TIDMAAOG
RNS Number : 9560M
Anglo African Oil & Gas PLC
03 May 2018
Anglo African Oil & Gas PLC / Index: AIM / Epic: AAOG /
Sector: Oil & Gas
ANGLO AFRICAN OIL & GAS PLC ('AAOG' or the 'Company')
Operational and financial update
Anglo African Oil & Gas plc, an independent oil and gas
developer, is pleased to provide the following operational update
on its 56% owned Tilapia field ('Tilapia') in the Republic of the
Congo together with a financial update:
TLP-101 Well
Following the successful work to disconnect, clean through and
reconnect the flowlines to TLP-101, and testing of flow through the
annulus, the well was then re-directed to production through the
coiled tubing. Having done so, pressure stabilised on Friday, 27
April at which time the well was re-opened. It was successfully
brought back on line and the flow rate immediately surpassed the
previous rate of 35 bopd. The Company is now allowing the flow rate
to increase gradually until it achieves the maximum level of
sustainable flow. The Company advises that it is likely to take up
to two weeks before the maximum flow rate is achieved and will
update the market once that flow rate has been established.
TLP-102 Well
As announced on 17 April, Schlumberger conducted a successful
intervention focussed on the integrity of the perforations on well
TLP-102. Following the intervention, oil and gas samples were taken
at the surface and were sent to Total's laboratory in Pointe Noire
for testing. The gas test result has now been received and has
confirmed the Company's evaluation that TLP-102 is now in contact
with the reservoir. The pressure in the well has continued to
increase steadily, and further than initially expected by the
Company. As a result, the Company will over the next week open the
annular to test whether oil will flow unassisted. However, the
Company still expects that to achieve optimum flow rates from
TLP-102 will, as originally planned, require mechanical assistance.
The Company has on site a downhole pump that was procured for this
purpose. Its insertion requires the use of equipment readily
available in Pointe-Noir and does not need a drilling rig on
site.
TLP-103 Well
Drilling operations have commenced ahead of mobilisation of the
rig:
-- The team has completed construction of the wellhead cellar
and a 30" Conductor case has been hammered in situ in preparation
for drilling.
-- Due to the size of the rig an additional access road to the site has been constructed.
-- The majority of long lead items have now cleared customs and are in country.
-- The Company has procured two wellheads from FMC that have
been prepared and tested and they are on site at FMC's facility in
Pointe-Noire.
-- The well design has been completed and is undergoing final
verification testing with a third party contractor using
specialised software.
-- HSE planning and procedures have been completed and
documented following site visits by specialist consultants.
-- The environmental impact assessment is nearing completion
ahead of submission to the Minister of the Environment.
-- Security procedures and site protection are underway with the
construction of fencing to secure the drill site.
-- All draft contracts from suppliers have been received and
have either been signed or are in the final stages of
negotiation.
-- Logistics, such as personnel and catering, have all been identified or contracted.
Finally, the rig itself is awaiting a pre-embarkation inspection
by a third party rig inspection team. A further inspection will
take place following rigging up at Tilapia.
New licence
Following and in connection with the request for a new licence
by SNPC and the Company, the Director General of Hydrocarbons for
the Republic of the Congo despatched a delegation to Tilapia to
confirm the factual basis of the application. The delegation
completed its work on 20 April having carried out all necessary
verification. The Company expects the process to conclude with the
formal proclamation of the new licence in the near future. The
Company will make a further announcement once the new licence has
been formally proclaimed.
Financial position
As the position of our partners to fund their share of the costs
of TLP-103 remains unclear, the Company considers it prudent to
procure additional funding in order that it can, if needed, cover
100 per cent of the anticipated well costs. This will remove any
uncertainty over the drilling of TLP-103 and place the drilling
campaign entirely within the control of the Company. The complete
cost of drilling and testing TLP-103, notwithstanding a decision to
use prime contractors such as Schlumberger, remains at US$7 million
plus a US$1 million contingency. The Company has already incurred
in excess of US$1 million of the drilling costs.
It should be noted that the terms of the existing licence over
the Tilapia field allow for the Company to claw back any drilling
costs incurred above its pro rata share from future cashflows. The
draft new licence referenced in the announcement of 5 March 2018
also allows for this.
The Company has continued to manage its cash reserves with care.
Following costs incurred, including and relating to the successful
work on TLP-101 and TLP-102 and procurement of long lead items for
TLP-103, the Company now has reserves of more than US$2 million. A
portion of this includes cash from SNPC's share of oil sales which
the Company's subsidiary holds subject to an offset in favour of
the Company in respect of costs which SNPC has not met.
The Company is considering the funding options available to it
and has received several offers in this regard. The Company will
consult to determine the most appropriate solution. TLP-103 will
not spud until a financing solution is in place.
Business development
Given the vast network of contacts provided by the new CEO and
the new board, the Company has been screening new opportunities and
has signed the exclusive right to negotiate to acquire two
producing fields in a new jurisdiction. It is now completing the
due diligence process on these assets.
While this potential new asset represents an exciting growth
opportunity for the Company, management remains focussed on the
Company's core asset in Tilapia and the drilling of the potentially
transformational TLP-103 well.
David Sefton, Executive Chairman, commented: "I am pleased with
the progress that the new management team continues to make and
that the current work programme is on track with the work on both
TLP-101 and TLP-102 being successful. The Company has now started
to deliver on the operational promises made at admission. It is
also very good to see work finally commence on TLP-103. The next
round of funding will, critically, remove any uncertainty as to the
drilling of TLP-103. This will allow the Company to move forward
and establish the value of Tilapia, which I know is the key
milestone for all investors. The management team understands this,
is very well advanced in preparation and planning and remains
completely focused on delivering the well as soon as possible."
**ENDS**
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
For further information please visit www.aaog.co or contact:
Anglo African Oil & Gas plc Tel: c/o St Brides
Partners +44 20
7236 1177
David Sefton, Executive Chairman
James Berwick, Chief Executive Officer
finnCap Ltd (Nominated Adviser and Broker) Tel: +44 20 7220
0500
Christopher Raggett, Giles Rolls, Anthony Adams
(Corporate Finance)
Emily Morris (Corporate Broking)
St Brides Partners (Financial PR) Tel: +44 20 7236
1177
Frank Buhagiar, Hugo de Salis
Notes to Editors
Anglo African Oil & Gas (AAOG) is an AIM-listed independent
oil and gas company that owns a 56% stake in the producing Tilapia
oil field in the Republic of the Congo. The Company boasts a
low-cost production story in a prolific hydrocarbon region with
significant exploration upside, differentiating it substantially
from its E&P peers. Additionally, management's remuneration is
tied to hitting production milestones, reflecting their strong
focus on cost control.
Tilapia has an excellent address, being located close to
multi-billion-barrel fields that include the ENI-operated
Litchendjili field and the 5,000bopd Minsala Marine field. Tilapia
currently produces approximately 38 bopd from two near-surface
intervals. It has an undeveloped discovery in the lower Mengo sands
with gross contingent resources of 8.1m barrels and a deeper
exploration prospect, with gross prospective resources of 58.4m
barrels, in the productive Djeno interval from which the adjacent
Minsala field produces.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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