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Trap Oil Group plc (TRAP)

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Friday 08 February, 2013

Trap Oil Group plc

Farm-in to the Trent East Terrace Area & update

RNS Number : 4398X
Trap Oil Group plc
08 February 2013
 



 

 

Trap Oil Group plc

("Trapoil" or the "Company")

Farm-in to the Trent East Terrace Area

and

Operational Update

Trapoil (AIM: TRAP), the independent oil and gas exploration, appraisal and production company focused on the UK Continental Shelf ("UKCS") region of the North Sea, is pleased to confirm details of its farm-in to the Trent East Terrace area and provide an operational update, principally in respect of certain of its planned exploration wells.

Trent East Terrace Farm-in

On 7 February 2013, Trapoil entered into a sale and purchase agreement to acquire a 33.33 per cent. working interest in Licence P.685 (Block 43/24a) (the "Trent East Terrace Area" or "TET"), containing the Trent East gas discovery, from Perenco UK Limited ("Perenco"). Block 43/24a is located in the Silverpit Basin in the Southern North Sea.

Trapoil has committed to secure a drilling rig within six months for the planned TET appraisal well and it is currently anticipated that the Company's share of the drilling costs will be approximately £5 million as and when the well is drilled. Trapoil will also assume its share of the abandonment liability for the 43/24a-3 well via a letter of credit for £0.7 million which will be provided from Trapoil's existing cash resources. TET is an eligible asset within the terms of Trapoil's US$20 million senior secured borrowing base facility with GE Energy Financial Services announced on 30 January 2013.

It is intended that Trapoil will be the operator of the TET area, subject to the approval of the Department of Energy and Climate Change ("DECC"), which remains a condition precedent to completion of this farm-in transaction.

Last year, Trapoil acquired a 30 per cent. working interest, from Holywell Resources Limited, in an adjacent block (Licence P.1923, Block 43/20c). Centrica Resources Limited is the operator of Block 43/20c. Furthermore, Trapoil made an application in DECC's 27th Seaward Licensing Round, for acreage proximate to the Trent East Terrace Area and is awaiting a decision from DECC in respect of a potential full or partial licence award in due course.

TET has proven gas in the Carboniferous Westphalian and Namurian reservoirs, with gross recoverable gas resources estimated by Trapoil's management to be between 35 and 60 billion cubic feet ("bcf"). Trapoil's management believes that the proposed drilling of a new appraisal well could potentially recover closer to 60bcf (gross) if all of the main porous gas bearing sands flow at commercial rates. The existing 43/25-3 discovery well drilled by Arco British Limited flow tested from two of the five potential sands at an aggregate rate of 50 million cubic feet of gas per day.

The currently envisaged development plan for TET comprises a single well tie-back to the Trent platform, operated by Perenco, where capacity and suitable facilities exist for the immediate handling of any commercial gas production, and a potential tie-in agreement is in the process of being finalised.

Operational Update regarding the Scotney, Magnolia and Crazy Horse Exploration Wells and Completion of the Revised Arrangements with Caithness

Operations are expected to commence shortly on the Scotney (Licence P.1658, Block 20/5b) exploration prospect ("Scotney") (Trapoil holds a 12.5 per cent. carried interest). The delay to spudding this well has been caused by adverse weather conditions preventing the rig leaving the previously drilled Romeo location.

 

Scotney is mapped as a four-way dip closure at the Base Cretaceous Unconformity level with Late Jurassic Tweedsmuir sands as the reservoir objective and best estimate gross prospective resources for the entire prospect of approximately 57 million barrels of oil equivalent ("mmboe") (approximately 7.1 mmboe net to Trapoil, unaudited estimate by Trapoil's management). The well is to be drilled using the Awilco WilHunter rig and well operations are currently anticipated to last approximately 36 days in the dry hole case. The well will be drilled to an estimated total target depth of 10,690 feet Measured Depth Below Rotary Table ("MDBRT") or 10,580 feet True Vertical Depth Sub Sea ("TVDSS").  

 

The partners in Licence P.1658 are Suncor Energy UK Limited (28.75 per cent., operator), Norwegian Energy Company UK Limited ("Noreco") (43.75 per cent.), First Oil and Gas Limited (15 per cent.) and Trap Oil Limited (12.5 per cent.).

 

Operations are currently expected to commence on the Magnolia (Licence P.1610, Block 13/23a) exploration prospect ("Magnolia") (Trapoil holds a 10 per cent. carried interest) in or around mid February 2013.

 

Operations on the Crazy Horse (Licence P.1650, Block 14/13) exploration prospect ("Crazy Horse") (Trapoil holds a 17 per cent. paying interest, 5 per cent. carried interest) are currently expected to be delayed until 2014. The operator, Noreco, withdrew from its previously agreed rig contract as there was no certainty from the rig provider as to a time of delivery. Noreco has sought and been awarded by DECC a six month extension to the Initial Term of the licence (previously due to expire on 11 February 2013), in order to enable it to contract a rig to drill the well.

 

In addition, the Company announces that the revised arrangements with Caithness Oil Limited, as announced previously on 16 November 2012, were duly completed on 30 January 2013.

 

An updated corporate presentation has today also been posted on the Company's website (www.trapoil.com).

 

Mark Groves Gidney, Chief Executive Officer of Trapoil, commented:

"The farm-in to the TET asset enables the group to secure operatorship, subject to DECC's approval, and therefore exercise greater control over the scheduling of our work programme. In addition, this relatively straight forward gas development project, in conjunction with the promising exploration potential in the adjacent acreage, offers the prospect of attractive cash flow for the group in the medium term.

We look forward to drilling the Scotney and Magnolia exploration wells over the coming months and to a rig being secured by Noreco to drill the Crazy Horse prospect."

 

 

 

Enquiries:

Trap Oil Group plc

 

Mark Groves Gidney, CEO

 

Tel:  0203 170 5586

www.trapoil.com

 

Strand Hanson Limited

James Harris

Matthew Chandler

James Spinney

 

Tel:  0207 409 3494

Mirabaud Securities LLP

Peter Krens

 

Tel:  0207 321 2508

FirstEnergy Capital LLP

Hugh Sanderson

David van Erp

 

Tel:  0207 448 0200

 

Cardew Group

Tim Robertson

Shan Shan Willenbrock

Lauren Foster

 

Tel:  0207 930 0777

[email protected]

**ENDS**

 

 

Martin David, Technical Director of the Company, has reviewed and approved the technical information contained in this announcement in his capacity as a qualified person under the AIM rules. Mr David holds a BSc degree in Geology from the University of London and has over 37 years experience in the oil industry.

Notes to editors:

 

·      The Group was created in 2008 by a team of experienced industry executives with a broad range of oil and gas technical, operational and financial expertise and professional skills.

 

·      Trapoil has developed long term relationships with key oil industry partners and major suppliers and consultants including CGGVeritas Services (UK) Limited ("CGGVeritas"), Applied Drilling Technology International and Exploration Geosciences Limited.

 

·      The Company utilises a research-led, knowledge-based approach to identify and deliver promising exploration and appraisal opportunities, and to this end has secured extensive long-term access to CGGVeritas' state of the art 3D seismic database over the majority of the Central North Sea area on negotiated terms. CGGVeritas is a leading pure-play geophysical services and equipment provider.  Access to such 3D seismic data serves to strengthen the Group's ability to create opportunities on both open and held acreage in the UKCS.


This information is provided by RNS
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