2013 and fourth quarter results published
SAINT HELIER, Jersey, April 28, 2014 /PRNewswire/ - In 2013, LONGREACH
OIL AND GAS LIMITED (TSXV: LOI) (the Company or Longreach)
successfully advanced its exploration programme completing one
promising well and setting the stage for a highly prospective
second well currently drilling ahead. The Company's first
exploration well, Koba-1 on its operated Sidi Moktar exploration
licence, encountered very encouraging natural gas resource
potential that indicated an estimated 45 metres of reservoir
potential. Longreach is currently drilling a second exploration
well, Kamar-1, on the property and has set casing above the first
targeted reservoir. Future operational activity in the Sidi Moktar
area will be determined after the completion, analysis and
interpretation of the Koba-1 well and the Kamar-1 well. Longreach
also plans to participate in an exploration well being drilled on
its non-operated Sidi Moussa Offshore licence in the third quarter
of 2014.
The Company exited 2013 with cash of
US$12.7 million and raised an
additional CAD$9.7 million through a
private placement in April 2014.
Longreach intends to evaluate additional financing opportunities in
2014.
Longreach today filed its annual financial
statements for the year ended December 31,
2013, together with its Management's Discussion and Analysis
in respect of the Company's financial results for the year ended
December 31, 2013. These documents
are available on the Longreach website at
www.longreachoilandgas.com or under the Company's profile on SEDAR
at www.sedar.com.
Highlights
Financial:
- Cash position as at December 31,
2013, of US$12.7 million
(US$34.2 million as at December 31, 2012; US$21.3
million as at September 30,
2013)
- Working capital as at December 31,
2013, of US$3.9 million
(US$32.6 million as at December 31, 2012; US$18.9
million as at September 30,
2013)
- Subsequent to year-end, completed an interim debenture
financing of CAD$9.7 million in
April 2014 and intends to obtain
further financing in 2014, which may include a rights offering or
private placement
Operations Summary:
- Sidi Moktar:
-
- Commenced drilling of the Koba-1 well, targeting Lower Liassic
and Upper Triassic clastic reservoirs. The Koba-1 well was drilled
to a total depth of 3,100 metres and operations were completed in
early January 2014. The well
encountered a gross interval of approximately 45 metres with
reservoir potential.
- On March 20, 2014, the Company
commenced drilling of the Kamar-1 well, targeting a Lower Liassic
reservoir and Triassic clastic reservoirs. The Kamar-1 well has a
planned total depth of 3,500 metres and operations are anticipated
to take approximately 70 days.
- Following the Kamar-1 well, the Company will review the forward
operational programme.
- Foum Draa Offshore:
-
- In late October 2013, the
operator, Cairn Energy plc (Cairn Energy), commenced drilling the
FD II-Alpha-1 exploration well located in 1,500 metres of water
approximately 120 kilometres offshore of Morocco. The well was drilled to a total depth
of 5,255 metres (subsea), but did not encounter clastic reservoirs.
The well has been plugged and abandoned.
- Sidi Moussa Offshore:
-
- Longreach has been advised that the operator, Genel Energy plc
(Genel), has secured a rig to drill an exploration well targeting
the Mid-Jurassic and Lower Triassic reservoirs in the third quarter
of 2014.
Operational Update
Sidi Moktar Onshore (Net Working Interest
50%)
Longreach has a 50 percent operating interest in
the onshore Sidi Moktar exploration licence. Sidi Moktar is
comprised of three blocks (Sidi Moktar
West, Sidi Moktar South and
Sidi Moktar North) totalling 2,683
square kilometres, which cover the majority of the hydrocarbon
basin of Essaouira, located in central onshore Morocco. The blocks surround the
producing Meskala field, which is considered Morocco's major producing field and operated
by the Office National des Hyrdocarbures et des Mines (ONHYM), the
Moroccan state energy company. In 2011, the Meskala field produced
approximately 3.6 million cubic feet per day of natural gas and 168
barrels per day of condensate from the Triassic reservoir. Four
fields within Sidi Moktar have historically produced 30.5 billion
cubic feet (Bcf) of gas from Jurassic-aged reservoirs.
