TIDMMOIL
RNS Number : 3241G
Madagascar Oil Limited
03 March 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR
JAPAN
3 March 2015
MADAGASCAR OIL LIMITED
("Madagascar Oil" or the "Company", together with its
subsidiaries, the "Group")
Operational & Development Planning Update
Madagascar Oil is pleased to provide an update on the Group's
operations and on its latest development planning activities.
Highlights
Ø As at 28 February 2015, cumulative oil production from Block
3104 had reached 173,351 barrels from a cumulative steam injection
of 910,017 Barrels of Water Equivalent ("BWE").
Ø All Steam Flood Pilot ("SFP") wells on Block 3104 are
operational, all steam generation equipment is available and the
facilities are capable of providing sales specification Tsimiroro
crude and blended Heavy Fuel Oil ("HFO") to the domestic Madagascar
market.
Ø Discussions continue with local electrical power generation
company, Jirama, and other domestic end users over the test sales
of Tsimiroro crude and HFO blend, with the first such test volume
being scheduled to a local industrial user for delivery in March
2015. It is hoped that continuous sales contracts will follow
successful outcomes of all of these tests.
Ø Approval of the Block 3104 Tsimiroro Development Plan ("TDP")
is still being considered by the Madagascar authorities and
regular, productive, meetings have been, and continue to be, held
between the Company's subsidiary, Madagascar Oil S.A. ("MOSA") and
the Madagascar authorities to clarify issues raised by them since
the TDP was submitted in late October 2014. Approval of the TDP
would allow the commencement of the first 25 year
exploitation/development phase under the Block 3104 production
sharing contract (the "Block 3104 PSC").
Ø The first of the 30 planned 2015 Development Evaluation Wells
("DEW") was drilled in February 2015, with a continuous programme
of drilling scheduled to commence at the start of the dry season,
which is expected to commence in late March/early April 2015.
Block 3104 (the "Block") Tsimiroro Steam Flood Pilot
Performance
As at 28 February 2015, cumulative oil production had reached
173,351 barrels from a cumulative steam injection of 910,017 BWE
giving a cumulative Steam Oil Ratio of 5.2. 90,780 barrels of crude
oil available for sales were accumulated in the storage tanks at
the SFP as at the same date.
Average 2014 oil production was 317 barrels of oil per day
("BOPD"), equating to average oil rates of 20 BOPD from the 16 SFP
production wells. Average steam injection for the SFP in 2014 was
1,582 barrels of water equivalent per day.
Averaged SFP oil production rates, for the latest months, are as
follows:-
2014 (month) BOPD
-------------- -------------
November 339
-------------- -------------
December 315
-------------- -------------
2015 (month)
-------------- -------------
January 317
-------------- -------------
February 295
-------------- -------------
Tsimiroro Crude Oil Sales
As at 28 February 2015, there were 90,780 barrels in storage at
the SFP available for sale to the domestic Madagascar market. MOSA
is working jointly with state utilities supplier, Jirama, to plan a
test of Tsimiroro crude as a HFO feedstock into the Antananarivo,
Mandroseza power station. This test is planned to follow the
refurbishment of the Mandroseza power generation equipment. A truck
load of Tsimiroro crude is also planned to be sent to two separate
domestic Madagascar industrial end-users in the coming weeks, also
for testing purposes. It is hoped that continuous sales contracts
will follow successful outcomes of all of these tests. Further
announcements will be made upon conclusion of these tests.
First phase of the work programme under the TDP
Subject to the approval of the TDP and the award to OMNIS
(L'Office des Mines Nationales et des Industries Strategiques) of
an Exploitation Mining Title, the Block 3104 PSC will enter into
its exploitation period, with a minimum term of 25 years. MOSA
continues to have an active and very positive dialogue with OMNIS,
the Ministry to the Presidency of Mines and Petroleum and also
representatives of the office of the President of Madagascar, with
regard to the approval process for the TDP.
Phase 1a of the TDP will fully develop the geological
compartment containing the existing SFP area. It is planned that
long-lead orders will be placed for drilling under Phase 1a of the
TDP and SFP facilities upgrade equipment/materials for a planned
2015 work programme following approval of the TDP.
Based on expected 6-9 month delivery times for these long-lead
items, Phase 1a development drilling could commence as early as
late 2015, adding to production from the existing SFP wells.
Phase 1b will follow Phase 1a and is designed to develop an
additional geological compartment to allow sales volumes to reach
10,000 BOPD.
