31st Jan 2017 09:13
LONDON (Alliance News) - NU-Oil & Gas PLC on Tuesday said it has signed a production sharing agreement with PVF Energy Services Inc to allow operations to resume on PL2002-01(A) in Newfoundland, Canada.
Nu-Oil shares were trading up 22% on Tuesday morning at 0.50 pence per share.
NU-Oil has signed the agreement through its subsidiary Enegi Oil Inc, and the deal will allow the London-listed company to receive 50% of the the net revenue generated from production from the licence, after PVF Energy has recovered any costs it incurs under the agreement.
The five-year agreement will see PVF Energy cover all the costs to get the field producing again. As well as funding 100% of the work programme costs, PVF Energy will also cover 100% of the "ongoing operations" in return for being entitled to the other 50% of net revenue from the field once it has recovered its costs.
The work programme will be undertaken in two stages, with a coiled tubing or wireline operation followed by a workover to re-complete the well and insertion of an artificial lift system.
PVF Energy has created a consortium of engineering and services companies to complete the work programme. The consortium includes Ecan Energy Services Inc and Innovative Development Design Engineers Ltd.
NU-Oil said Ecan has stored an XJ400 workover rig at Stephenville, about 50 kilometres from the licence. It is envisaged that rig will be used to complete the work programme, subject to regulatory approval and availability.
The programme will begin "once suitable weather conditions arrive and all regulatory approvals are granted, likely to be in the second quarter of 2017", NU-Oil said.
The agreement also allows PVF Energy to drill additional wells, which, if pursued, will see Nu-Oil and PVF Energy negotiate a farm-in agreement.
"The company is delighted to execute a full production sharing agreement with PVF. Not only does the agreement provide new investment with the aim of achieving production and therefore revenue for NU-Oil from the Garden Hill field, but it also ensures that the company should no longer have any material costs from its Canadian operations," said Chief Executive Nigel Burton.
By Joshua Warner; [email protected]; @JoshAlliance
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