Operations Update

RNS Number : 3133C

Silvermere Energy PLC

15 April 2013

 



AIM: SLME

15 April 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 further information on production and sales of oil and gas during March 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").

Total production and sales of gas recorded during the month were 883,000 standard cubic feet (scf), and total production of oil was 127 barrels.

Up until the previous update on 5 March 2013 the well continued to experience restricted flow rates due to obstructions in the well-bore. Pipeline operating pressure from platform to shore was reduced in an attempt to improve pressure differentials and flow conditions, but this did not resolve the matter. It was therefore agreed by the partners that a simple work-over should be conducted in order to investigate and remedy the blockages that have extended the clean-up period longer than had been expected.

Following mobilisation of the required equipment to the platform on 1 April, work-over operations commenced and remain on-going as at the date of this announcement. The work-over is being conducted using the platform's on-board crane.

A further update will be provided upon completion of the work-over operations.

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:

"We are pleased that the decision has been taken to undertake a work-over of the I-1 well, as we believe this should enable us to deliver previously projected flow rates, to increase the associated cash flow and therefore to demonstrate the value of the asset."

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/Scott Mathieson/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 US$57million net from the potential upgrade of Possible (3P) reserves. These reserves are based on a projected three well programme.

Initially, Silvermere is focused 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 focused 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.

 

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