TIDMMOIL
RNS Number : 3645K
Madagascar Oil Limited
16 April 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR
JAPAN
16 April 2015
MADAGASCAR OIL LIMITED
("Madagascar Oil" or the "Company", together with its
subsidiaries, the "Group")
Tsimiroro Development Plan Approval
Madagascar Oil is pleased to confirm the award of the
Development Mining Title for the Block 3104 Tsimiroro Production
Sharing Contract (the "Block 3104 PSC") by the President of
Madagascar, H.E. Hery Rajaonarimampianina, following a joint
proposal by the Minister at the Presidency in charge of Mines and
Petroleum and the General Manager of OMNIS (Office des Mines
Nationales et des Industries Strategiques), which took place at the
Council Of Ministers on 15 April 2015. This follows approval of the
Block 3104 Tsimiroro Development Plan (the "TDP") by the Block 3104
Management Committee.
Highlights
-- Demonstrates the Company's excellent and collaborative
working relationship with the Government of Madagascar
-- Represents the first Production Sharing Contract to enter
into the development phase in Madagascar
-- Awards a 25 year development mining title with possible
additional extensions to enable a potential development period of
up to 50 years provided production remains commercial
-- Covers the entire 6,670km2 of Block 3104 including the
Tsimiroro Main Field with its 1.7 billion barrels of oil contingent
resource base, as well as appraisal activities of conventional
light oil potential in the Tsimiroro South and Tsimiroro Deep South
areas
-- Represents a significant and major step forward for the Group
following 11 years of exploration activity in Madagascar and the
drilling of 138 wells on Block 3104
-- Approval allows the Group to:
- proceed with development of the Block 3104 Tsimiroro asset,
including development drilling and facilities upgrades to build on
existing production;
- progress further the active discussions with potential
strategic partners to assist in funding development; and
- undertake the domestic sale of production from the Steam Flood
Project ("SFP"), including the 100,000 barrels of oil currently in
storage, which is expected to commence this quarter
Robert Estill, Chief Executive Officer of Madagascar Oil,
commented:
"We are delighted to have reached this significant milestone in
the growth of Madagascar Oil. Being the first company to reach the
development phase within Madagascar is a truly exciting
opportunity, both for us as a company, but more importantly for the
people of Madagascar.
We are grateful to the Government of Madagascar for their
extensive and constructive contribution to this process and the
strong working relationship we have built as a result. As a
Company, we believe we have a dual responsibility, not simply to
generate value for our shareholders but also to lead the way in
developing Madagascar's significant natural resources that will
benefit the whole country."
First phase of the work programme under the TDP
The initial Tsimiroro crude to be developed under Phase 1 of the
TDP is a heavy oil (14-15 API), with target markets both in
Madagascar and internationally for power generation, as a heavy oil
refinery feedstock and as marine bunker fuel.
Phase 1 of the TDP is intended to first fully develop the
geological compartment containing the existing SFP area. It is
planned that long-lead orders will be placed for drilling under
Phase 1 of the TDP and SFP facilities upgrade equipment/materials
for the planned work programme to commence in late 2015. An
additional geological compartment will be developed, intended to
enable sales volumes to reach up to 10,000 barrels of oil per
day.
Block 3104 PSC Amendments
The President of Madagascar, H.E. Hery Rajaonarimampianina, also
approved a decree at the Council of Ministers of 15 April 2015
following a joint proposal by the Minister at the Presidency in
charge of Mines and Petroleum and the General Manager of OMNIS
which approves an amendment agreement to the Block 3104 PSC (the
"Block 3104 PSC Amendment Agreement"). The Block 3104 PSC Amendment
Agreement relates to certain items included in the submitted
TDP.
The Block 3104 PSC Amendment Agreement redefines the Block 3104
PSC into two separate areas: the Tsimiroro Main Field, situated in
the northern area of the Block 3104 PSC which covers an area of
approximately 3370km(2) (the "Tsimiroro Main Field") and the
southern area which covers an area of approximately 3300km(2) (the
"Tsimiroro Southern Area"). The SFP is situated in the Tsimiroro
Main Field.
The Block 3104 PSC Amendment Agreement sets out certain
obligations in relation to annual submission of work programs and
budgets for the Block 3104 PSC. This includes commitments to
appraise structures in the Tsimiroro Southern Area, including
Tsimiroro Deep and Deep South, through seismic acquisition in 2016
with drilling on the deeper horizon potential following in 2017 and
2018, depending on prospectivity (the "Appraisal Activity"). These
structures have the potential to yield light oil from deeper
horizons as indicated by well results from exploration drilling in
Block 3104 and Block 3107 to the immediate south.
The Block 3104 PSC Amendment Agreement also sets out certain
relinquishment obligations for the Tsimiroro Southern Area. It has
been agreed with the relevant Malagasy authorities that following
the Appraisal Activity, Madagascar Oil S.A. (the Company's wholly
owned subsidiary and the party to the Block 3104 PSC) shall
determine the location of a portion of the Tsimiroro Southern Area
to be relinquished excluding any retained exploitation area, such
relinquishment to be notified by 31 December 2018.
Operational Update
The SFP area continues to demonstrate consistent production
performance with all wells operational and consistent steam
generation and injection achieved.
The first of a series of planned Development Evaluation Wells
was drilled and cored successfully in February 2015 using the
Madagascar Oil drilling rig. This will be followed up with a
continuous drilling programme, commencing in Q2 2015, to provide
updated information on the thermally effective oil-in-place
available from the Amboloando reservoir and from the underlying
Isalo-1 horizon. The rig will then transfer to development drilling
on arrival of long lead items which can now be ordered for an
expected late 2015 delivery.
Superseding the previous test sales authorisation, the TDP
allows the Company to proceed to sales of the production from the
existing SFP. Madagascar Oil has over 100,000 barrels of oil in
storage at the existing facility, which is available for the
domestic Madagascar market. Discussions with domestic users
continue and it is anticipated that the first test sales volumes
will commence in Q2 2015. The Company continues to co-operate with
state utilities provider, Jirama, in a joint Technical Committee to
plan the test of Tsimiroro crude in the Antananarivo power
generation facilities.
Funding Strategy
Having achieved the significant milestone of approval of the
TDP, the Company will consider the most appropriate way to fund the
development of Block 3104. This may include re-assessing the
positive indications of support received from major shareholders at
the time of the September 2014 placing.
In addition, the Company remains in active dialogue with a
number of potential strategic partners able to assist Madagascar
Oil in funding the development in accordance with timetable
outlined in the TDP.
CONTACT INFORMATION:
Madagascar Oil Limited
Robert Estill - Chief Executive Officer
Stewart Ahmed - Chief Operating Officer +44 (0) 20 3356
Gordon Stein - Chief Financial Officer 2731
Strand Hanson Limited - Nominated & Financial
Adviser
Stuart Faulkner, Angela Hallett, James Dance +44 (0)20 7409 3494
VSA Capital Limited - Corporate Financial
Adviser +44 (0) 20 3005
Andrew Monk, Andrew Raca, Justin McKeegan 5000
Mirabaud Securities LLP - Broker
Rory Scott +44 (0) 20 7878
Bell Pottinger - PR 3360
Lorna Cobbett, Henry Lerwill +44 (0)20 3772 2500
www.madagascaroil.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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