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LGO secures US$4m to drill in Guaya
Leni Gas and Oil (LGO) plc has said in a statement that it “successfully secured an additional US$4 million of funding prior to commencing the programme of 30 new wells at its 100 per cent owned Goudron Field in Trinidad where current proven plus probable (2P) oil reserves total 7.2 million barrels.”
Completion of these new funding arrangements means that the previously announced debt package which was arranged with Meridian SEZC is no longer required for the next drilling phase of the Goudron Field development, the statement said. However, LGO said, “it may be reactivated for funding further acquisitions in Trinidad”.
LGO Chief Executive Neil Ritson said: “We are encouraged that the approvals process is now reaching its conclusion, and that the drilling of the critically important new wells at the Goudron Field will shortly be able to start. The additional funding arrangements ensure that the drilling programme can be carried out, and that 2014 will be a very exciting year as these new wells start to unlock the true potential of Goudron.”
The Goudron field is located in Guayaguayare. Hours after the release of the statement, Ritson said in an interview with a London website (http://www.lse.co.uk) that drilling is expected to commence in February. “Given that we delayed the start, we’re now considering continuous drilling. Originally we had planned to do two wells, and then take a break, but now we’re thinking that we might go straight into the 30 well programme,” he said.
Asked exactly what LGO will be doing and when, he said: “We expect to get the final paperwork together by mid-January. We’ve been preparing for the mobilisation of the rig in parallel with the documentation, so we would expect to be able to get the rig into the field during February and we have already planned two wells to infill the field development area, which is very low-risk. It’s going to be between existing producing wells.”
LGO said the Environmental Management Authority (EMA) gave the company confirmation “in writing that it has now received all the data required for the final issue of the Certificate of Environmental Compliance (CEC) for the planned drilling campaign at the Goudron field. It is now anticipated that the CEC will be issued by January 16.” The company said production from the field has continued at previously announced levels, and the new wells will be placed on production within approximately 60 days of spudding.
The company is expecting an additional 10 new pump jacks in January and the current recompletion programme, which has seen Goudron’s oil production increase tenfold over the past year, will continue in parallel to the drilling of the new wells, LGO said in its statement.
The company has successfully increased its commercial debt by US$1.5 million to US$2.5 million in readiness for new drilling at the Goudron Field using its existing US$10 million commercial loan arrangements announced last June. The company has also raised an additional £600,000 before expenses, by way of a placing of 78,947,369 new ordinary shares at a placing price of 0.76 pence per share “with institutions representing sophisticated high net worth investors,” the statement said.
YA Global Master SPV Ltd (YAGM) subscribed for a total of 131,578,944 new ordinary shares in the company, LGO said, for a gross consideration of £1 million. Of this amount, £500,000 will be paid back by LGO to YAGM under an equity swap agreement from which LGO is expected to receive, subject to various adjustments, £41,667 per month for a 12 month period. YAGM has agreed not to sell any of its placing shares for two months.
The company and YAGM entered into an equity swap agreement pursuant to which, LGO will pay YAGM £500,000. In consideration for this payment, the company will receive 12 monthly payments of £41,667 between the date of admission of the placing shares to trading on London’s Alternative Investment Market and February 28, 2015.
LGO said further draw downs from its existing debt facility “will be deployed as necessary to execute the remainder of the 30 well drilling campaign at Goudron and to conduct the necessary studies required to commence secondary recovery using water flooding to access additional oil reserves.”
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