Business development update

RNS Number : 6378S

Predator Oil & Gas Holdings PLC

18 March 2021

 

FOR IMMEDIATE RELEASE

18 March 2021

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")

Business development update 

Predator Oil & Gas Holdings Plc (Predator), the Jersey-based Oil and Gas Company with operations in Trinidad, Morocco and Ireland, announces a business development update for Morocco and Ireland.

Guercif Scoping Development and Operating Costs for Pilot Compressed Natural Gas ("CNG") Project

In accordance with the Company's strategy to fast-track monetisation of an initial potential gas discovery at MOU-1 for the Moroccan industrial market, SLR Consulting Ltd, petroleum engineers and oil and gas advisors, were commissioned to develop a high level scheme for the transport of dry gas from the Guercif well site to existing reception facilities via a CNG "virtual pipeline".

Capital and operating cost estimates have been generated together with a consideration of different trailer options for road transport. Diesel versus CNG fuel options for haulage trucks were evaluated for the impact on capital and operating costs and carbon footprint.

Initial well head pressures were assumed to be 2100 psi declining to 500 psi over 5 years.

Road distance to market point was calculated to be 340 kilometres.

An initial Pilot CNG project assumed a production profile of 10 mm cfgpd and a project life of 10 years.

The results of the scoping cost estimates based on actual CNG industry data are summarised below.

· Gross capital development costs for start-up production of US$15.185 to 15.833 million, depending on haulage fuel choice and steel components used. Net to the Company's 75% working interest £8.2 - 8.6 million using an exchange rate of US$1.39 to £1.00.

· Total amortised capital and operating costs over the 10-year life of the pilot project of US$2.79 to 4.24/mcf, with the lower estimate based on using greener CNG and not diesel as haulage fuel.

Undiscounted net-back, excluding the drilling of an additional development well assuming MOU-1 is potentially completed as a production well, uses published gas prices for the Moroccan industrial gas market of between US$10 and 12 /mcf. These are underpinned by strengthening oil prices.  Scoping net-back for example is  US$7.21/mcf at US$ 10/mcf gas sales price and using the greener CNG fuel haulage option.

Scoping annual gross undiscounted potential revenues of US$26.3 million (US$19.7 million net the Company's 75% working interest) for 3.65 BCF of gross annual gas production would support a potential commercial development in an MOU-1 success case and provide multiples of the development capital requirements necessary to attract reserves-based lending. For a 10 year pilot project life, total gross gas resources required are  36.5 BCF. For the first 10.6 BCF of net gas production no government royalties are payable and there is no liability for corporation tax until 10 years have elapsed.

The pilot CNG project concept is designed to have flexibility to facilitate upscaling to supply the growing industrial market. It requires low levels of capital investment and therefore market penetration and increased market share has the ability to be fast-tracked via a transparent and uncomplicated, de-risked, development option.

In the medium and longer term the ability to monetise larger volumes of gas from the considerable inventory of gas prospects and potential gas resources in the Company's Guercif licence for gas-to-power in Morocco, and potentially for export, remains  an attractive commercial proposition for business growth.

Offshore Ireland - Floating Storage and Regasification Unit  ("FSRU") and LNG

In the context of the Company's Floating Storage and Regasification Unit  ("FSRU") and LNG project offshore Ireland, designated "Project Rainbow" by the Company, the Company is making a submission to the Public Consultation on the expert advisory group report entitled "Expanding Ireland's Marine Protected Area Network", published by the Department of Housing, Local Government and Heritage. Deadline for submissions is 30 July 2021. This will be in conjunction with the Company applying for Marine Area Consent for Project Rainbow as part of conforming to new regulations put in place to replace some of the existing regulations.

The purpose of the submissions and applications is to demonstrate that the Floating Storage and Regasification Unit  ("FSRU") and LNG project is in the public interest, as it is the only viable  near-term  solution actively being worked on to address diversity and security of gas supply and gas storage options. Security of energy supply is accepted by regulators as being of public interest."

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

"The eagerly awaited receipt of the CNG scoping development design and capital and operating costs has demonstrated a simple path to early monetisation of gas from the Guercif area. It provides the input data necessary to help expedite a Plan of Development submission based on a potential gas discovery and required for the Environmental Impact Assessment. The development option is simple, easily managed and requires very low levels of capital to generate near-term gas revenues. Importing specialist haulage vehicles and trailers and storage capacity are the only significant long-lead items. The potential for early and material revenue generation and profits is very exciting. Successfully executing a  pilot CNG project will de-risk scalability and drive the potential to add large numbers of new industrial customers where no realistic alternatives to imported fuel oil currently exist.

Project Rainbow is being accelerated in Ireland as the regulatory process becomes clearer and more focussed on the public interest element of the project, which is driven by the developing security of energy supply and capacity near-term emergency."

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 Dr. Stephen Staley Non-executive Chairman Paul Griffiths  Chief Executive Officer	Tel: [phone] [e-mail]
Novum Securities Limited Jon Belliss Optiva Securities Limited Christian Dennis	Tel: [phone] Tel: [phone]
Flagstaff Strategic and Investor Communications Tim Thompson  Mark Edwards Fergus Mellon	Tel: [phone] [e-mail]

Notes to Editors:

Predator is an oil and gas exploration company with the objective of participating with FRAM Exploration Trinidad Ltd. in further developing the remaining oil reserves and sequestrating anthropogenic carbon dioxide in the producing Inniss Trinity oil field onshore Trinidad, primarily through the application of C02 EOR technology. Potential for cash flow exists by executing a successful Pilot Enhanced Oil Recovery project using locally sourced liquid carbon dioxide for injection into and storage within the oil reservoirs ("C02 EOR"). Near-term expansion and production growth potential is focussed on upscaling the C02 EOR operations in the Inniss-Trinity oil field, subject to all necessary approvals. 

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.  A drilling programme, subject to the lifting of COVID-19 restrictions, targeting material prospective gas resources is scheduled for Q2 2021.

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 Kinsale gas field and Barryroe oil field in the Celtic Sea.

The Company has a highly experienced management team with a proven track record in the oil and gas industry.

 

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