14 October 2016
Mayan Energy Ltd / Index: AIM / Epic:
MYN/ ISIN: VGG6622A1057 / Sector: Oil & Gas
Mayan Energy Ltd
(“Mayan” or “the Company”)
Gas production
brought on line. Cost saving measures now kicking in.
Mayan Energy Ltd (AIM: MYN), the AIM listed oil and gas company,
is pleased to announce the commencement of gas production from the
Shoats Creek Field (“Shoats Creek”) and the impact of cost cutting
measures introduced by its new management team.
Completion of Shoats Creek gas
pipeline and initiation of gas sales
- A 600 metre gas line has now been installed which enables oil
and gas to be produced from wells at Shoats Creek, including inter
alia: Lutcher Moore 14 well (“LM14”)
and LM 20, as well as a number of other candidates for reconnection
in the near to medium term.
- LM 14 was the first well to be connected. Operating on a
tight choke, initial flow rates are reported as 1,300 thousand
cubic feet per day (“Mcfd”) and 30 barrels of oil per day
(“bopd”). These flow rates are close to previously reported
expectations, and the intention is to be conservative in managing
the well, as producing at increased choke rates would be
counterproductive to well life and production rates. It is
anticipated that after the first few weeks of production that rates
will stabilise at approximately 300 Mcfd and 30 bopd. Both
initial and expected flow rates are gross rates produced by the
well. The net attributable to Mayan from LM 14 is expected to
be approximately 900 Mcf gas and 25 bopd oil, stabilising at
approximately 200 Mcfd gas, and 20 bopd oil.
- LM 20 – which had not been anticipated to contribute gas has,
following on from minor over haul work to the well which has opened
it up to gas flow, now started delivering gas. Revised
production rates from LM 20 will be reported shortly, once they
have been determined, as a down-hole pump still needs to be lowered
and adjusted for proper influx of fluids. As a result; LM 20
became the second well to be connected to the gas line.
- Gas sales to Enerfin Field Services LLC, a subsidiary of
Enerfin Resources Company (see RNS announcement dated 28 July 2016) will start at the end of the second
week of October; with first cash flow expected in November
2016. Under the contract with Enerfin, and on the basis that
daily production volumes are more than 1,000 Mcfd, the Company
expects to receive Henry Hub sales price, less a 10% commission;
below 1,000 Mcfd price received will be net of a 15% commission to
Enerfin.
- Mayan has a 70.00% working interest (“WI”) and 52.78% net
revenue interest (“NRI”) in LM14, and a 20.00% WI and 15.08% NRI in
LM 20 in respect of oil, and a 70.00% WI and 52.78% NRI in respect
of gas;
- Based upon oil and gas prices of US$
40 per barrel, and US$2.5 per
Mcf gas (against current spot prices of approximately US$50 per barrel and approximately US$3/ Mcf), the Company estimates that the impact
of these oil and gas wells coming on stream will significantly
increase Mayan monthly revenues.
Operational profitability now
achieved
- Cost cutting introduced by the new management team over the
last few months has reduced operational and administrative
personnel costs by approximately US$60-70,000 per month and together with other
measures now in place, put Mayan in a position where, for the first
time and assuming the oil and gas price environment remains at
current levels, its US operations have the potential to be
operating on a profitable footing.
Commenting on the above, Mayan’s CEO Eddie Gonzalez said: “I am really pleased to
report that we achieved this important production milestone.
I think it shows that together with the cost cutting measures
we have taken, our new team is on track to meet another of our
objectives: namely achieving US operational profitability.
And if we factor in the benefit of oil and gas prices, which have
moved favourably upwards during the last few months, I would say
that we are comfortably ahead of our game plan.
“Looking ahead, we are now in a position to begin to unlock the
value and cash flow from the Shoats Creek, and on the back of that,
and our plans to monetise some of our non-core assets, we will then
pick up speed in moving forward with our plans for Mexico.
“Finally, I have to say that after a little more than a month in
the job, I am really looking forward to keeping up the news flow of
our progress against the targets that we have set ourselves, and in
particular how we will be further improving returns to the Company,
as we finesse and fill in the details of our previously reported
plans for the development of our assets.”
ENDS
For further information visit http://www.mayanenergy.com/ or
contact the following:
Eddie Gonzalez |
Mayan Energy Ltd |
+ 1 469 394 2008 |
Charlie Wood |
Mayan Energy Ltd |
+44 7971 444 326 |
Roland Cornish |
Beaumont Cornish Ltd |
+44 20 7628 3396 |
James Biddle |
Beaumont Cornish Ltd |
+44 20 7628 3396 |
Elliot Hance |
Beaufort Securities Ltd |
+44 20 7382 8300 |
Nick Bealer |
Cornhill Capital Limited |
+44 20 7710 9612 |
Elisabeth Cowell |
St Brides Partners Limited |
+44 20 7236 1177 |
Notes:
- Mayan Energy Limited is an AIM listed (London Stock Exchange)
oil and gas energy company with a vision of building a midstream
service (oil and gas waste management) and downstream operations
business in Mexico ,exploiting the
opportunities arising from the liberalisation of that country’s
energy sector. This vision will complement the Company’s
present operations which are focussed on the redevelopment and
enhancement of its upstream oil and gas interests in Oklahoma and Louisiana.
- This announcement contains inside information for the purposes
of Article 7 of the EU Regulation 596/2014.
Qualified Person
The technical information that is
contained in this announcement has been reviewed by Mr.
Kevin Green, a Consultant to the
Company and a Petroleum Geologist who is a suitably qualified
person with over 30 years' experience in assessing hydrocarbon
reserves and who has consented to the inclusion of the technical
information.