12th Aug 2008 12:03
12 August 2008
LENI GAS & OIL PLC
("Leni Gas and Oil" or the "Company")
Leni Gas and Oil increasing stake in Gulf of Mexico
Leni Gas & Oil plc, the oil & gas exploration, development and production company, today announces that it has acquired a further 1,000,000 shares in Byron Energy Pty Ltd ("Byron" or "Byron Energy") from IB Daiwa Corporation, increasing its holding from 22.3 percent (22.3%) of the issued share capital of Byron to 28.94 percent (28.94%) for an aggregate cost of US$6.57 million in cash.
Byron is a private Australian company, incorporated in 2005. Since its incorporation, Byron has operated as an oil & gas exploration, development and production company focused on opportunities in the Gulf of Mexico and the USA. Under Australian corporation law, Byron is classified as a small proprietary company and as such is not required to prepare audited financial reports. The unaudited accounts of Byron, for the nine months ended 31 March 2008, show net losses of US$1,259,000 with net assets at the same date of US$2,013,080 of which cash accounted for US$2m.
On 21 July 2008, the Company announced that Byron Energy completed a transaction to acquire a 25% Working Interest in both Eugene Island Blocks 183 and the southern half of Block 184 (Net Revenue Interest up to 20.83% in Block 183 and 19.17% in the southern half of Block 184), including the Eugene Island 184A platform and production facilities. Byron has also acquired a 12.5% Working Interest (Net Revenue Interest 9.58%) in the northern half Eugene Island Block 184 and 10.37% Working Interest (Net Revenue Interest 8.64%) in Eugene Island Block 172, excluding the Eugene Island 172 producing reserves and platform.
These properties were acquired from Leed Petroleum PLC ("Leed) under the terms of the Scouting Agreement ("the Scouting Agreement") between Byron and Leed.
The Eugene Island Blocks 172,183 and 184 are located in US Federal Waters, 50 miles offshore, south of Morgan City, Louisiana at a water depth of approximately 80 feet.
The Eugene Island 184A platform located in the southern half of Block 184 is a manned facility with living quarters and currently supports five active wells, all of which are producing oil and gas. The four pile platform has the capacity to handle 30MMCFD, 10MBOD and 10MBWD.
Byron's current production in the field comes from the Tex X-2, Tex X-3 and Mid-Tex reservoirs in the southern portion of Eugene Island Blocks 183 and 184.
On 20 June, 2008 Leed reported that the Eugene Island A-7 well has reached a total depth of 15,774 feet and that electric logs have confirmed that six pay sands have been encountered in the well-bore containing a total of 125 feet of true vertical thickness pay. On 3 July 2008 Lead announced that the well has been sidetracked through four of the six sands encountered in the original well-bore to a measured depth of 15,396 feet. Logging operations in the sidetracked portion of the well-bore have been performed and confirm 124 feet of true vertical thickness of pay in the four sands, which is 56 feet more than that encountered in the original well bore. Accordingly in total, the Eugene Island A-7 well has 181 feet of true vertical thickness of pay in all six pay sands. With drilling now concluded, Leed is working on casing and completing the Eugene Island A-7 well for production from one of the primary targets, which has 41 feet of true vertical thickness pay. The first sale of production from this zone is expected during the September quarter of 2008. Upon establishment of production from the A-7 well, Leed intends to drill the Eugene Island A-8 well.
The cost to Byron of exercising its option to acquire the interest in the in Eugene Island properties was US$16.4 million comprising 25% of Leed's original acquisition costs plus 25% of all capital expenditure plus 25% of all operating less up to 25% of net revenues from 1 January 2007 until closing, on 18 July 2008.
In addition to the Eugene Island properties, Byron has earned an option, under the Scouting Agreement, to acquire 25% of Leed's interest in the following areas of interest in the Gulf of Mexico:-
Grand Isle Blocks 95 and 100, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest)
South Marsh Island Blocks 5 and 6, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest)
Ship Shoal Blocks 201 and 205, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest)
Main Pass Block 115, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest).
Sorrento Field, Onshore Louisiana, where Byron has a right to acquire up to 25% Working Interest (18.38% to 19.63% Net Revenue Interest)
West Cameron Block 106, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest)
South Marsh Island Block 8, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest)
Under the Scouting Agreement, each optioned property is covered by an area of mutual interest ("AMI") agreement, covering the lease area and the surrounding contiguous blocks.
David Lenigas, Executive Chairman of Leni Gas & Oil commented;
"We are extremely pleased to have increased our share holding in Byron Energy, as it ultimately increases the Company's exposure to the Eugene Island A-7 well which is currently being completed for production in the Gulf of Mexico. We also see significant upside on the whole Eugene Island play with Leed Petroleum announcing that they intend to drill the A-8 and A-2 sidetrack wells after completion of the A-7."
Competent Person's Statement:
The technical information contained in this announcement has been reviewed and approved by Fraser S Pritchard, Director of Operations for Leni Gas & Oil plc (member of the SPE) who has 20 years relevant experience in the oil industry.
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Enquiries: |
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Leni Gas & Oil PLC David Lenigas, Executive Chairman |
Tel +44 (0) 20 7016 5100 |
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Beaumont Cornish Limited Roland Cornish Rosalind Hill Abrahams |
Tel +44 (0) 20 7628 3396 Tel +44 (0) 20 7628 3396 |
Pelham PR
Charles Vivian Tel: +44 (0)20 7743 6672
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