San Gervasio gas-to power project

RNS Number : 4432Y

Independent Resources PLC

22 February 2013

 



22 February 2013

Independent Resources plc

("IRG" or "the Company")

San Gervasio gas-to power project

Independent Resources plc (IRG:L) is pleased to announce that it has received formal documentation that CIRM, the Hydrocarbon and Mining Resources Commission of the Ministry of Economic Development of Italy, has expressed a favourable opinion on accepting the "San Gervasio" Production Concession application by its wholly-owned subsidiary, Independent Energy Solutions. The Company expects a formal award of the Production Concession shortly. 

The San Gervasio gas field is located in the Lombardy Region, Brescia Province. The discovery well was drilled by a division of Eni in 1991 after flowing gas from the Porto Garibaldi formation at a depth of 1650 metres. The reservoir is composed of two sandstone layers with a vertical thickness of 11 and 2 metres respectively. The discovery well underwent two successful production tests, in 1991, and 1995. The Long Production Test undertaken in 1995 produced 18,400 m³ (~650 mcf) per day of 99% pure methane. In 2000, the static bottom hole pressure was measured at 170 kg/cm² (~2,400 psi).  Based on a new, integrated data analysis, the Company calculated the gas originally in place (GOIP) to be 102.3 million m³ (3.6 BCF), of which approximately 54.5 million m³ (1.9 BCF) are recoverable in the first 14 years of production (2P discovered commercial reserves, justified for development, according to PRMS Guidelines, SPE November 2011).

The San Gervasio Production Concession was originally awarded to Eni on January 1^st, 1997 but the field was never brought into production. The field's relatively small size was deemed by ENI to be a low priority development. In late 2011 Italy's mining office, UNMIG, pursuant to ministerial regulation enacted in 2009, decided to re-award the idle San Gervasio Production Concession, including the San Gervasio 1 well completed for production, to interested and capable parties subject to a sealed-bid competition. Points were awarded for specific attributes in each applicant's proposal to determine the winning application.

Independent Energy Solutions' application, filed on March 30^th, 2012, was highly detailed and included original and multidisciplinary analysis of Eni's data-set. The proposed development scenario is a gas-to-power configuration whereby power would be produced at the well-head using two 1MW gas-fired power generators with the potential to recover and utilize heat locally. The project is not only expected to be cash-generative, but also commercially online within a year. Our application was awarded the highest score by the CIRM commission, and therefore the Company expects this will lead to the award of the Production Concession to Independent Energy Solutions in the near future, subject to Regione Lombardia environmental approval.

To ensure the Company is able to reach the project's milestones on time and under budget, it is Independent Energy Solutions' intention to partner with a reputable Italian company with significant experience executing and managing such projects. We look forward to updating shareholders as we make progress on this project.

Grayson Nash, Executive Chairman, commented "subject the formal award to us of the concession, we are delighted to be in the position to expect some positive cash-flow in the near term. The technical team worked very hard on this and we are very pleased it worked out. We look forward to more good news in the short term."

This announcement has been reviewed by Roberto Bencini, Technical Director of Independent Resources, for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. Mr. Bencini is a Chartered Petroleum Geologist. He is a member of the Society of Petroleum Engineers, the Geological Society of London and the American Association of Petroleum Geologists.  The evaluation of the potential recoverable hydrocarbons mentioned in this announcement has been assessed in accordance with Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE) November 2011 and reviewed and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE).

For further information, please visit www.ir-plc.com or contact:
Grayson Nash		Independent Resources plc	[phone]
Allan Piper/Simon Hudson		Tavistock Communications	020 7920 3150
David Porter/Richard Thompson (Corporate Finance)		Seymour Pierce	020 7107 8000
Richard Redmayne/David Banks (Corporate Broking)
Phil Davies / James Wood (Corporate Broking)		Charles Stanley Securities	020 7149 6074

Background details follow:

Independent Resources is the planned developer of the Rivara underground gas storage site located in the Po Valley, Northern Italy, where a recent earthquake has slowed the pace of permitting for this very important project.

IRG holds extensive unconventional oil exploration interests onshore Tunisia, exclusive CBM exploration interests covering the entire Ribolla basin in central Italy, in addition to emerging interests in CO₂ geological storage.

The Company intends to re-position itself as a niche E&P player through acquisition of production and development assets, maturing our existing exploration assets and acquiring new exploration assets while retaining significant gas storage interests.

Glossary (PRMS Guidelines, SPE November 2011)

2P                                      Taken to be equivalent to the sum of Proved plus Probable Reserves; denotes best estimate scenario of Reserves.

Commercial                         When a project is commercial, this implies that the essential social, environmental, and economic conditions are met, including political, legal, regulatory, and contractual conditions. In addition, a project is commercial if the degree of commitment is such that the accumulation is expected to be developed and placed on production within a reasonable time frame.

Discovered                           It refers to a "petroleum accumulation for which one or several exploratory wells have established through testing, sampling, and/or logging the existence of a significant quantity of potentially moveable hydrocarbons."

Justified for Development    Implementation of the development project is justified on the basis of reasonable forecast commercial conditions at the time of reporting and that there are reasonable expectations that all necessary approvals/contracts will be obtained. A project maturity subclass that reflects the actions required to move a project toward commercial production.

Reserves                             Reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria: They must be discovered, recoverable, commercial, and remaining (as of a given date) based on the development project applied.

 

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