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Leni Gas & Oil PLC - Update on Investment

RNS Number : 5014Z Leni Gas & Oil PLC 21 July 2008 For Immediate Release 21 July 2008 LENI GAS & OIL Plc Byron Energy acquires 25% working interest from Leed Petroleum in Gulf of Mexico Byron Energy Pty Ltd ('Byron or 'Byron Energy'), 22.3% owned by Leni Gas & Oil Plc, completed a transaction to acquire a 25% Working Interest in both Eugene Island Blocks 183 and the southern half of Block 184 (Net Revenue Interest up to 20.83% in Block 183 and 19.17% in the southern half of Block 184), including the Eugene Island 184A platform and production facilities. Byron has also acquired a 12.5% Working Interest (Net Revenue Interest 9.58%) in the northern half Eugene Island Block 184 and 10.37% Working Interest (Net Revenue Interest 8.64%) in Eugene Island Block 172, excluding the Eugene Island 172 producing reserves and platform. These properties were acquired from Leed Petroleum PLC ('Leed) under the terms of the Scouting Agreement ('the Scouting Agreement') between Byron and Leed. The Eugene Island Blocks 172,183 and 184 are located in US Federal Waters, 50 miles offshore, south of Morgan City, Louisiana at a water depth of approximately 80 feet. The Eugene Island 184A platform located in the southern half of Block 184 is a manned facility with living quarters and currently supports five active wells, all of which are producing oil and gas. The four pile platform has the capacity to handle 30MMCFD, 10MBOD and 10MBWD. Byron's current production in the field comes from the Tex X-2, Tex X-3 and Mid-Tex reservoirs in the southern portion of Eugene Island Blocks 183 and 184. On 20 June, 2008 Leed reported that the Eugene Island A-7 well has reached a total depth of 15,774 feet and that electric logs have confirmed that six pay sands have been encountered in the well-bore containing a total of 125 feet of true vertical thickness pay. On 3 July 2008 Lead announced that the well has been sidetracked through four of the six sands encountered in the original well-bore to a measured depth of 15,396 feet. Logging operations in the sidetracked portion of the well-bore have been performed and confirm 124 feet of true vertical thickness of pay in the four sands, which is 56 feet more than that encountered in the original well bore. Accordingly in total, the Eugene Island A-7 well has 181 feet of true vertical thickness of pay in all six pay sands. With drilling now concluded, Leed is working on casing and completing the Eugene Island A-7 well for production from one of the primary targets, which has 41 feet of true vertical thickness pay. The first sale of production from this zone is expected during the September quarter of 2008. Upon establishment of production from the A-7 well, Leed intends to drill the Eugene Island A-8 well. The cost to Byron of exercising its option to acquire the interest in the in Eugene Island properties was US$16.4 million comprising 25% of Leed's original acquisition costs plus 25% of all capital expenditure plus 25% of all operating less up to 25% of net revenues from 1 January 2007 until closing, on 18 July 2008. In addition to the Eugene Island properties, Byron has earned an option, under the Scouting Agreement, to acquire 25% of Leed's interest in the following areas of interest in the Gulf of Mexico:- * Grand Isle Blocks 95 and 100, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest) * South Marsh Island Blocks 5 and 6, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest) * Ship Shoal Blocks 201 and 205, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest) * Main Pass Block 115, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest). * Sorrento Field, Onshore Louisiana, where Byron has a right to acquire up to 25% Working Interest (18.38% to 19.63% Net Revenue Interest) * West Cameron Block 106, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest) * South Marsh Island Block 8, where Byron has a right to acquire up to 25% Working Interest (20.83% Net Revenue Interest) Under the Scouting Agreement, each optioned property is covered by an area of mutual interest ('AMI') agreement, covering the lease area and the surrounding contiguous blocks. David Lenigas, Executive Chairman of Leni Gas & Oil commented; 'This is a terrific milestone for the Company as it secures immediate oil and gas production in the Gulf of Mexico with significant upside at Eugene Island with the potential of the A-7 hole over the next few weeks and the upcoming A-8 well from the Eugene Island 184A platform.' Competent Person's Statement: The technical information contained in this announcement has been reviewed and approved by Fraser S Pritchard, Director of Operations for Leni Gas & Oil plc (member of the SPE) who has 20 years relevant experience in the oil industry. Enquiries: Leni Gas & Oil PLC David Lenigas, Executive Chairman Tel +44 (0) 20 7016 5100 Beaumont Cornish Limited Roland Cornish Rosalind Hill Abrahams Tel +44 (0) 20 7628 3396 Pelham PR Charles Vivian Tel + 44 (0)20 7743 667 Leed Petroleum today made the following announcement: 'Leed Petroleum PLC, the oil and gas exploration and production company focussed on the Gulf of Mexico, today announces that on 18 July 2008 the Company's operating subsidiary, Leed Petroleum LLC, consistent with its obligations under the Byron Scouting Agreement, transferred 25% of its interest in its Eugene Island area assets to an operating subsidiary of Byron Energy Pty. Ltd. ('Byron') for US $16.4 million. A subsidiary of the Company entered into the Scouting Agreement on 8 December 2005. Pursuant to this agreement, Byron earned the option to acquire up to 25% of the Company's interest in the Eugene Island assets. Byron exercised this option, and the Company has now transferred ownership of 25% of its interest in the leases described below, together with the associated reserves, wells and facilities, to Byron's operating subsidiary. The purchase consideration was calculated in accordance with the Scouting Agreement as 25% of the Company's (i) original capital costs for the Eugene Island property; (ii) capital expenditures incurred in connection with the property; and (iii) operating costs incurred in connection with the property; less (iv) income received from the property. After completing the sale with Byron, Leed's ownership in the Eugene Island leases is as follows: ASSET OPERATOR INTEREST1 STATUS LEASE EXPIRY DATE LEASE AREA (All are U.S.) WI / NRI (km2) (%) Eugene Island Block 172 McMoRan Oil & Gas 31.10 / 25.91 Production, Held by Production* 20.23 LLC Development and Exploration Eugene Island Block 184 Leed Petroleum LLC 75-37.5 / 57.5-28.75 Production, Held by Production* 20.23 (south half) and Development and McMoRan Oil & Gas Exploration LLC (north half) Eugene Island Block 183 Leed Petroleum LLC 75 / 62.5 Production, Held by Production* 20.23 Development and Exploration 1 Interest - Working interests (WI) are shown and are subject to various royalty payments. Net revenue interests (NRI) include any and all royalty payments. Working and/or revenue interests may vary within a given licence area according to area and or depth. * Lease expires 180 days after cessation of production. The transfer of the 25% interest in the Eugene Island assets does not have any effect on the Company's reserves, which have historically been reported as if Byron had exercised its option. However, flow rates from the Company's A-6 well have previously been reported on a gross basis. Howard Wilson, President and Chief Executive of Leed Petroleum PLC, commented: 'Eugene Island has been a great acquisition for the Company. Our drilling results to date have created substantial value in Leed and we expect near term future drilling at Eugene Island to yield more value enhancing results. We look forward to continuing to work with Byron as a partner to unlock the potential of this field.' This information is provided by RNS The company news service from the London Stock Exchange END MSCPUUUWMUPRGUG

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