SAINT HELIER, Jersey, April 28,
2014 /PRNewswire/ --
2013 and fourth quarter results
published
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 http://www.longreachoilandgas.com or
under the Company's profile on SEDAR at http://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.
ZagBasin 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
http://www.longreachoilandgas.com and under the Company's SEDAR
profile at http://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.
For further information:
Martin Arch
Chief Financial Officer and Secretary
Tel: +44(0)203-137-7756
(LOI.)
SOURCE Longreach Oil and Gas Limited