('Prospex' or the 'Company')
Acquires 50% interest in Large Gas Exploration Licence in
The Acquisition consists of an Exploration Area, which has an undeveloped discovery (Grancesti SE-1) and a number of prospects (at varying stages of development) and leads. The balance of the exploration area interest is held by Raffles Energy S.R.L. ('Raffles' or 'the Operator'), an established gas producer in
Suceava: a proven play with multiple low cost, low risk opportunities with potential to rapidly start production on discovery
· Suceava provides Prospex with an excellent platform to build a significant presence in a country with prolific petroleum systems and a variety of hydrocarbon plays. Even with a long history of E&P,
· Several discoveries, prospects and leads are already mapped on the 2D seismic grid consisting of ca 1,600km of lines that provide a suitable coverage of the Suceava prospective areas distributed within the concession area (ca 1,734 sq km)
· Two of which are near term priorities:
1. The Bainet Prospect ("Bainet"), a shallow, 600m biogenic gas target covered by 3D seismic, which the Company and Raffles intend to drill in
o Bainet lies on trend with similar fields producing from good quality Salmatian reservoirs on the Concession as well as with analogue gas fields producing conventional high-calorific value natural gas (over 98% methane content) in the adjoining Bilca Gas Production Area of bordering EIII-1 Brodina Block
o It is a well-defined structural closure on seismic, analogue to other producing areas in the vicinity, which is additionally supported by an amplitude variation with offset ('AVO') response similar to nearby fields and has been assigned internal gross prospective resources of approximately 1.5bcf recoverable
o Gross well cost including completion as a production well is estimated to be
o Assuming success, the Operator plans to get Bainet on production via a relatively short tie in to the flow line connecting the Climauti gas field to the Bilca gas processing plant. Subject to permitting, the flowline tie-in construction work is expected to be completed in approximately three months.
2. Grancesti SE-1 discovery flowed gas at a rate of 1.2MMscfpd/d over a limited short test from the Sarmatian reservoir at a depth of ca 550m
o Drilled in 2005 to c. 2,300m by previous operator focused on a deeper oil target
o Work over and recompletion of the well as a gas producer to be undertaken once land access resolved
o Within c. 1.5km distance of high pressure pipeline grid operated by Transgaz
Four additional prospects and one lead identified by the Operator
· Significant scope to drill additional low cost, low risk wells targeting gas in 2018 and beyond - subject to securing an extension to the exploration area of the concession which expires end of 2017
· Drilling of the Bainet prospect and the work over at Grancesti, if accessible, satisfy the existing exploration phase commitments
· Prospex estimates the aggregate gross recoverable gas (unrisked) in a range from 17 to 56 bcf using standard probabilistic methods
Acquisition Details
· Asset Purchase Agreement ('APA') and Joint Operating Agreement ('JOA') signed with Raffles
· Under the APA the total consideration is
· Consideration to be settled using existing cash resources
· The Company has committed to provide up to
"Not only does this Acquisition enable us to deliver on our objective to drill a well in 2017, it also provides us with an excellent platform from which we can build a portfolio of interests in a country with an established oil and gas industry, excellent infrastructure, and supportive regulatory and fiscal regimes. The presence of operators of the calibre of Exxon Mobil, Repsol, OMV and Lukoil in
Further Information
PXOG is acquiring a 50% economic interest by being party to the JOA that assigns income and costs relating to activity on the exploration area in line with the proportional ownership. In addition to being a party to the JOA under the APA, Raffles has agreed to assign to PXOG Massey a notional 15% working interest of the Petroleum Agreement for the Suceava Concession. Zeta Petroleum (Suceava) SRL, as co-title holder of the Petroleum Agreement has already provided its consent for this assignation, that is now subject only to the
The APA is broadly in a common industry standard format. It provides for transfer of the economic interest under the APA and JOA (discussed below) in the Suceava Exploration Area immediately on execution and provides for a subsequent transfer of a share of the over-arching Petroleum Agreement subject to the consent of NAMR. NAMR's consent process is expected to take around three months and requires PXOG to satisfy the Agency of its technical and financial competence. In the APA there are a number of interim period obligations imposed upon the Seller pending Completion of the Petroleum Agreement Transfer to protect the Prospex's interests. Third party supporting approvals have already been granted and the transfer document is to be submitted to NAMR and the consent process will begin immediately once documents have been translated and certified.
The APA 's headline commercial terms are such that PXOG will pay an initial consideration of
The JOA again is broadly a standard international format document containing terms one would ordinarily expect in such a document. The document is the same in operative terms as the JOA that applies in the adjacent producing blocks of Suceava. There are standard provisions on exclusive operations, default, approval procedures for work programmes and budgets, indemnification of the Operator, and withdrawal. Approvals are required by both parties and 70% of voting rights such that PXOG will not be outvoted and its interests are protected. The JOA contains a right of first offer where the other Party wishes to sell its interest.
The Suceava Well Programme and Budget and the corresponding Authorisation for Expenditure of the Suceava Exploration Well are agreed. Both the APA and JOA are written under English law.
* The production areas on the Concession consist of the Climauti and Dornesti South gas fields, owned by seller and Zeta Petroleum (Suceava) SRL. Climauti has produced since
About Raffles Energy
Raffles Energy SRL is a well-established player in the Romanian energy sector as (i) E&P upstream operator and title-holder of several petroleum licences, and (ii) operator of two gas-to-power plants, electricity producer and supplier. RESRL is fully licenced operator by the
Raffles Energy SRL operates a diverse portfolio of onshore gas assets in
Raffles Energy SRL is a wholly owned subsidiary of
Competent Person Sign Off
Carlos J Venturini, Exploration Manager of
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
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For further information visit www.prospexoilandgas.com or contact the following:
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Tel: +44 (0) 20 3586 1009 |
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Tel: +44 (0) 20 7409 3494 |
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Tel: +44 (0) 20 7382 8300 |
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Peterhouse Corporate Finance
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Tel: +44 (0) 20 7469 0932 |
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Tel: +44 (0) 20 7236 1177 |
Notes
This information is provided by RNS