TIDMPRD
RNS Number : 2278K
Predator Oil & Gas Holdings PLC
20 December 2022
FOR IMMEDIATE RELEASE
20 December 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")
Conditional acquisition of Cory Moruga; CO(2) EOR collaboration
and settlement with Challenger Energy Group Plc
Highlights
-- Settlement reached with Challenger Energy Group PLC
-- Progressing acquisition of Cory Moruga oil field in Trinidad
-- US$9 million Gross Consideration
-- Net payment of US$3 million cash, in staged payments with
US$6 million of potential liabilities and other value items offset
against Gross Consideration
-- Cory Moruga under-developed and very well suited to application of CO2 EOR
Predator Oil & Gas Holdings Plc (LSE: PRD), the Jersey based
Oil and Gas Company with near-term gas operations focussed on
Morocco, is pleased to announce that it has today entered into a
binding Term Sheet (the "Term Sheet") with Challenger Energy Group
PLC ("Challenger Energy"), providing for:
(i) the acquisition of Challenger Energy's 83.8% interest in the Cory Moruga asset; and
(ii) a mutually agreed final settlement in relation to the Well
Participation Agreement under which a CO2 enhanced oil recovery
project ("CO2 EOR") was carried out by Predator Oil & Gas
Trinidad in CEG Inniss-Trinity Trinidad Limited's (formerly FRAM
Exploration Trinidad Limited) Inniss-Trinity field in Trinidad
-
together the "Transaction".
Key terms of the Transaction
-- Predator will acquire 100% of the issued shares of T-Rex
Resources (Trinidad) Limited ("T-Rex"), an indirectly wholly owned
subsidiary of Challenger Energy that holds its 83.8% interest in,
and is the operator of, the Cory Moruga licence.
-- Gross consideration is US$9.0 million.
o US$3.0 million is payable to Challenger Energy by Predator in
cash, in instalments as follows:
(i) US$1 million upon completion;
(ii) a further US$1 million 6 months after completion; and
(iii) a further US$1 million payable once Cory Moruga field
production first reaches 100 barrels of oil per day.
o An agreed amount of US$6 million will be offset against the
Gross Consideration to reflect the aggregate agreed value of:;
(i) T-Rex's liabilities (including all contingent and potential
liabilities, whether crystallised or not); and
(ii) The option value embedded in Challenger Energy's back-in right ("Back-in Right");
(iii) the repayment of all loans and debts owed or claimed to be
owed by either party to the other in respect of the Inniss-Trinity
CO(2) EOR pilot project (recognising that absent a settlement
between the parties, such amounts would be recoverable only from
incremental production from the Inniss-Trinity CO(2) EOR pilot
project area), and
(iv) the mutual final settlement agreed between the parties in
respect of all disputes and claims in relation to the
Inniss-Trinity CO(2) EOR pilot project.
Engagement Letter with Optiva Securities Limited ("Optiva")
An Engagement Letter with Optiva has been executed by the
Company regarding any potential M & A transaction with, or an
investment by parties directly into, Predator Oil & Gas
Trinidad Limited ("POGT"), a wholly owned subsidiary of the
company, to gain specific exposure to CO2 EOR activities. Any such
external investment specifically into POGT would allow this project
to progress simultaneously with Predator's other projects, while
not diluting the value of those other projects.
Back-in Right for 25% Equity of Predator's share of Cory
Moruga
In relation to the Back-in Right, it may be exercised at
Challenger Energy's election:
o at any time in the period commencing three years after the
completion date or first commercial production from Cory Moruga
field (whichever is earlier) and ending six years after the
completion date;
o If the Back-in Right is exercised, Challenger Energy will pay
to Predator a fixed cash amount of US$2.25 million:
(i) plus a variable percentage of the costs incurred by Predator
on the Cory Moruga field subsequent to the completion date;
(ii) the percentage dependent on the P50 Resource attributable
to the Cory Moruga field at that time being:
a) 50% of costs incurred if the P50 Resource is less than 5 million barrels of oil (MMbbls);
b) 75% of costs incurred if the P50 Resource is more than 5 MMbbls but less than 10 MMbbls; and
c) 100% of costs incurred if the P50 resource exceeds 10 MMbbls.
Framework for CO2 EOR collaboration
-- Predator and Challenger Energy have agreed to establish a
collaboration in relation to CO(2) EOR activities and projects in
other areas in Trinidad, including but not limited to potential
application of CO(2) EOR techniques across Challenger Energy's
other fields ;
-- Leveraging Predator's expertise in CO(2) EOR techniques and methodologies.
Completion
-- Predator has until 31 January 2023 to complete confirmatory
due diligence, prior to which time the parties will also work in
good faith to enter into long-form transaction documentation in
respect of the Transaction.
-- Thereafter, completion of the Transaction will be conditional
on consent to the Transaction being received from the Trinidadian
Ministry of Energy and Energy Industries ("MEEI"), including
agreement from MEEI to a revised work programme proposed by
Predator:
(i) work programme to include technical work, CO(2) EOR activity, and new well drilling in 2024;
(ii) a waiver by MEEI of past dues and claims in respect of Cory
Moruga field, and a revision by MEEI of the basis of future licence
fees applicable to the Cory Moruga licence.
