18th Apr 2007 07:00
Leni Gas & Oil PLC18 April 2007 For Immediate Release 18 April 2007 LENI GAS & OIL Plc Signs agreement to acquire interest in offshore asset located between Malta and Libya Leni Gas & Oil plc ("LGO" or the "Company") an oil and gas exploration anddevelopment company has signed an agreement ("Farm-in Agreement") today withMalta Oil Pty. Limited ("MOL") a subsidiary of Mediterranean Oil & Gas PLC ("MOG") to acquire an initial 20% interest in four oil and gas explorationblocks known as Area 4, located within Maltese waters between Libya and Malta,covering an area in excess of 5,000 km2 with water depths of around 400m. HIGHLIGHTS: • LGO to acquire 20% interest in Area 4 between Malta and Libya by funding 2D and 3D infill seismic surveys. • LGO can increase its interest to 50% in Area 4 by paying 80% of the cost of the first exploration well. • MOL has announced Best Estimate STOIIP (P50) total 5,745 million barrels of oil. • High Estimates STOIIP (P10) total 14,432 million barrels of oil. • Located within internationally recognised border of Malta, an EU member state, favourable fiscal terms and a political climate. • MOG will be operator of the licences. • Negotiations with Seismic vessels to commence 2D infill programme. Mr David Lenigas, the Company's Chairman commented: "This first investment since listing on AIM on 16th March 2007, supports theCompany's strategy to identify and acquire producing or previously exploredprospective assets. Area 4 is an under-explored petroleum area which directly relates to theextension of the offshore hydrocarbon zones in Tunisia and Libya where severaloil & gas majors (e.g. Exxon, Woodside, Petrobras and Gazprom), operate and haverecently won exploration licences. We look forward to working with the experienced management team of MediterraneanOil and Gas Plc to develop this highly prospective asset into near termproduction." AREA 4 - PROSPECTS The prospectivity of Area 4 currently comprises of nine prospects and is locatedon the Mediterranean Pelagian shelf. Tarxien is the most worked-up prospect inthe south east of Area 4 which is covered by 3D seismic and has Best EstimatesSTOIIP (P50) of 295 million barrels and High Estimates STOIIP of 499 millionbarrels. By far the largest prospect is Luzzu, which was identified last yearand has Best Estimates STOIIP of 2,420 million barrels and High Estimates STOIIPof 6,860 million barrels. LGO proposes to fund a 2D and 3D seismic survey for the 4 blocks on Area 4,during 2007 with a view of identifying drillable prospects by early 2008. FARM-IN AGREEMENT Under the terms of the agreement, which is subject to approval by the Governmentof Malta, LGO receives its entitlement to an assignment of a full 20%participating interest on signing the agreement. In consideration of thisinterest, LGO will contribute the costs towards acquiring about 3,000 linekilometres of 2D seismic and a detailed 3D seismic programme. LGO has an obligation to fund US$1,500,000 of the exploration study costs andthereafter subject to shareholder approval (if required) and compliance with therequirements of the AIM Rules (as required) to fund a further US$3,500,000. IfLGO does not advance more than the initial US$1,500,000 then it is obliged toreturn a pro rata portion of the participating interest it received on signing. Furthermore, in the event that a Production Sharing Contract is granted pursuantto provisions of the Maltese Exploration Study Agreement, LGO will have theright to further sole fund, 80% of the first exploration well cost to increaseits participating Interest in Area 4 to 50% and MOL will maintain aparticipating Interest of 50% by funding 20% of the exploration well costs. The timing of payments by LGO will be limited on the following basis: (i) LGO's obligations to contribute funds within the first 12 month period willbe limited to US$1,500,000; (ii) LGO's obligation to contribute funds in the next 12 month period will belimited to US$1,000,000; and (iii) LGO's obligation to contribute sole funding after that 24 months period inaggregate amount shall not exceed