Sidi Moktar has a significant amount of
historical exploration data available, including 6,172 kilometres
of 2D seismic, and 43 exploration and development wells. Longreach
has interpreted over 4,500 kilometres of existing 2D seismic data
and has completed the reprocessing of 1,750 kilometres of this
data. Longreach has also completed comprehensive petrophysical and
petrographic analyses of the neighbouring wells and outcrop
sections to better understand the reservoir and seal potential of
the Lower Liassic and Triassic stratigraphic sections.
Subsequently, a portfolio of 12 prospects and leads has been
mapped, ranked and risked.
On November 15,
2013, Longreach announced an updated independent technical
report (effective date June 30, 2013)
of the Company's petroleum assets, including the Sidi Moktar
licence, that was prepared by Gaffney, Cline & Associates
(GCA), a qualified reserves evaluator in accordance with National
Instrument 51-101 requirements using the Canadian Oil and Gas
Evaluation Handbook. GCA confirmed that Longreach's
reinterpretation of the seismic and other data had resulted in a
new model for the structural evolution of the Sidi Moktar area and
concurs with Longreach's interpretation that the anticlines are
more likely formed by inversion of Permo-Triassic half grabens. As
a result, there is potential for hydrocarbon bearing clastic
reservoirs to be found below Jurassic carbonate seals. GCA's best
estimate of unrisked prospective resources are 420 Bcf of natural
gas and 25.1 million barrels (MMbbl) of condensate for the Koba
prospect, with a geological chance of success of 25 percent, and 91
Bcf of natural gas and 6.1 MMbbl of condensate for the Kamar
Subcrop prospect, with a geological chance of success of 11
percent. The Kamar-1 well is expected to test the Kamar Subcrop, as
well as the Kamar Onlap prospect (stratigraphically above the Kamar
Subcrop) to which GCA estimated 232 Bcf of natural gas and 13.9
MMbbl of condensate, with a geological chance of success of six
percent.
During 2013, the Company commenced drilling of
the Koba-1 well, targeting the Lower Liassic and Upper Triassic
clastic reservoirs. The Koba-1 well was drilled to a total depth of
3,100 metres and operations were completed in early January 2014. The well encountered a gross
interval of approximately 45 metres with reservoir potential. Over
this section, a gas influx of over 10 percent was encountered
throughout the interval with heavier hydrocarbon components of
condensate (over C5+). The Koba-1 well is currently suspended and
the Company is reviewing the logs to assess the options
available.
On March 20, 2014,
the Company commenced drilling of the Kamar-1 well, targeting a
Lower Liassic and Triassic clastic reservoirs. The Kamar-1 well has
a planned total depth of 3,500 metres and operations are
anticipated to take approximately 70 days. The Company plans to
review the forward operational programme following the completion
of the Kamar-1 well.
Sidi Moussa Offshore (Net Working Interest 1.5%)
and Foum Draa Offshore (Net Working Interest 2.5%)
In September 2009,
Longreach agreed to terms to earn a 7.5 percent net working
interest in the Sidi Moussa Offshore licence and the Foum Draa
Offshore licence. Located directly west of the coastal city
of Agadir, the two licences cover an area of approximately 12,714
square kilometres.
On August 23,
2012, Longreach entered into a farm-out agreement with Genel
whereby Genel acquired a 60 percent operating equity interest in
the Sidi Moussa Offshore licence proportionally from Longreach and
each of its joint venture partners. Genel paid its equity interest
share of past costs, being US$129,990
net to Longreach, and is expected to pay the first US$50 million towards drilling of the commitment
well (including ONHYM's 25 percent carried interest) required
under the terms of the First Extension Period of the Sidi Moussa
Licence. Longreach's net interest in the Sidi Moussa Offshore
licence has been reduced from 7.5 percent to 1.5 percent as a
result Genel's farm-in. The Company has been advised by Genel that
an offshore exploration well targeting Mid-Jurassic / Lower
Triassic reservoirs is anticipated to be drilled in the third
quarter of 2014.