The parties have agreed to work together to secure the required
consents and approvals and achieve completion of the Transaction as
soon as reasonably practicable on or before 30 May 2023, with a
long stop date of 31 August 2023 after which either party may elect
to terminate the agreement or they can mutually agree to an
extension.
Independent Competent Persons Report ("CPR")
The Company will commission a CPR on Cory Moruga in the coming
weeks which is expected to be published before Completion.
Background
The Cory Moruga field in Trinidad was first identified by
Predator as a prime candidate for CO2 EOR in 2017. An option to
acquire Cory Moruga was outlined in the Company's Prospectus
published in 2018 at the time of admission to the Main Market but
was later dropped when the Company elected to focus on the Guercif
Licence in Morocco.
The Inniss-Trinity pilot CO2 EOR Project allowed the Company to
develop valuable CO2 EOR operational expertise and for it to
establish exclusivity in respect of using the surplus liquid CO2
supply in Trinidad for CO2 EOR operations with Massy Gas Products
Limited ("Massy").
The Cory Moruga field is under-developed as a result of which
higher reservoir pressures have been maintained. This makes it
relatively unique in Trinidad as it creates the possibility to
execute a miscible CO2 EOR project to generate the potential to
significantly increase the oil recovery factor.
Cory Moruga is covered by 3D seismic which shows less fault
compartmentalisation relative to many other mature fields onshore
Trinidad. It has never been water-flooded. This assists the
development of a CO2 injection strategy to potentially maximise the
effectiveness of the CO2 sweep through the reservoirs.
A small part of the Moruga West field extends into Cory Moruga.
The ex-BP field continues to produce from the same Herrera
reservoirs as have been encountered in Cory Moruga drilling to
date. In 2017 the Company unsuccessfully bid for the Moruga West
field, which was then owned by Massy. The geological understanding
of the development and extent of the Herrera reservoirs in Moruga
West has been invaluable in the Company's assessment of the growth
potential of the Cory Moruga asset.
Paul Griffiths, Executive Chairman of Predator Oil & Gas
Holdings Plc commented :
"We are delighted to have negotiated an amicable settlement with
Challenger Energy - which gives a positive footing for both
companies to move forward - and gives Predator access to the
under-developed Cory Moruga field. Cory Moruga has always been
recognised by the Company as a candidate for miscible CO2 EOR.
Since 2017, when the Company first had an option to acquire it, WTI
spot oil price has increased by 46% to improve CO2 EOR project
economics.
It is important for our shareholders that the Company is seen to
be leveraging its expertise in CO(2) EOR techniques and
methodologies developed as a consequence of executing the
Inniss-Trinity CO2 EOR Project. This allows us to capture value for
the Inniss-Trinity CO2 EOR Project that would otherwise have been
unrealised. Cory Moruga creates another exciting growth opportunity
for 2023 which the Company can operate entirely itself and can
exercise direct control over the receipt of potential future
production revenues."
For further information visit www.predatoroilandgas.com
Follow the Company on twitter @PredatorOilGas.
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 :
Enquiries:
Predator Oil & Gas Holdings Plc Tel: +44 (0) 1534 834 600
Paul Griffiths Executive Chairman Info@predatoroilandgas.com
Lonny Baumgardner Managing Director
Novum Securities Limited Tel: +44 (0) 207 399 9425
David Coffman / Jon Belliss
Optiva Securities Limited Tel: +44 (0) 203 137 1902
Christian Dennis, CEO
Ben Maitland, Corporate Finance Tel. +44 (0) 203 034 2707
Flagstaff Strategic and Investor Communications Tel: +44 (0) 207 129 1474
Tim Thompson predator@flagstaffcomms.com
Mark Edwards
Fergus Mellon
Notes to Editors:
About Cory Moruga field
-- The Cory Moruga licence is a direct licence from the
Trinidadian Ministry of Energy and Energy Industries ("MEEI") in
which Challenger Energy's wholly owned subsidiary T-Rex Resources
(Trinidad) Limited ("T-Rex"), holds an 83.8 % interest, alongside
its partner Touchstone Exploration Inc. which has 16.2% interest.
T-Rex is operator.
-- The Cory Moruga licence includes the Snowcap oil discovery,
with oil previously having been produced on test from the Snowcap-1
and Snowcap-2ST wells. On the basis of the production tests, a
development plan was submitted in 2018, prior to Challenger Energy
taking control of the asset, however, the block was not further
developed. Subsequent to the acquisition of Columbus Energy
Resources PLC in 2020, Challenger Energy undertook a detailed
technical review of its Trinidad portfolio and assessed that Cory
Moruga field required further appraisal before a commercial
development decision could be made.
-- Challenger Energy considers the Cory Moruga licence to be
non-core to its cash flow generative production-focused business in
Trinidad, and therefore no further work has been planned for the
Cory Moruga field in the near-term. At the same time, Predator
considers that the Cory Moruga field represents an ideal candidate
for a CO(2) EOR project.
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
finalised to coordinate with a further drilling programme beginning
in 2022.
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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END
ACQMZMMZNLNGZZM
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