TIDMCOP
RNS Number : 4010O
Circle Oil PLC
08 February 2016
8 February 2016
CIRCLE OIL PLC
("Circle" or the "Company")
Operational and Financial Update
Operational Update
Morocco
Circle is pleased to announce that it, together with its partner
Office National des Hydrocarbures et des Mines ("ONHYM"), has
signed a Memorandum of Understanding ("MOU") with a potential new
gas customer in Morocco, SBS Porcher ("Porcher"). The MOU forms the
basis for Circle to sell the gas discovered during the successful
2014/15 Sebou drilling campaign and all parties expect to sign
binding documentation in the coming months.
As part of this arrangement, a new pipeline extension would be
constructed linking the existing Circle-owned pipeline in the
northern Kenitra region to the Porcher factory in the central
Kenitra area.
The key terms of the MOU include:
-- Porcher would pay for (and own) the required pipeline
extension of approximately 15-18 km (estimated cost of $2.5m) to
central Kenitra, with construction estimated to start in May 2016
and first gas anticipated to flow during Q4 2016
-- Estimated gross offtake volume would be 10,000 cubic metres
per day (approx. 0.35mmcf/d)(1) with a price of MAD 4.25/cubic
metre ($12/mcf).
o This additional offtake represents an increase of 6% of
production volumes compared to 2015
-- The gas price would be fixed with no linkage to oil prices
-- The contract duration is 5 years
This new contract when signed, will result in Circle achieving
demonstrably higher gas prices. More importantly it also enables
Circle to access a potential new customer base in central
Kenitra.
Egypt
The infill drilling campaign on the North West Gemsa field is
continuing. The first of two production wells, well (AASE-23) has
been drilled to TD, completed and tied in to the production
infrastructure. On 6 February a well test commenced and the well
flowed at a gross average rate of 4,081bbls/day(2) and 2.715mmcf/d
through a 48/64" choke.
The well will be produced at a lower rate in order to best
manage the long term field production.
The second production well (AASE-24) in this two well campaign
spudded on 8 February 2016.
Tunisia
The farm-out process for the Company's Mahdia permit is
continuing. Despite the difficult market conditions, Circle remains
engaged in discussions with a number of interested parties.
Financial Update
Further to the Company's announcement on 14 December 2015, the
Company remains in discussions with International Finance
Corporation ('IFC') however, given the further fall and continued
volatility in oil price both parties are continuing discussions on
the redetermination and working together to find a solution to
right-size the balance sheet.
In Egypt, dollar receipts from EGPC remain limited and
unpredictable causing the Company to be more reliant on extracting
funds from its profitable operations in Morocco. As a consequence,
Circle's cash flow and financial position remains under significant
pressure.
Circle CEO, Mitch Flegg said
"We are very pleased with the gas pricing agreed with Porcher in
Morocco. The realised price of around $12/mcf is more than 40%
higher than the average price realised under our existing contracts
and we look forward to signing binding documentation. We believe
that this will set a benchmark for future gas sales contracts.
In Egypt, the AASE-23 well adds welcome additional production to
the field and we look forward to announcing the results of the
AASE-24 well when available."
(1) Circle Oil 75%, ONHYM 25%
(2) Circle Oil 40%, NPIC 50%, SDX 10%
For further information contact:
Circle Oil Plc (+44 20 7182 4913)
Mitch Flegg, CEO
Investec (+44 20 7597 5970)
Chris Sim
George Price
James Rudd
Murray (+353 1 498 0300)
Joe Heron
Pat Walsh
Notes to Editors
Circle Oil plc (AIM: COP) is an international oil & gas
exploration, development and production company holding a portfolio
of assets in Morocco, Tunisia, and Egypt with a combination of
low-risk, near-term production, and significant upside exploration
potential. The Company listed on AIM in October 2004.
The Company has assets in the Rharb Basin, Morocco; the Ras
Marmour Permit in southern Tunisia; the Beni Khalled permit in
northern Tunisia, the Mahdia Permit offshore Tunisia and the NW
Gemsa permit in Zeit Bay area of Egypt.
Circle's strategy is to locate and secure additional licences in
prospective hydrocarbon provinces and, through targeted investment
programmes, monetise the value in those assets for the benefit of
shareholders. This could be achieved through farm-outs to selected
partners who would then invest in and continue the development of
the asset into production, or Circle may opt to use its own
expertise to appraise reserves and bring assets into production,
generating sustained cash flow for further investment.
Further information on Circle is available on its website at
www.circleoil.net.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLLFEFFRITIIR
(END) Dow Jones Newswires
February 08, 2016 08:00 ET (13:00 GMT)
Circle Oil (LSE:COP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Circle Oil (LSE:COP)
Historical Stock Chart
From Jul 2023 to Jul 2024
