LGO Energy PLC La Lora Concession, Spain (4151V)
30 January 2017 - 6:01PM
UK Regulatory
TIDMLGO
RNS Number : 4151V
LGO Energy PLC
30 January 2017
For Immediate Release, Embargoed until 7 am
30 January 2017
LGO ENERGY PLC
("LGO" or the "Company")
La Lora Concession, Spain
LGO today provides a further update on its 100% owned Spanish
concession, La Lora ("the Concession"), in northern Spain, which is
operated by its wholly owned subsidiary Compañía Petrolífera de
Sedano, S.L.U. ("CPS"). Further to its announcement on 13 January
2017 the Company has now been informed that the Spanish Cabinet of
Ministers has not approved the extension of the Concession as
requested. As a consequence the Concession will terminate at
midnight on 31 January 2017. This decision appears to have been
made on purely legal, and not technical or commercial, grounds and
despite the advice that LGO received from its Spanish lawyers on
the fundamental strength of the legal case. The Spanish Ministry of
Industry, Energy and Tourism ("Ministry") has already indicated
that it will offer the Ayoluengo Field to CPS for a new concession
as soon as possible.
The Ministry has yet to issue the text of the Royal Decree so
full details are not yet available, however, in anticipation of
this possible outcome CPS is already in the final stages of a
process to temporarily suspend all field operations and to complete
the envisaged sale of all oil stocks from the Ayoluengo Field by
the end of the Concession. Employment contracts for the vast
majority of CPS's 17 staff members will also be suspended,
initially for a period of up to one year.
Over the past four years LGO has actively sought an extension to
the Concession and has carried out extensive legal, technical and
commercial evaluation work that was submitted to the Ministry in
August 2015 in support of a formal request for a 20-year extension.
As previously indicated it would do in these circumstances, LGO now
anticipates making a new application for a 30-year concession on
the same overall technical basis as the extension and believes that
its extensive experience at the field and its technical and
commercial knowledge place CPS in a competitive position to regain
the production rights in a situation with far better investment
prospects with a new concession.
The Board of LGO wishes to reiterate that without new
investments having been made in recent years, pending the extension
decision, and with present oil prices, the temporary suspension of
operations at CPS will have minimal impact on the Group's operating
finances. LGO will remain focussed on its high impact Trinidad
production and exploration business. The carried value of the La
Lora asset, including land and physical plant owned by CPS, is
approximately GBP7 million.
Neil Ritson, LGO's Executive Chairman, commented:
"Naturally we are disappointed with the decision and it will
inevitably cause some hardship to our employees and their
communities in the Burgos area, where Ayoluengo has been a
significant source of employment for the last 50 years. We will be
working with the Spanish authorities to seek a new concession as
soon as possible."
Enquiries:
LGO Energy plc +44 (0) 203 794 9230
Neil Ritson
Fergus Jenkins
Beaumont Cornish Limited +44 (0) 20 7628 3396
Nomad
Roland Cornish
Rosalind Hill Abrahams
FirstEnergy Capital LLP +44 (0) 20 7448 0200
Joint Broker
Jonathan Wright
David van Erp
Bell Pottinger +44 (0) 20 3772 2500
Financial PR
Henry Lerwill
This information is provided by RNS
The company news service from the London Stock Exchange
END
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