On August 28,
2012, Longreach entered into a farm-out agreement with Cairn
whereby Cairn acquired a 50 percent operating equity interest in
the Foum Draa Offshore licence proportionally from Longreach and
each of its joint venture partners. In 2013, Cairn paid its equity
interest share of past costs, being US$150,000 net to Longreach, and paid the first
US$60 million towards drilling of the
FD-1 exploration well (including ONHYM's 25 percent carried
interest), a commitment well under the terms of the First Extension
Period of the Foum Draa Licence. Longreach's net interest in the
Foum Draa exploration licence has been reduced from 7.5 percent to
2.5 percent as a result of Cairn's farm-in.
In late October
2013, Cairn commenced drilling the FD II-Alpha-1 exploration
well located in 1,500 metres of water approximately 120 kilometres
offshore of Morocco. The well was
drilled to a total depth of 5,255 metres (subsea), but did not
encounter clastic reservoirs where the primary target was a Late
Jurassic and Early Cretaceous deep-water turbidite slope fan. It
did penetrate the oldest stratigraphic section of any deep water
exploration well along the Moroccan margin. The well was
subsequently plugged and abandoned.
Zag Basin Onshore (Net Working Interest
22.5%)
The operator of the Zag Basin, San Leon Energy
Plc, completed a 15,000 square kilometre aeromagnetic survey and a
1,674 kilometre 2D seismic survey on the licence in January 2012, largely on the eastern part of the
property area. This was the first seismic data ever acquired
on this licence. Interpretation of the surveys has indicated a
portfolio of structural leads.
Having successfully completed the minimum work
programme obligations for the Initial Period of the exploration
licence, the joint venture partners elected to move into the First
Extension Period. The First Extension Period has a minimum work
programme requirement for one well to test either the Ordovician
formation or to drill to a minimum depth of 3,000 metres by
May 2015.
About Longreach
Longreach is an independent Canadian oil and gas company focused on
its significant land position in Morocco. The Company has a 50 percent operated
interest in the Sidi Moktar licence area covering 2,683 square
kilometres and is working closely with ONHYM as a committed
long-term partner to unlock the hydrocarbon potential of the
region. Morocco offers a
politically stable environment to work within and has favourable
fiscal terms to energy producers. Longreach is a public company
listed on the TSX Venture Exchange under the symbol "LOI".
Additional information about the Company can be
found at www.longreachoilandgas.com and under the Company's SEDAR
profile at www.sedar.com.
Special Note Regarding Analogous Information
Although the Company believes that production on
the Meskala field, which is adjacent to the Sidi Moktar licences,
may indicate that production is possible from the Koba structure,
no assurance can be given by the Company that commercial production
on any of the Sidi Moktar exploration licences will be achieved, or
as to the levels of production that may be possible on any of the
Sidi Moktar exploration licences if production is achieved.
Special Note Regarding Estimates
The unrisked prospective resources described
above have been estimated using probabilistic methods and are
dependent on a petroleum discovery being made.
Prospective resources are those quantities of
petroleum estimated, as of a given date, to be potentially
recoverable from undiscovered accumulations by application of
future development projects. Prospective resources have both an
associated chance of discovery and a chance of development.
Prospective resources are further subdivided in accordance with the
level of certainty associated with recoverable estimates assuming
their discovery and development and may be subclassified based on
project maturity. The prospective gas and condensate resources in
the GCA report indicate exploration opportunities and quantify the
development potential in the event a commercial discovery is made
and should not be construed as reserves or contingent resources.
The prospective resources set out in the tables above are those
undiscovered, highly speculative gas and condensate resources
estimated beyond gas and condensate reserves or contingent gas and
condensate resources where geological and geophysical data suggest
the potential for discovery of petroleum but where the level of
proof is insufficient for classification as reserves or contingent
resources. The unrisked prospective gas and condensate resources
are the range of volumes that GCA estimates could reasonably be
expected to be recovered in the event of discovery and development
of these resources.
Definitions
The following terminology, consistent with the
COGE Handbook and guidance from Canadian securities regulatory
authorities, was used to prepare the disclosure relating to the
prospective gas and condensate resources above.
"Best Estimate" (Best) is considered to
be the best estimate of the quantity of resources that will
actually be recovered. It is equally likely that the actual
remaining quantities recovered will be greater or less than the
best estimate. Those resources that fall within the best estimate
have a 50 percent confidence level that the actual quantities
recovered will equal or exceed the estimate.
