21st Dec 2016 07:00
NU-OIL AND GAS PLC
AIM ticker: 'NUOG'
21 December 2016
NU-Oil and Gas plc
("NU-Oil" or "the Company")
Option Agreement covering the 'Deep Rights' on EL1070
The Company is pleased to announce that it has entered into an Option Agreement with G2 Energy Corp. ('G2 Energy'), (together, the "Parties"), under which G2 Energy will have an exclusive option to earn 100% of the Company's working interest in the Deep Rights (see below) of licence EL1070 offshore Western Newfoundland, which is currently held by the Company's Canadian subsidiary, Enegi Oil Inc. ('EOI'). Should the option be exercised, EOI will retain a 5% gross overriding royalty in the Deep Rights, such that 5% of any revenue generated from the development of EL1070 will be owned by EOI. The option is for a period of 24 months.
In order to execute the option G2 Energy must submit an application for a Significant Discovery License ('SDL') on EL1070, prior to the expiry of the option period. In this respect, prior to the end of the option period, G2 Energy must achieve a flow test for hydrocarbons on one or more of the wells on EL1070, a requirement under the regulations for the submission of an application for a SDL.
G2 Energy has undertaken further analysis of data on existing wells, and has identified a potential bypassed oil pay zone behind casing in one of the license wells, within the Carbonate Platform section, and their initial work program, subject to regulatory approval, will plan to flow test this prospective zone. This section is interpreted to have a dense natural fracture network in brittle carbonate rocks, which may have natural flow capability.
Consistent with the Company's strategy for its assets in western Newfoundland all costs during the option period associated with EL1070 will be borne by G2 Energy and any abandonment costs associated with any work performed by G2 Energy will also be for their account. Costs for the last financial year relating to EL1070 were not material. The Company retains a carrying value for its investment in Enegi Oil Inc. of £516,000 in its audited financial statements of 30th June 2016 which mainly relates to the valuation of its interest in EL1070.
G2 Energy shall now have a period of 45 days to conclude due diligence on EL1070.
About G2 Energy Corp.
G2 Energy is an investment vehicle that has been specifically established to explore the potential of EL1070. Its two principals are George Langdon and Gerard Edwards. George Langdon was a former senior geologist at Mobil Oil and Gerard Edwards a financial analyst with Mobil. Both have been instrumental in achieving the award of the first onshore production lease in the province of Newfoundland and have been involved with the recognition of the potential of both the deep Carbonate Platform rocks and the Green Point shale. Collectively through their previous companies they have raised approx. $100m for exploration in west Newfoundland. Both are graduates of the Memorial University of Newfoundland, George with a PHD in Earth Sciences and Gerard with a MBA. They have been involved in the exploration of oil and gas in eastern Canada for more than 20 years and during their time in the industry have developed an extensive network of contacts that will be exploited for the purposes of developing EL1070.
About EL1070
Although EOI is a registered holder of 33% of the EL1070 licence, through a 2009 agreement with Shoal Point Energy the Company now holds a 100% interest in the Deep Rights, with Shoal Point Energy holding 100% interest in the Shallow Rights on the license.
The Deep Rights on EL1070 are defined as all petroleum substances and associated rights within and stratigraphically below the Ordovician Carbonate Platform (excluding Cape Cormorant and Table Cove Formations). The main target within the EL1070 Deep Rights is the Shoal Point prospect, which is a 'conventional' exploration target, and is reachable from an onshore location.
EL1070 was issued in January 2002 and continues to be in good standing beyond its 9 year exploration phase, while partners in the project diligently pursue the award of a SDL for discoveries within the Shallow Rights section. In order to pursue Shallow Rights hydrocarbons in the Green Point shale fracking will be necessary, for which there is currently a moratorium in Newfoundland. The Company, in conjunction with G2 Energy, will also need to liaise with the Government to commence activity on the conventional Shoal Point prospect; G2 Energy has already conducted informal discussions with the regulator.
Nigel Burton, CEO of NU-Oil, commented:
"The Directors are pleased that we are able to enter into an agreement that should allow new investment into EL1070. The agreement has the added benefit of removing on-going costs. We look forward to working with G2 Energy."
Enquiries:
NU-Oil and Gas plc
Alan Minty, Executive Chairman Tel: +44 161 817 7460
Nigel Burton, CEO Tel: +44 7785 234447
Beaufort Securities Limited Tel: +44 20 7382 8300
Jon Belliss
Elliot Hance
Strand Hanson Limited
Rory Murphy/Ritchie Balmer Tel: +44 20 7409 3494
St Brides Partners Limited Tel: +44 20 7236 1177
Elisabeth Cowell
Lottie Brocklehurst
www.nu-oilandgas.com
Qualified Persons
The information in this release has been reviewed by Professor Mike Bowman, a Non-Executive Director of NU-Oil and Gas plc. Mr. Bowman was the President of the Petroleum Exploration Society of Great Britain in 2012 and has over 30 years' experience in the petroleum industry
Note to Editors:
NU-Oil and Gas plc is an independent oil and gas company whose strategy is to build a diverse portfolio of assets with a strong emphasis on acquiring interests in stranded and marginal fields.
These fields are low risk highly-appraised projects and consequently the Company's entry cost will be low. NU-Oil will look to develop these assets utilising solutions delivered by Marginal Field Development Company (MFDevCo) and the MFD Consortium, which can significantly improve the development economics of a project. This is also expected to enable the early booking of reserves. |
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
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