Development Evaluation Programme
The TDP described a range of thermally effective Oil in Place
derived by MOSA for the Block 3104 Tsimiroro Main Field, Amboloando
heavy oil resource. This range is described as:
Low: 1.33 Billion Barrels
Best: 1.80 Billion Barrels
High: 2.45 Billion Barrels
These "thermally effective oil in place" figures are MOSA
internal numbers based on the Main Field Amboloando reservoir
geological interpretation completed in 2014. The definition of
thermally effective oil-in-place utilises a 50% oil saturation
cut-off and criteria over the presence flow barriers in the oil
column. This latest interpretation utilises the 2014 petrophysical
dataset from all wells with available log data. It is planned to
further improve the Tsimiroro Main Field Amboloando reservoir
geological model in 2015 using the results of the Development
Evaluation Programme ("DEP") work. This work consists of 30 new
fully cored and logged DEW, the completed ground magnetometer
survey for reservoir scale igneous dyke imaging (see below), field
geological surveying and improved fluvial sand-body modelling
techniques.
The first of the 30 DEW was drilled in February using the MOSA
owned drilling rig. The well (DEW15-11) was fully cored over the
target oil bearing reservoir section and drilled successfully to
the planned Total Depth of 265 metres and was also designed to test
the capabilities of locally sourced drilling and core-handling
crews ahead of the main DEP. The remainder of the wells will be
drilled in the dry season which is expected to commence in late
March/early April 2015. It is anticipated that the DEW well
campaign will complete in Q3 2015.
The new application of the ground magnetometer survey method of
igneous dyke detection was extended over parts of the Phase 1 and
Phase 2 intended development areas under the TDP in
September-November 2014 with the processed data yielding clear
imaging of the dyke network which compartmentalises the reservoir.
This should allow the steam flood pattern of wells to be aligned
with the dyke matrix.
The DEW and ground magnetometer survey data will be incorporated
into the revised geological modelling to advance reservoir
development planning beyond the Phase 1a development area.
Blocks 3105, 3106 & 3107
Separate exploration reports have been completed on each of
blocks 3105, 3106 & 3107, by UK-based Subsurface Consultancy,
ERCL. The reports summarise completed subsurface work including the
revised geological interpretations and also describe the
hydrocarbon prospect and lead inventory of each block. Exploration
work programmes to mature the prospectivity are described in each
report.
As announced by the Company on 15 December 2014, MOSA has
formally requested a two year extension of the exploration periods
for Blocks 3105, 3106 and 3107 from the Madagascar authorities.
This formal request was made ahead of the scheduled end date of the
current exploration periods of 14 December 2014 and the Company is
hopeful of receiving these extensions in the near future.
Block 3102 (Bemolanga)
The Operator of Block 3102 (Bemolanga) License, Total E&P
Madagascar S.A.S ("Total"), presented the 2015 annual work
programme and budget to the Madagascar authorities and to MOSA in
December 2014. The 2015 work programme is aimed at maturing leads
on the block to plan for a seismic acquisition programme in 2016.
The proposed 2015 budgeted work is fully covered by the terms of
the existing Total carry of MOSA costs.
Corporate Social Responsibility Projects
The Ankondromena School and Mahavelo School buildings were
completed and handed over by MOSA in 4Q 2014. The Folakara market
building, designed to support the development of income generating
activities by encouraging local exchanges, was completed by MOSA
and handed over in December 2014. All of these villages are located
within 10 kilometres of the SFP.
Robert Estill, Chief Executive Officer of Madagascar Oil,
commented:
"We continue to make good progress on Steam Flood Pilot
operations and the data we are gathering is proving to be extremely
useful as we move towards the development phase of the Block 3104
Tsimiroro field. Our ongoing Development Evaluation Programme will
provide further important data to allow us to determine the optimal
drilling locations for our development phase.
We have had extensive and very positive discussions over the
past few months with OMNIS and Madagascar Government
representatives on our Tsimiroro Development Plan. As this is
considered by the Madagascar authorities to be a project of
national state importance, we fully understand the cautious and
measured approach they are taking and are grateful for the
extensive resources they are devoting to this process.
We look forward to updating the market on these discussions in
the near future."
Contact Information: Madagascar Oil Limited
Robert Estill - Chief Executive
Officer
Stewart Ahmed - Chief Operating
Officer
Gordon Stein - Chief Financial +44 (0) 20 3356
Officer 2731
Strand Hanson Limited - Nominated
& Financial Adviser
Stuart Faulkner
Angela Hallett +44 (0)20 7409
James Dance 3494
VSA Capital Limited - Corporate
Financial Adviser
Andrew Monk
Andrew Raca +44 (0) 20 3005
Justin McKeegan 5000
Mirabaud Securities LLP - Broker +44 (0) 20 7878
Rory Scott 3360
Pelham Bell Pottinger - PR +44 (0)20 7861
Henry Lerwill 3232
This information is provided by RNS
The company news service from the London Stock Exchange
END
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