9th Mar 2016 07:00
For Immediate Release, Embargoed until 7 am
9 March 2016
LGO ENERGY PLC
("LGO" or the "Company")
Termination of Offer Period
and
Goudron production investment
LGO Energy plc (LSE AIM: LGO) today provides an update on its strategy review, originally announced on 3 November and updated on 7 December 2015 to include a possible merger or third party sale within the context of a formal sale process ("FSP").
In early November 2015, the Company engaged Wellford Capital Markets, LLC and Height Securities, LLC to investigate sources of funding in the USA and elsewhere, and in December 2015 the LGO Board decided to widen the scope of the Company's search for future funding options through reviewing strategic partnerships, asset sales, mergers and potential offers for the Company in a FSP as defined by the Takeover Code.
Having considered the options available, the Board has decided to terminate the FSP with immediate effect. The Board believes that the other strategic refinancing opportunities available represent the best approach for the Group and the Board now intends to focus exclusively on those funding routes.
Goudron Field
Separately, the Company has today initiated an expansion of the ongoing program of well work in the Goudron field designed to increase production progressively over the next two months by accessing opportunities to recomplete wells, including from the 2014 and 2015 drilling campaigns, where there is known oil pay that has, as yet, not been placed on production. This work will be funded through service income in the Company's Trinidadian subsidiary, Columbus Energy Services Limited, which has the flexibility to deploy its free cash flow independent of restrictions currently faced by Goudron E&P Limited. Further details of this program will be announced in the coming weeks.
Neil Ritson, LGO's Chief Executive, commented:
"The Company has now moved to focus on specific funding options that have been identified and as a result has chosen to end the FSP. The Company is discussing refinancing options that the Board consider present the best approach for the Group as a whole. In light of stabilizing oil prices the Company has also agreed to commence additional work designed to increase production at the Goudron Field."
Takeover Code
As a result of the termination of the FSP, the Company is no longer in an offer period under the Code and, accordingly, the requirement to make disclosures under Rule 8 of the Code has now ceased.
In accordance with Rule 26.1 of the Code, a copy of this announcement will be published, subject to certain restrictions relating to persons in any restricted jurisdiction, at www.lgo-energy.com.
Cautionary Statement
It should be noted that none of the new funding arrangements currently envisaged by the Company are certain or can be guaranteed.
Enquiries:
LGO Energy plc | +44 (0) 203 794 9230 |
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Neil Ritson Steve Horton |
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Beaumont Cornish Limited | +44(0) 20 7628 3396 |
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Nomad |
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Rosalind Hill Abrahams Roland Cornish |
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FirstEnergy Capital LLP | +44(0) 20 7448 0200 |
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Joint Broker Jonathan Wright David van Erp
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Bell Pottinger | +44 (0) 20 3772 2500 |
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Financial PR Henry Lerwill |
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Information to Editors:
LGO is an onshore oil production and development company with ongoing production operations and significant oil reserves under licence in both Trinidad and Spain. The Company owns and operates, through a wholly owned subsidiary, Goudron E&P Limited, the Incremental Production Service Contract for the Goudron oil field in south eastern Trinidad where the Company has recently drilled 15 new development wells and has reactivated over 60 legacy wells drilled prior to 1986. The Company also owns and operates the Ayoluengo oil field onshore in northern Spain where continued production is achieved from 12 legacy wells that have been recompleted and maintained by the Company's Spanish subsidiary Compañia Petrolifera de Sedano since 2007. The Goudron field oil production is by primary flow and pumping and is considered suitable for an enhanced oil recovery project, planned to commence in 2016 subject to permitting and financing. The Company plans to start the redevelopment of the Ayoluengo field by means of new side-track wells in 2017 subject to a licence renewal and financing. The Company also holds an extensive tract of low risk onshore exploration acreage in south western Trinidad where considerable number of undrilled oil and gas prospects adjacent to, and at deeper levels from, existing small scale oil production.
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