31st Oct 2016 11:15
LONDON (Alliance News) - Nu-Oil & Gas PLC on Monday said it has agreed heads of terms with PVF Energy Services Inc under which the pair will work together to establish commercial production operations on Nu-Oil's licence PL2002-01(A), which contains the Garden Hill oil discovery in Western Newfoundland, Canada.
Nu-Oil said it is anticipated that the heads of terms will lead to the pair entering into a detailed definitive operating agreement within four months.
Under the definitive operating agreement, it is expected that PVF will assume responsibility for the operation of the licence and its associated operating costs, in exchange for a profit sharing agreement on any production generated. PVF would therefore recover its operating costs and would be entitled to receive 40% of any subsequent profit.
Nu-Oil will remain as the 100% owner of the licence, but PVF will have the right to acquire an interest.
According to Nu-Oil, PVF will be the focal point of a consortium of local oil and gas engineering service and equipment providers, which will come together to pursue the opportunities offered by the Garden Hill oil discovery.
A number of activities to recommence production are being considered, including: removal and reinstallation of the completion in conjunction with cleaning the well; use of specialised wireline tools to clean and mill out any blockages inhibiting flow into the completion system; use of a coiled tubing unit to clean the completion system and drill out a plug with retention of the CTU on-site to deal with any blockages that might arise on a continuous basis; and an operational solution that reanalyses data and focuses on using the latest chemicals and technology to put together a chemical injection system.
"The directors are pleased that we are able to enter into serious discussions that, once concluded, will result in the recommencement of activity on what we still believe to be a very productive Garden Hill Trend. The final agreement will have the added benefit of removing on-going costs. We look forward to concluding the agreement and, in conjunction with PVF, agreeing the operating plan with the aim of restarting production," Chief Executive Nigel Burton said in a statement.
Shares in Nu-Oil were trading up 13% at 0.630 pence on Monday morning, following the announcement.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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