First Sales of Oil and Gas

RNS Number : 5128S

Silvermere Energy PLC

03 December 2012

 



AIM: SLME

03 December 2012

Silvermere Energy plc

("Silvermere" or the "Company")

First Sales of Oil and Gas

Silvermere Energy plc, the independent oil and gas company with assets in the Gulf of Mexico, is very pleased to announce the first sales of oil and gas from its Mustang Island 818-L Field. This is based on information provided by the Operator, Dominion Production Company LLC ("Dominion").

Following the successful 24-hour flow test conducted on 15 October 2012 and the return to continuous operation from 30 October, clean-up of the well has continued alongside pressurisation of the flow line to the "Six Pigs" shore facility. Having achieved the necessary operating pressure to supply the transmission network, the first oil and gas sales were recorded on 1 December 2012. Following installation of a compressor and associated equipment at its shore facility, the I-1 well is due to be turned back on later today, from which time production is expected to flow continuously through the sales meters.

As previously reported, the flow-test conducted on 15 October 2012 showed flow rates of 155 bopd plus 700,000 scfpd of associated gas, and no water. With the well clean-up still on-going, the optimum commercial flow rates have still to be determined but encouraging operating pressures recorded in the well suggest that commercial production could match or exceed the levels obtained in the flow test.

 A further update will be provided once commercial production rates can be estimated with confidence.

Commenting on these recent developments, Andy Morrison, Chief Executive of Silvermere, said: "We are very pleased to have achieved such an important milestone - the first sales from Mustang Island. These revenues will make an important contribution to cash flow and will enable us to advance towards the next stages of our development and growth."

This statement has been approved by Mr Tom Gunningham CEng MEI, Director of Rockflow Resources Ltd, an independent oil and gas consultancy, who is a Chartered Petroleum Engineer with 24 years' experience in the Petroleum Industry, and who is a Qualified Person in accordance with the guidance note for Mining, Oil & Gas Companies issued by the London Stock Exchange in respect of AIM Companies.

--ENDS--

For further information please contact:

Silvermere Energy plc Andy Morrison, Chief Executive	[phone]
Merchant Securities Limited (Nominated Adviser and Broker) Lindsay Mair/Virginia Bull/Catherine Miles	+ 44(0)20 7628 2200
Peterhouse Corporate Finance Limited Jon Levinson	[phone]
Bishopsgate Communications Nick Rome/Anna Michniewicz/Ivana Petkova	[phone]

About Silvermere Energy PLC

The Company has a 33.33 per cent working interest and 20.00 per cent net entitlement interest in the Mustang Licence Area, an area within the southern half of the north-west quarter and northern half of the south-west quarter of the Block 818-L field as defined in State of Texas Oil and Gas Lease numbers 108873 and 108874. The Mustang Island 818-L field (the "Field"), located in Kleberg County waters of the Gulf of Mexico, is home to a field re-habilitation project targeting bypassed or only partially produced gas-condensate.

According to a recent update to the independent Competent Persons Report published at admission in August 2011, the Mustang asset - which is operated by Dominion Production Company, the Field has a NPV10 of Proven and Probable reserves (P1 + P2) estimated to be US$14 million attributable to the Company's interest. It has an additional NPV10 of $57million net from the potential upgrade of Possible (3P) reserves. These reserves are based on a projected three well programme.

Initially, Silvermere is focussed on progressing production from the I-1 re-entry well where it has a 16.66 per cent working interest with a view to underpinning its long-term objective of creating a bankable and cash generative oil and gas company during the medium term and then drilling the three new wells to access the NPV identified in the CPR.

The Company maintains an active business development programme which aims to identify and acquire additional valuable assets either in or near production. These will be used to expand the business and provide additional value to shareholders over time. The Company's search is focussed on the US for the time being, both on-shore and off-shore, but may be expanded further afield in future.

Silvermere is quoted on the AIM Market of the London Stock Exchange plc (AIM: SLME) with its offices in London.

 

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