22nd Oct 2019 11:19
(Alliance News) - Attis Oil & Gas Ltd said Tuesday it has secured a lease for an acreage in Texas, US which holds 17 potential drilling locations.
The Bivins 115 lease, Attis's first acreage in the Red Cave formation in the Texas panhandle, has a present value of USD8.2 million. A recent study on the lease assumed 945,585 barrels of oil produced over a 20 year well life.
In a statement, Attis commented: "The oil play, which covers just 10,500 acres, sits in a 28 square mile area, 30 miles to the north of Amarillo, and remains largely intact as drilling has historically targeted the deeper and larger Brown Dolomite formation. With low drilling costs and low geological risk, Red Cave represents an opportunity to generate significant cash flow in the near term."
Attis has completed a GBP420,000 bridging loan facility with five shareholders and its own Chair Paolo Amoruso and Chief Operating Officer Thom Board. The company said the loan will fund the working capital and development work for the lease.
As part of the facility, Attis has issued 420.0 million five-year warrants, priced at 0.1 pence per share. Shares in the Texas-headquartered oil company were down 9.1% in London on Tuesday at 0.075p.
The company expects Bivens to be drill-ready in 2020 and will begin - weather permitting - an eight well drill programme in the second quarter of 2020.
"The company intends to use Bivins as a platform to build a strategic position in Borger/Amarillo and the surrounding Texas panhandle by leveraging its established relationships with local mineral and working interest owners, operators and contractors, and roll-out an aggressive multi-well drill programme targeting the Red Cave formation," Attis explained.
To fund this, the company said it will seek to monetise its current portfolio. Attis hired Moyes & Co, an independent third party, to undertake a reserves report covering all the company's existing assets, being Austin, Zink Ranch and Fort Worth. Attis said the report confirmed a present value of USD7.6 million.
Attis will look to divest Austin field in the near-term and is reviewing its Zink Ranch and Forth Worth projects.
Chief Exectutive Charlie Wood said: "The acreage secured at Bivins represents the culmination of the company's 12-month strategic review and delivery. One year ago, at Mayan's AGM, the company proposed to take stock of the current assets, assess near term revenue potential and future opportunity.
"Following Attis' review, at the time an independent company, the company pursued an aggressive 'put-on-pump' transition to production and cashflow. The acquisition of Attis in April of this year completed the transition to a full discipline North American oil and gas owner and operator. The securing of this non dilutive funding facility provides additional working capital, which allows us to complete preparation works on Bivins Ranch, exit Austin field and work towards a funding package for the drilling of Bivins in 2020."
Separately, Attis said its investee Petroteq Energy Inc has achieved continuous production in the quantities of oil extracted, processed and sold at the Asphalt Ridge facility in Utah.
Attis holds 1.0 million shares in Petroteq, plus 1.0 million of associated three-year warrants at USD0.90 each.
Toronto-listed Petroteq said, following certain plant installations, has produced and sold 1,000 barrels of oil and hit a production rate of 200 barrels of oil per day at Asphalt Ridge.
Petroteq added: "We anticipate oil production rates to increase once ongoing automation of the Plant's centrifuge unit is completed and a second and then third 8-hour shifts are added, achieving around the clock 24 hour/day operations and our goal of 1,000 barrels of daily oil production"
By Paul McGowan; [email protected]
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