"Low Estimate" (Low) is considered to be
a conservative estimate of the quantity of resources that will
actually be recovered. It is likely that the actual remaining
quantities recovered will exceed the low estimate. Those resources
at the low end of the estimate range have the highest degree of
certainty - a 90 percent confidence level - that the actual
quantities recovered will equal or exceed the estimate.
"High Estimate" (High) is considered to
be an optimistic estimate of the quantity of resources that will
actually be recovered. It is unlikely that the actual remaining
quantities of resources recovered will meet or exceed the high
estimate. Those resources at the high end of the estimate range
have a lower degree of certainty - a 10 percent confidence level -
that the actual quantities recovered will equal or exceed the
estimate.
Special Note Regarding Forward Looking
Statements
This press release contains forward-looking statements. Such
forward-looking statements relate to future events or the Company's
future performance. All statements other than statements of
historical fact are forward-looking statements. Forward-looking
statements are often, but not always, identified by the use of
words such as "may", "will", "should", "expect", "plan",
"anticipate", "believe", "estimate", "predict", "project",
"potential", "targeting", "intend", "could", "might", "continue" or
the negative of these terms or other similar terms. Forward-looking
statements in this press release include, but are not limited to,
statements regarding the drilling of the Karmar-1 well at the
Company's operated Sidi Moktar onshore license area in Morocco; the ability of the Company to
successfully complete the drilling programme at Kamar-1 over the
next few weeks; the completion of evaluations and processing and
interpretation of data, the performance characteristics of the
Company's oil and gas properties, capital expenditure programmes,
supply and demand for oil, gas and commodities, prices for oil and
gas, drilling plans, and realization of the anticipated benefits of
acquisitions.
Forward-looking statements are only predictions.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such
forward-looking statements. Some of the risks and other factors
which could cause results to differ materially from those expressed
in the forward-looking statements contained in this press release
include, but are not limited to: general economic conditions in
Canada, the Kingdom of
Morocco and globally; completing
the proposed drilling programme at Kamar-1 in a timely and fiscally
prudent manner; industry conditions, including fluctuations in the
price of oil and gas, governmental regulation of the oil and gas
industry, including environmental regulation; fluctuation in
foreign exchange or interest rates; risks inherent in oil and gas
operations; political risk, including geological, technical,
drilling and processing problems; unanticipated operating events
which could cause commencement of drilling and production to be
delayed; the need to obtain consents and approvals from industry
partners, regulatory authorities and other third-parties; stock
market volatility and market valuations; competition for, among
other things, capital, acquisitions of reserves, undeveloped land
and skilled personnel; incorrect assessments of the value of
acquisitions or resource estimates; any future inability to obtain
additional funding, when required, on acceptable terms or at all;
credit risk; changes in legislation; any unanticipated disputes or
deficiencies related to title matters; dependence on management and
key personnel; and risks associated with operating in and being
part of a joint venture.
Although the forward-looking statements
contained in this press release are based upon factors and
assumptions which management of the Company believes to be
reasonable, the Company cannot assure that actual results will be
consistent with its expectations and assumptions. Material factors
and assumptions which management of the Company has considered in
connection with making the forward-looking statements in this press
release include that the Company will be able to successfully
complete the drilling programme at Kamar-1 and to successfully
evaluate, process and interpret data. Undue reliance should not be
placed on the forward-looking statements contained in this news
release as there can be no assurance that the plans, intentions or
expectations upon which they are based will occur. These statements
speak only as of the date of this press release, and the Company
does not undertake any obligation to publicly update or revise any
forward-looking statements except as expressly required by
applicable securities laws.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
This news release does not constitute an
offer to sell or a solicitation of an offer to buy any securities
of Longreach in any jurisdiction in which such offer, solicitation
or sale would be unlawful. The securities referred to herein have
not been and will not be registered under the United States
Securities Act of 1933 (the "U.S. Securities Act") or any state
securities laws and may not be offered or sold within the United States or to U.S. Persons (as
defined in the U.S. Securities Act) unless registered under the
U.S. Securities Act and applicable state securities laws, or an
exemption from such registration is available.
SOURCE Longreach Oil and Gas Limited