US$5,000,000 DETAILS ON AREA 4 The 4 Maltese blocks on Area 4, cover an area in excess of 5,000 km2 and arecovered by an Exploration Study Agreement ("ESA") dated 24 March 2005 (asextended by letter on 7 March 2007) between MOL and the Government of Malta inrelation to four blocks with a prearranged Profit Sharing Contract ("PSC") withthe Malta Government. Area 4 has extensive historic 2D seismic data acquired by JNOC, Amoco and theMaltese Government and one 3D survey acquired by Shell and Nimir on Block 7 in1994. MOL's consultants RPS Group PLC ("RPS") concluded in their latest report asannounced publicly by MOG on 10 May 2006, that within the 3D seismic area ofBlock 7, five prospects have now been identified (Hagar Qim, Skorba, Tarxien,Prospect D and Prospect E). Best Estimates STOIIP (P50) on Hagar Qim, Skorba, Tarxien and Prospects D and E,all within the 3D seismic are, total 642 million barrels of oil with High Estimates STOIIP (P10) totalling 1,451 million barrel of Oil. Outside the 3D seismic area, RPS also identified four new prospects from thehistoric 2D seismic (Luzzu, Prospects A, B and C). Best Estimates STOIIP (P50) on the 2D seismic Prospects (Luzzu, A, B and C)total 5,103 million barrels of oil with High Estimates STOIIP (P10) totalling12,981 million barrels of oil. Disclosure The Company's Chairman Mr David Lenigas is also a non-executive director of MOGand holds 40.03 per cent. of the Company's issued share capital and holdsoptions over a total of 1,100,000 Ordinary Shares in MOG representing 3.3 percent. of MOG's issued share capital and therefore did not participate in thevote for either company in relation to the Farm In Agreement and excused himselffrom those board meetings at which decisions were made with regard to the FarmIn Agreement. Both LGO's and MOG's Board (excluding David Lenigas) haveunanimously resolved that this transaction is in the best interest of bothCompanies. The Board of LGO (excluding David Lenigas) having consulted BeaumontCornish Limited with respect to the AIM Rules considers that the terms of theFarm In Agreement are fair and reasonable insofar as the shareholders of LGO areconcerned. Enquiries: Leni Gas & Oil PlcDavid Lenigas Tel: +44 (0)20 7016 5100Jeremy Edelman Tel: +44 (0)20 7016 5100 Beaumont CornishRoland Cornish Tel: +44 (0)20 7628 3396Rosalind Hill Abrahams Tel: +44 (0)20 7628 3396 Pelham PRCharles Vivian Tel: +44 (0)20 7743 6672Evgeniy Chuikov Tel: +44 (0)20 3008 5506 LENI GAS & OIL BACKGROUND For further information on the Company, refer to www.lenigasandoil.com Leni Gas & Oil Plc is a newly incorporated company and listed on AIM. TheCompany was established to invest in oil and gas assets with a view toincreasing shareholder value. The company intends to be an active investor andwill focus on opportunities in Africa, North America, South America, Australia,Asia and Western Europe. GLOSSARY STOIIP stock tank oil initially in place P50 The quantity for which there is a 50% probability that the quantities actually recovered will equal or exceed the estimate. P10 The quantity for which there is a 10% probability that the quantities actually recovered will equal or exceed the estimate. QUALIFIED PERSON The information regarding AREA 4 has been provided by MOG, as announced by MOGon 10 May 2006. Giovanni Catalano (a director of MOG) holds a masters degree in geology and hashad over twenty-five years in the upstream oil and gas industry. Prior tojoining MOG, Mr Catalano held senior positions with Woodside Energy Pty Ltd inPerth and prior to Woodside (seven years), Mr Catalano was with AGIP (nineyears) and Lasmo International (eleven years). He is a former director ofWoodside Energy UK and AGIP Mauritania BV companies and former chairman ofWoodside Energias SA in Spain. Mr Catalano is an Associate Councillor ofAssomineraria. He has compiled, read and approved the technical disclosure inthis announcement. The technical disclosure in this announcement complies withthe SPE/WPC Standard. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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