LGO Energy (LGO)

 

LGO to resume Goudron drilling

LGO Energy says recent loan re-financing and equity placement have positioned the Company for an early return to drilling in the Goudron Field with the imminent signing of an initial two well contract, including options to extend for further wells, in order to drill production wells to the ubiquitous Mayaro Sandstone oil pay interval.

It says: "After retendering the rig and services it has been possible to obtain a small footprint conventional drilling rig on a turnkey basis, which is considered to offer a lower risk and lower cost solution compared to previously proposed solutions using large conventional or heavy workover rigs. The Company owned workover rig, Columbus #1, is now expected to be deployed to routine well service operations.

"This initial Mayaro drilling programme will get under way as soon as practical in 2017 and is expected to be followed by further drilling to the Mayaro Sandstone oil pay where up to 70 infill target locations have been identified of which 45 wells have already received outline approval. During the proposed work program the Company expects to issue regular updates on progress, including the spudding and results of each well. The Company will continue to announce Group production on a quarterly basis once oil sales volumes have been fully fiscalised and audited.

"The Company's Goudron subsidiary, Goudron E&P Limited, also expects to submit the formal application for a waterflood enhanced oil recovery ("EOR") project to the competent authorities in Trinidad during early 2017 with a view to commencing the initial phase of waterflood in the C-sands at Goudron in late 2017. The proposed initial scheme involves the use of existing C-sand wells (two injectors and six producers) and the results of this EOR pilot will determine the detailed form of the wider EOR development in future years."

Chief executive Neil Ritson said: "After a difficult period with low oil prices and a senior debt facility that was difficult to service effectively from field operations, which themselves were constrained by limited available funds, we can now look forward to the imminent return to development drilling and the deployment of capital to increase production at the Company's flagship Goudron Field. During the recovery period some very difficult decisions had to be made on the deployment of funds and shareholder equity and we appreciate the commitment and support of our shareholders during this process."

At 4:29pm: (LON:LGO) LGO Energy PLC share price was +0p at 0.11p