Texas Oil & Gas Joint Venture Commences

RNS Number : 1417T

Pennpetro Energy PLC

16 March 2023

 

Pennpetro Energy PLC

("PPP" or "Pennpetro")

Texas Oil & Gas Joint Venture Commences

Highlights:

· Formal Agreements signed with Millennium PetroCapital, to selectively participate in Austin Chalk production wells, across 250,000 acres in Gonzales County, Texas

· Millennium has a large inventory of low-risk Austin Chalk development wells

· Expected initial production rates ranging from 100 to 400 barrels of oil per day and total recoveries 100,000 to 300,000 barrels of oil per well

· First joint development well expected to be spudded in April and in production in May

London, 16 March 2023 - Pennpetro Energy PLC (LSE:PPP), an independent oil and gas company focusing on production and development in Gonzales County, Texas, USA, today announces that, through its wholly owned subsidiary, Nobel Petroleum USA Inc. ("Nobel") has reached an important milestone towards becoming an oil producer with the execution of the Participation, Development and Option Agreement and Joint Operating Agreement with Millennium PetroCapital Corporation ("Millennium") for a proposed 250,000 acre (1,011 square kilometres) Area of Mutual Interest ("AMI") petroleum joint venture in Gonzales County, Texas.

This announcement follows the earlier RNS, dated 10 October 2022, announcing the signing of the initial heads of terms agreement with Millennium. 

Tom Evans, Pennpetro's CEO, commented:

"The execution of this agreement with Millennium is a major step forward towards Pennpetro becoming an oil producer. Our management team at our US subsidiary, Nobel, are now working with Millennium on budgets and scheduling to allow Pennpetro to participate in the upcoming Whistling Straits #1H well in the Gonzales County AMI, which is expected to spud in April. We look forward to updating shareholders at a very exciting time for the Company."

The Gonzales County 250,000 acre (1,011 square kilometres) AMI is located about 290 miles (466 kilometres) due west of Houston and will provide PPP's Nobel with a large inventory of low risk development options in a world class oilfield. The joint venture will not impact Nobel's separate City of Gonzales development, which will continue to be owned 100% and operated by Nobel.

Under the new agreements, Nobel will have the option, but not the obligation, to participate in any and all development wells within the AMI by Millennium to a depth sufficient to test the target Austin Chalk interval.

The Austin Chalk has been producing oil and gas in Texas since at least the 1920s and has cumulative production of almost 1 billion barrels of oil and over 5 trillion cubic feet of gas to date. Furthermore, the United States Geological Survey recently assessed the mean recoverable undiscovered resource potential for the Austin Chalk to be 6.9 billion barrels of oil and 41.5 trillion cubic feet of gas. The chalk directly overlies the prolific Eagle Ford Formation, which is the primary source rock of most of the oil in the chalk. Oil migrates into the chalk through microfractures and fills the tectonic fractures and porosity matrix. (Refer Sources Note 1 below)

Wells in the project area are typically completed open hole (without fracking) with 4,000 feet (1,219 metres) laterals, connecting naturally occurring fractures within the chalk. Reservoir depths range from 7,000-8,000 feet (2,133-2,438 metres) subsea.  Nobel expects each well to recover between 100,000-300,000 barrels of oil with Initial Production ("IP") rates ranging from 100-400 barrels of oil per day ("bopd"), based on unfracked analog wells within the Austin Chalk Play.  Oil quality is general sweet with API gravity of about 35 degrees and oil is trucked from the well site to nearby sale points.

The new agreements provide for Nobel paying 33.33% of the cost to drill and complete each new joint development well connected to the storage tanks for a net 25% working interest (18.75% net revenue interest) as well as a prospect fee which covers sunk costs relating to leasing, land, legal, 3D seismic licensing, geological and geophysical analysis.

Millennium is working towards spudding the first joint development well in April 2023 and this will be a sidetrack from an earlier producer from a deeper interval. 

About Millennium PetroCapital Corporation:

Millennium, a privately funded independent producer and parent company of Millennium Exploration Company, is headquartered in San Antonio, Texas and is a developer of oil and gas producing properties throughout the Texas Gulf Coast Basin. Millennium has executed over 60 projects and 80 combined wells spanning 28 Texas counties since inception in mid-2006. 

Recently, Millennium has achieved excellent success in the prolific Austin Chalk Play.  In Gonzales County, Texas, Millennium has drilled and completed 6 horizontal wells in the Austin Chalk since April 2020 with additional wells permitted for drilling in 2023. The 6 wells in the area had IP rates ranging from 180-420 bopd. (Refer Source Note 2 below)

Qualified Person's Statement:

Deane Pierce, Nobel's Executive Vice President Engineering, who has 45 years of relevant experience in the global oil industry, has approved the information contained in this announcement. Mr. Pierce graduated with a BS Mechanical Engineering from Texas Tech University, has an MBA Finance from Dallas Baptist University and is a Registered Petroleum Engineer #56733. Mr. Pierce also has numerous industry publications dealing with drilling and production optimization with an emphasis on horizontal completion and inflow control.

-ENDS-

This announcement contains inside information within the meaning of Article 7(1) of (i) Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014, as amended (the "EU Market Abuse Regulation") and (ii) the EU Market Abuse Regulation as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018.

ENQUIRIES:

Pennpetro Energy PLC: Tom Evans, CEO	[e-mail]
Brokers: Arden Partners Plc Simon Johnson, Ruari McGirr	[phone]
Peterhouse Capital Limited Lucy Williams Duncan Vasey	[phone] [phone]
Investor Relations: Instinctif Partners   Galyna Kulachek, Isadora Pegler	[e-mail]   [phone]

NOTES TO EDITORS:

Pennpetro Energy is an independent oil and gas company focusing on production in the Gonzales Oil Field in Texas, USA. Shares in the company were admitted to the Official List of the London Stock Exchange by way of a Standard Listing on 21 December 2017.

Further information on the Company can be found at www.pennpetroenergy.co.uk  

NOTE: Sources 1:

https://pubs.usgs.gov/fs/2020/3045/fs20203045.pdf

https://austinchalkoilgas.com/    

NOTE: Source 2:

Railroad Commission of Texas website, well completion reports

 

END

 

 

JVEJAMTTMTJBTTJ