Operations Update

RNS Number : 9918W

Silvermere Energy PLC

04 February 2013

 



AIM: SLME

04 February 2013

Silvermere Energy plc

("Silvermere" or the "Company")

Operations Update

Silvermere Energy plc, the independent oil and gas company with assets in the Gulf of Mexico, is pleased to provide an update covering production and sales of oil and gas during January 2013 from the I-1 well on its Mustang Island 818-L Field. This is based on information provided by the Operator, Dominion Production Company LLC ("Dominion").

Following the previously announced re-opening of the third party transmission line on 07 January 2013, total production and sales of gas recorded during the month were 8,680,000 standard cubic feet (scf). Total production of oil was 1,780 barrels. It is expected that the oil charge of the pipeline will be completed within the next month so that sales and production numbers for oil will begin to converge.

Operations during the month were interrupted a few times by the need to clean up accumulated drilling mud and debris from the platform equipment and it is clear that the well remains in clean-up phase. The Company still awaits a longer period of sustained continuous flow, but production experience to date supports previous guidance provided which was for commercial flow rates of 155 bopd plus 700,000 scfpd of associated gas, and no water. This is equivalent to a total flow rate of approximately 270 boepd using standard industry conversion factor of 6,000 scf/boe.

Silvermere owns a 16.66% working interest in the I-1 well and a 33.33% working interest in future wells on the leases.

Commenting on these recent developments, Andy Morrison, Chief Executive of Silvermere, said: "With the I-1 well in production we are pleased to note that initial flow rates are in line with expectations. Following the clean-up phase we expect to establish continuous commercial production and to optimise flow rates"

This statement has been approved by Mr Tom Gunningham CEng MEI, Director of Rockflow Resources Ltd, an independent oil and gas consultancy, who is a Chartered Petroleum Engineer with 24 years' experience in the Petroleum Industry, and who is a Qualified Person in accordance with the guidance note for Mining, Oil & Gas Companies issued by the London Stock Exchange in respect of AIM Companies.

--ENDS--

For further information please contact:

Silvermere Energy plc Andy Morrison, Chief Executive	[phone]
Merchant Securities Limited (Nominated Adviser and Broker) Lindsay Mair/Virginia Bull/Catherine Miles	[phone]
Peterhouse Corporate Finance Limited Jon Levinson	[phone]
Bishopsgate Communications Nick Rome/Anna Michniewicz/Ivana Petkova	[phone]

About Silvermere Energy PLC

The Company has a 33.33 per cent working interest and 20.00 per cent net entitlement interest in the Mustang Licence Area, an area within the southern half of the north-west quarter and northern half of the south-west quarter of the Block 818-L field as defined in State of Texas Oil and Gas Lease numbers 108873 and 108874. The Mustang Island 818-L field (the "Field"), located in Kleberg County waters of the Gulf of Mexico, is home to a field re-habilitation project targeting bypassed or only partially produced gas-condensate.

According to a recent update to the independent Competent Persons Report published at admission in August 2011, the Mustang asset - which is operated by Dominion Production Company, the Field has a NPV10 of Proven and Probable reserves (P1 + P2) estimated to be US$14 million attributable to the Company's interest. It has an additional NPV10 of $57million net from the potential upgrade of Possible (3P) reserves. These reserves are based on a projected three well programme.

Initially, Silvermere is focussed on progressing production from the I-1 re-entry well where it has a 16.66 per cent working interest with a view to underpinning its long-term objective of creating a bankable and cash generative oil and gas company during the medium term and then drilling the three new wells to access the NPV identified in the CPR.

The Company maintains an active business development programme which aims to identify and acquire additional valuable assets either in or near production. These will be used to expand the business and provide additional value to shareholders over time. The Company's search is focussed on the US for the time being, both on-shore and off-shore, but may be expanded further afield in future.

Silvermere is quoted on the AIM Market of the London Stock Exchange plc (AIM: SLME) with its offices in London.

 

END

 

 

DRLLLFSEFAIVIIV