Enegi Oil PLC Marginal Field Update (0238Z)

TIDMENEG

RNS Number : 0238Z

Enegi Oil PLC

08 December 2014

ENEGI OIL PLC

AIM ticker: 'ENEG'

OTC ticker: 'EOLPF'

8 December 2014

Enegi Oil Plc

("Enegi" or "the Company")

Marginal Field Update

Enegi is pleased to provide an update on the recent progress of ABT Oil and Gas ("ABTOG"), the joint venture company owned 50/50 by Enegi and ABTechnology Limited whose strategy is to build a portfolio of marginal field opportunities which can be developed using appropriate and proven buoyant technology.

Highlights:

-- ABTOG continues to progress its marginal field solutions towards Field Development Plan readiness;

-- The offer of award of Block 21/28 provides an opportunity to demonstrate a new approach for field development and creates impetus for further exploration in the North Sea;

-- Increasing industry focus on cost reduction expected to drive operators to consider alternative approaches to field development, such as the ABTOG solutions and methods;

-- Negotiations with Wood Group PSN continue along with discussions with other complementary major industry partners;

-- Discussions between Antrim Energy Limited (the operator of the Fyne Licence) and DECC regarding the Fyne Field Development Plan are ongoing.

The Company continues to progress its marginal field initiative and, even though there has been a fall in the oil price already creating delays in large-scale project approvals and impacting existing project schedules, the Company believes that the potential for marginal field developments remains high when judged in the context of general oil price volatility and not on specific short term oil prices. While the current oil price is low, the long term price forecast remains generally unchanged. Furthermore, such macro-economic changes only confirm the need for greater cost-effectiveness in project delivery in the offshore sector, principles which are fundamental to recovering resources from marginal fields.

In continuing the Company's investment in ABTOG, which is a statement of confidence in its business model, other factors need to be emphasised.

-- Firstly, as the oil price changes, so does the economic threshold for marginal fields and so numerous opportunities remain. The same principles for economic delivery continually apply.

-- Secondly, in the recent 28th Licensing Round, there was a shift to more licenses being awarded to smaller companies, possibly indicating that less exploration activity is anticipated.

-- Finally, the Wood Review emphasised the requirements for more collaboration and alternative approaches to progress projects.

Thus, the core elements of ABTOG's method remain valid, consisting of i) lower capex through use of solutions appropriate to the development size ii) lower opex through not normally attended operations iii) removal of reliance on existing infrastructure through provision of oil storage iv) the ability to redeploy the solution, thereby enabling facility costs to be amortised over multiple fields and v) project management and engineering procedures that are appropriate to the size of the opportunity, thereby enabling projects to be delivered quickly and cost effectively.

These continue to be applied in the development of the Fyne Field as part of a wider marginal field programme which has the additional potential to unlock three further discoveries, all within 5km of Fyne, and which could add an estimated 8mmbo to the development. Two of these discoveries lie in the recently offered 21/28 block. There are also a number of exploration prospects in the area of the 21/28 block that could be drilled in the future as part of that wider development of Fyne. These exploration prospects could add 40mmbo to the overall project and development and utilise an additional Self-Installing Floating Tower ("SIFT"). Furthermore, within the Central North Sea, ABTOG has identified numerous small and stranded discoveries which if suitable, can result in further development of the wider Fyne Field development.

Discussions between Antrim Energy Limited (the operator of the Fyne Licence) and DECC regarding the Fyne Field Development Plan are ongoing. In parallel, ABTOG continues in negotiations with Wood Group PSN and other complementary parties in order to refine technical solutions and improve the concepts.

The Company will provide shareholders with a further update on these items in due course.

Prof. Mike Bowman, Non-Executive Director of Enegi Oil and Chairman of ABTOG commented:

"The current challenges faced by the industry in the UKCS provide substantial hurdles and require innovation and collaboration to change the trend of declining production. It is recognised that many of the problems result from the North Sea being a mature basin but problems are exacerbated by other influencing factors whose effects are analysed and well described in the Wood Review. Considerable potential remains and many companies are collaborating to develop solutions and methods that are appropriate and will extend the life of production from the North Sea. ABTOG are at the vanguard of such activity and are continuing to make progress and drive forward approaches that make smaller projects viable."

 
 Enegi Oil                                Tel: + 44 161 817 7460 
 Alan Minty, CEO 
 Nick Elwes, Director of Communications 
 
 Cenkos Securities 
 Neil McDonald                            Tel: + 44 131 220 9771 
 Derrick Lee                              Tel: +44 131 220 6939

www.enegioil.com

Facebook (Enegi Oil PLC)

Twitter (@enegioil)

Qualified Persons

The information in this release has been reviewed by Barath Rajgopaul MSc (Mech. Eng.) C. Eng, a member of the Advisory Panel of Enegi. Mr. Rajgopaul has over 30 years' experience in the petroleum industry.

Notes to Editors

Enegi Oil Plc is an independent oil and gas company whose strategy is to build a diverse portfolio of assets with a strong emphasis on acquiring interests in marginal fields. These marginal fields are low risk highly-appraised projects and consequently the Company's entry cost will be low. Enegi will look to develop these assets utilising ABTechnology's buoyant solutions, which are appropriate and change the development economics of a project. This is also expected to enable the early booking of reserves. The Company's current portfolio is made up of operations focused on opportunities around the Port au Port Peninsula in Newfoundland, Canada, the UK North Sea and Jordan. The Port au Port Peninsula is located in western Newfoundland, which, although lightly explored, is in an active petroleum system with light oil having been discovered on a number of occasions. The Company's licences in the UK North Sea have discovered hydrocarbons on them and have been selected based on buoy technology operating criteria. The Company has also entered into the highly prospective Dead Sea and Wadi Araba Block in Jordan with its partner Korea Global Energy Corporation.

ABT Oil & Gas is a joint venture company owned 50/50 by Enegi and ABTechnology. ABT Oil & Gas's strategy is to build a portfolio of marginal field opportunities which can be developed using appropriate and proven technology. The application of the technology in developing marginal fields has the potential to significantly change the economics surrounding a project thus making it viable to develop. ABT Oil & Gas will only consider projects that are based upon discovered hydrocarbons, thus are deemed to be lower risk, and will look to gain an interest in the project in return for providing an appropriate development solution. The Company's initial area of focus is on the UKCS.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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