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Columbus Energy Res (CERP)

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Monday 10 September, 2018

Columbus Energy Res

Cory Moruga Block: Snowcap Licence Extension

RNS Number : 1988A
Columbus Energy Resources PLC
10 September 2018
 

                                           

10 September 2018

Embargoed for release until 7.00am

COLUMBUS ENERGY RESOURCES PLC

("Columbus" or the "Company")

Cory Moruga Block:  Snowcap Licence Extension  

Columbus, the oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America, provides the following update about the Steeldrum transaction.

The Company is pleased to note that the Ministry of Energy and Energy Industries in Trinidad (the "Ministry") has granted an extension of the licence for the Cory Moruga Block (the "Licence").  The Licence will now run until 2032.   The extension will allow Steeldrum Oil Company Inc ("Steeldrum") to commence commercial sales from the Snowcap-1 well as the first step of the Cory Moruga field development. 

Steeldrum is in the process of being acquired by Columbus, with completion still expected in Q3/Q4 2018.

Leo Koot, Executive Chairman of Columbus, commented:

"The formal extension of the Cory Moruga licence provides the perfect opportunity for the combined Columbus-Steeldrum group to bring a new field onto production before the end of 2018, using existing infrastructure and available funds.  The combined entity will then have six fields on production, providing a more robust production profile and with more options to determine where best to invest our funds to obtain the best "bang for our buck".

The Columbus-Steeldrum management team will continue to focus on "quick-wins" to increase production to be implemented following completion of the transaction."  

Background - Cory Moruga License/Snowcap Field Development

T-Rex Resources (Trinidad) Limited ("T-Rex"), a wholly-owned subsidiary of Steeldrum, holds 83.8% of the Licence as operator, with the remaining 16.2% being held by Primera Oil and Gas Limited, a subsidiary of Touchstone Exploration Inc.    

In July to August 2010, T-Rex drilled the Snowcap-1 exploration well in the Licence and performed a flow test in February 2011 during which time the well flowed 29.5-degree API light oil at varying rates from 1,100-1,450 bopd and gas at a rate of 2.2 MMCFG with final flowing pressure of 1,180 psi. Two subsequent extended production tests later produced at sustained rates of approximately 250 bopd on 7 -12/32" choke size (in 2012) and at 80 bopd oil (in 2015) with an emulsion mix due to possible water influx from a deeper sand.  It is expected that the well will resume to flow and produce at a fluid-rate of around 100 BFPD with the extent of the water-cut from the well being unknown at present given that it is over three years since the well last flowed. When natural flowing pressure decreases, artificial lift can be used to increase production during this appraisal phase of the field.

(Note:  Figures quoted above were provided by Steeldrum and were extracted from the Snowcap Field Cory Moruga Block Development Plan, dated February 2018, as submitted by T-Rex to the Ministry).   

T-Rex declared a discovery in August 2015 which was noted as a Commercial Discovery by the Ministry in February 2016.  The Ministry has confirmed that the expiry date for the Licence had been formally extended until 28 August 2032, allowing T-Rex to proceed with a phased development of the Snowcap Field, the first step being commercial sales from the Snowcap-1 well using existing infrastructure. Production will commence as soon as possible after completion of the acquisition by Columbus of Steeldrum.  

Further field facilities and development wells will be added on a phased basis in subsequent years based on initial production performance.

Columbus is also considering other drilling opportunities on the Cory Moruga Licence and also at South Erin and Innis-Trinity, all to be funded from currently available resources.  Further updates will be announced in due course.  

Background to Steeldrum Acquisition

On 13 July 2018, Columbus signed a Sale and Purchase Agreement ("SPA") to acquire Steeldrum Oil Company Inc ("Steeldrum"), which will add approximately 200-250 bopd and reserves of 5.6 mmbbl from the Innis-Trinity field and South Erin field combined. The transaction also includes the Snowcap Field/Cory Moruga development project, expected to add recoverable reserves of approximately 1.1 mmbbl to the Columbus portfolio.

(Note: Reserve figures quoted above supplied by Steeldrum)

Columbus Shares

Upon completion of the Steeldrum acquisition, the Company expects to issue 109,166,209 shares to the sellers of Steeldrum.   This consists of 92,743,775 shares (the "Base Consideration Shares") and 16,422,434 shares for the Licence extension.

As at the date hereof, the Company's issued share capital consists of 650,286,412 ordinary shares with a nominal value of 0.05p each will increase as follows after the acquisition:  

                               

Current shares in issue:                                       650,286,412

Base Consideration Shares:                                   92,743,775

Cory Moruga Shares:                                              16,422,434

Total Shares which will be in issue:                  759,452,621

 

Steeldrum's shareholders will hold 14.4% of Columbus' stock after the acquisition.  The Company has already confirmed that Steeldrum shareholders will be subject to certain lock-in arrangements that will prohibit them divesting of their shares for a period of at least 6 months post completion, save for 10% of the Base Consideration Shares.   That said, Columbus is in regular dialogue with Steeldrum's major shareholders who have confirmed they intend to support Columbus as medium-long term investors. 

Definitions:

bopd:                      barrels of oil per day

MMCFG:                 million cubic feet of gas

BFPD:                      barrels of fluid per day                     

 

Qualified Person's statement:

The information contained in this document has been reviewed and approved by Stewart Ahmed, Managing Director (Trinidad) for Columbus Energy Resources plc.  Mr Ahmed has a BSc in Mining and Petroleum Engineering and is a member of the Society of Petroleum Engineers.  Mr Ahmed has over 32 years of relevant experience in the oil industry.

This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

 

Contact Information

Columbus Energy Resources plc

Leo Koot / Gordon Stein

+44 (0)20 3794 9230

VSA Capital Limited

Financial Adviser and Broker

Andrew Monk / Andrew Raca / Justin McKeegan

+44 (0)20 3005 5000

Beaumont Cornish Limited

Nominated Adviser

Roland Cornish / Rosalind Hill Abrahams

+44 (0)20 7628 3396

Camarco

Public and Investor Relations

Georgia Edmonds / James Crothers

+44 (0)20 3757 4983

 

Notes to Editors:

Columbus Energy Resources Plc is an oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America. Initially focussed on maximising production from its core Goudron field asset, Columbus is cashflow positive and aims to create transformational growth by developing its exploration targets across its dominant portfolio position in the South West Peninsula ("SWP"), a prolific region which lies in the extreme southwest of Trinidad and consists of stacked shallow and deep prospects, in a capital efficient and disciplined manner.  

Columbus is guided by the following core values; safe and sustainable, stronger together, creative excellence, positive energy, totally trusted and personally responsible.

The Company is led by an experienced Board and senior management team with supportive shareholders and intends on leveraging its expertise and experience to build an attractive and diversified portfolio of assets across South America in order to build an oil production led South American exploration business.  

The Board and management are 100% aligned with shareholders and each of the Executive Directors and Executive Management members continue to receive 50% of their salaries in Company shares and will do, for the foreseeable future.

To find out more, visit www.columbus-erp.com or follow us on Twitter @Columbus_ERP 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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