shareholders will understand
why we were left with no alternative but to begin a process of litigation.
Even more significantly it is important to stifle misinformation that could
potentially delay the accelerated roll-out of new CO2 EOR projects in
Trinidad.

 

To this end we are delighted with the outcome of our first physical trip to
Trinidad since the outbreak of the Covid pandemic. Secondary to moving the
resolution of the dispute with Challenger forward, the Company was involved in
discussions with our trusted stakeholders to roll out up to six new CO2 EOR
projects onshore Trinidad including the potential for a miscible CO2 flood.

 

Important very preliminary discussions were held regarding expanding our
operations to include green hydrogen, developing markets for our potential gas
products in general and sourcing non-fracked LNG for the Mag Mell project in
Ireland. These are exciting developments only made possible by a physical
visit with our stakeholders and the "Proof of Concept" established at
Inniss-Trinity for CO2 EOR operations. Our next step is to explore further the
potential to develop a carbon credits trading platform.

 

From the above it will be obvious that the Company will not allow a former
junior partner to detract from the Company's primary objective of building an
integrated energy business in Trinidad aligned with the Energy Transition.
Frankly we have been far too patient until now and that is a lesson that
management has accepted responsibility for."

 

 

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 (mailto: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 (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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