TIDMNUOG
RNS Number : 5289S
Nu-Oil and Gas PLC
26 June 2018
26 June 2018
Nu-Oil and Gas plc
("Nu-Oil" or "the Company")
Operational and Strategic Update Statement from the Chairman of
the Company
Nu-Oil announces the following operational and strategic update
from its Executive Chairman, Alan Minty as follows:
"It has been 3 months since my last Chairman's Statement, which
accompanied the Company's interim Financial Statements, and I would
like to take this opportunity to update the market with respect to
the progress we have made and reiterate our strategic goals. We are
also aware of certain rumours currently circulating on bulletin
boards, which we hope this statement will dispel.
Nu-Oil's strategy is to generate value from marginal field
activities in two 'domains'; in both cases we target low-risk,
undervalued projects that can be transformed by changing the
economics. The first domain is the offshore sector where we target
discoveries with proven reserves and preferably producing assets,
to reduce capital and subsurface risks. We pursue this through our
investment in MFDevCo, in which both Nu-Oil and RMRI Ltd, a company
controlled by myself, hold a 50% interest, which has engineering,
subsurface and operational experience, supplemented by Nu-Oil's
specific capability when required. The second target domain is
onshore where we are focusing on a region with large resources and
which we know well from our considerable operating experience
there; this is western Newfoundland, where we work via our 100%
owned subsidiary, Enegi Oil Inc. ("Enegi"), using local
partners.
Opportunities in the offshore sector are more capital intensive
and take longer to incubate as the evaluation, assessments and
planning processes required reflect the additional complexity
involved in offshore operations when compared to those onshore.
This greater complexity requires more expertise so MFDevCo
established a 'support' consortium of experienced, international
oil-service companies (the "Consortium"); the prestige of the
members illustrates the credibility of the strategy and of the
current opportunities.
We undertake extensive screening in both domains. In the
offshore sector, one redevelopment project in particular is of
great interest because of the value that can be generated and
because the commercial circumstances that surround the project
provide further hurdles to competition. There can never be a
guarantee of concluding a project prior to physical execution but a
regeneration strategy has been identified and MFDevCo and the
Consortium have undertaken significant work including
identification of, and engagement with, the owners of a facility in
China for deployment on the project. We are currently leveraging
the Consortium's relationships in China with the aim of
capitalising on this opportunity.
MFDevCo is building its team as it commissions, and works with,
the Consortium on this project; due diligence is vital and
extensive. A key task has been to review the complex subsurface
model and the work to date provides confidence that the project
should be pursued aggressively. The main outputs from such work are
accurate recoverable volumes of oil and predicted production rates,
based primarily on the performance of the reservoir to date.
Project planning continues at pace as negotiations advance; this
exercise is mainly performed by RMRI, also a shareholder of
MFDevCo, in conjunction with Aker Solutions. The latter's
experience of large scale development projects is invaluable
including engineering design and operations such as well
completions, subsea infrastructure, process facilities, production
operations, logistics and offtake arrangements. Nu-Oil provides
support to MFDevCo through engagement in the commercial elements of
the project.
Our current priority is to conclude the commercial terms and,
within that framework, create a deal whereby Nu-Oil benefits from a
financial structure that creates significant value for shareholders
and avoids dilution. Such a structure has been developed and is
being negotiated. Further announcements will be made when
appropriate based on the outcome of discussions.
Onshore opportunities are less complex and while they do not
carry the same investment risks as offshore, they still require
careful evaluation and planning. Even so, the characteristics of
'marginal field' opportunities onshore will be different from those
we target offshore, because fields are 'less stranded' from a
location perspective, which naturally has an effect on the
'prospectivity' of the opportunity. Offshore fields are commonly
deemed to be marginal once they have been appraised, however
onshore marginal fields are likely to be nearer to exploration than
to production. As always, expertise and support from a technical
group improves the chances of producing successfully.
Nu-Oil chose to remain active in western Newfoundland for a
number of reasons: (1) it had identified and understood the
potential in the region, (2) it already had licences in place and
detailed subsurface models, (3) it recognised that assets in the
area are stranded in part by lack of infrastructure, and (4) while
the Company shares the rights on EL1070 with Shoal Point Energy
Ltd., it is the last remaining operating company active in that
part of the Province and as such is ideally positioned to use that
as a springboard to other opportunities.
In addition, in PVF Energy we have a partner that is committed
to developing and implementing a similar consortium approach in the
area. PVF retains a very strong belief in the potential not only of
the Garden Hill field but also of the region as a whole, based on
many years' experience and their work on site over the last 12
months, and this is evidenced by the recent signing of the Heads of
Terms for the farm-in, as announced on 24 May 2018. The over-riding
objective remains to maximise production from the lease area
through the drilling of a new well. The first step towards this is
of course the upcoming production test, and, despite a limited
number of engineering issues in preparation for the test, PVF has
informed us they expect to undertake and conclude this
successfully. The impact of engineering issues is felt far more
keenly in western Newfoundland owing to the remoteness of the site
and lack of infrastructure.
The results of the test will provide valuable information both
for the future development of Garden Hill and as a basis for wider
activity in the area. But it is the consortium approach, along with
the investment required to ensure that the necessary infrastructure
is more readily available in the Province, which will ultimately
stimulate activity and deliver the outcomes we seek. We have been
encouraged by the results of the work to date, the well has flowed
to surface and downhole pressure readings indicate the pressure has
recovered, which indicates connectivity to a large source
reservoir.
Nu-Oil (via Enegi) has a long history of working in western
Newfoundland and we believe in the positive impact not only for the
Company but also for the local community of successfully and safely
developing the assets in the region. We remain fully committed to
achieving this goal.
My own belief remains as strong as ever. Personally, I have
invested heavily in the success of both Nu-Oil and MFDevCo,
information on which is in the public domain. My position is fully
aligned with that of all shareholders and my commitment to the
success of the venture has been and remains absolute. I hope that
this update addresses the false information that seems to be
circulating on bulletin boards. The most malicious information
appears to be originating from western Newfoundland and the Company
will seek legal advice as to how to address this and create greater
order in the market.
This is an exciting time for Nu-Oil and I look forward to a
bright future for the Company and its shareholders."
Alan Minty
Executive Chairman
Enquiries
Nu-Oil and Gas plc
Simon Bygrave Tel: +44 (0)161 817 7460
Investor Relations & Communications
Nigel Burton Tel: +44 (0)7785 234447
Chief Executive Officer
Strand Hanson Limited Tel: +44 (0)20 7409 3494
Rory Murphy/Ritchie Balmer/Jack
Botros
Novum Securities Limited Tel: +44 (0) 20 7399 9425
Jon Bellis
Disclaimer
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
This information is provided by RNS, the news service of the
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END
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