TIDMMOIL
RNS Number : 8049Q
Madagascar Oil Limited
22 June 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR
JAPAN
22 June 2015
MADAGASCAR OIL LIMITED
("Madagascar Oil" or the "Company")
Appointment of Jefferies as Strategic Advisor and Updated
Company Presentation
Madagascar Oil is pleased to announce the appointment of
Jefferies International Limited ("Jefferies") as a strategic
advisor to the Company and that a new, updated, company
presentation is available on the Company's website.
Appointment of Jefferies:
Jefferies has been appointed to assist in a process which is
already underway, to identify and secure a strategic partner who
will work with the Company on the development and funding of the
world class Tsimiroro heavy oil field in Madagascar (the "Tsimiroro
Development") which received Development Plan approval from the
Madagascar authorities on 15 April 2015.
The Company remains in dialogue with a number of potential
partners and it is envisaged that the appointment of Jefferies will
enable Madagascar Oil to access a wider pool of potential partners.
Jeffries is also expected to provide strategic advice which will
help secure the optimal partner(s) for the Company going forward.
The Company is confident of a successful conclusion to this process
before the end of 2015 and will provide further updates in due
course.
Updated Company Presentation:
The Company's CEO, Robert Estill, will be presenting at the Oil
& Gas Council Africa Assembly in Paris on 23 June 2015 and a
copy of the presentation to be made at that Assembly (the "Company
Presentation") is now available on the Company's website:
www.madagascaroil.com. The Company Presentation includes the
following items which are additional to the information previously
reported by the Company and are therefore summarised below. The new
information is based on the latest Company estimates and is
consistent with the Company's plans as outlined in the approved
Block 3104 Tsimiroro Development Plan (the "TDP").
Tsimiroro Development Plan:
-- Drilling costs for each development well are now estimated at
US$150,000 per well based on latest data. It is expected that well
completion, flowlines, tie-back and artificial lift costs will add
a further US$140,000 cost for each development well. Both well cost
components represent a reduction over existing TDP submission
costings due to recent market price conditions.
-- A new production profile up until 2045 has been highlighted
which shows the latest estimated production growth forecasts under
three newly defined stages as follows:
o Anchor Stage: the initial growth stage which shows gross
production achieving between 7,000-10,000 barrels of oil per day
("bopd") from approximately 400 development wells in the period up
to the end of 2018/early 2019. It is estimated that funds of
between US$200-US$400 million will be required to fund this stage
from a mix of equity, oil sales, farm-in, financial agreements with
service companies or through other funding options. Jefferies will
assist Madagascar Oil in determining the optimal funding route for
this stage, including the identification and securing of a
strategic partner(s), as referred to above. This stage was
previously referred to by the Company as "Phase 1" of the TDP.
o Fast Track Stage: a further growth stage which envisages gross
production reaching 50,000 bopd by 2021/2022. This stage would
involve, amongst other things, the construction of a pipeline to
the west coast of Madagascar and new coastal offtake facilities,
increased drilling activities through a larger rig count and an
additional central processing facility. The latest Company
estimates indicate that additional funds of between US$400-US$600
million will be required for this stage and it is envisaged that
funding options may be available from a variety of avenues
including debt, infrastructure funds, crude oil offtakers, equity,
cashflows arising from crude oil sales and from other sources. The
Company has already commenced discussions with third parties
interested in funding elements of this stage and it is envisaged
that discussions will continue as the Anchor Stage progresses. The
Fast-Track Stage was previously referred to by the Company as
"Phase 2" of the TDP.
o Enhanced Stage: this stage envisages gross production growing
from 50,000 to over -100,000 bopd through 2025 with the rate of
growth being dependent on many factors, in particular the number of
drilling rigs in operation at any one time and pace of development.
Latest Company estimates indicate that this stage will be fully
funded from project cashflows with no additional external funding
being required.
Tsimiroro Development Value:
-- The Company has run a range of commercial cases for the
Tsimiroro Development based around varying oil prices, production
profiles, oil recovery rates, capital spend and other cost
assumptions. The Company's latest base case estimate (NPV10 value)
is US$2.6 billion for the full contingent resource development,
which is based on:
o the production profile arising from the three stages, referred
to above;
o a late May 2015 forward oil curve price deck (US$62.50 per
barrel rising to US$80 per barrel in 2018 onwards);
o capital and opex costs as included in the TDP; and
o estimated recovery factor of around 40% of the 1.7 billion
barrels of contingent resources.
-- The Company Presentation shows a range of sensitivities
around the base case of US$2.6 billion using different oil price
assumptions (ranging from US$40 per barrel to US$100 per barrel)
and different stock tank oil initially in place ("STOOIP") volumes
(ranging from 0.6 billion barrels STOOIP to 3.5 billion barrels
STOOIP). The impact is shown on a chart in the Company Presentation
(page 11).
-- The latest NPV10 values are the Company's best estimate at
this time and will inevitably change over time as new information
emerges for the development.
Chief Executive Officer, Robert Estill, commented:
"I am delighted that we have engaged Jefferies to assist
Madagascar Oil in identifying and securing a partner for the
development of our Tsimiroro field. Given the very large resource
base of the Tsimiroro asset, containing at least 1.7 billion
barrels of contingent resources, and since Development Plan
approval, we know there is much interest in this project from
around the world. Jefferies has an excellent track record and it
makes sense to hire them to run the most competitive process
possible in order to get the highest value for our shareholders.
Jefferies has a strong understanding of the Company and our assets,
having helped secure a farm-down of our Bemolanga licence in
Madagascar to TOTAL in 2008, in a deal worth over US$100 million.
We look forward to working with the Jefferies team who will be
commencing their advisory support immediately".
Competent person's statement:
The information contained in this announcement has been reviewed
and approved by Stewart Ahmed, Chief Operating Officer of the
Company, who has 30 years of relevant experience in the oil
industry. Mr. Ahmed is a member of the Society of Petroleum
Engineers (SPE).
Forward-looking statements:
This announcement includes certain forward-looking statements,
estimates and forecasts with respect to the anticipated future
performance of the Company which reflect the Company's expectations
regarding future plans and intentions, growth, results of
operations, performance and business prospects and opportunities.
Such forward-looking statements, estimates and forecasts reflect
various assumptions made by the management of the Company and their
current beliefs, which may or may not prove to be correct, A number
of factors could cause actual results to differ materially from the
potential results discussed in such forward-looking statements,
estimates and forecasts including, changes in general economic and
market conditions, changes in the regulatory environment, business
and operational risks and other risk factors. Although such
forward-looking statements, estimates and forecasts are based upon
what the management of the Company believe to be reasonable
assumptions, no guarantee can be given that actual results will be
consistent with such forward-looking statements, estimates and
forecasts. Prospective investors should not place undue reliance on
such forward-looking statements, estimates and forecasts. Such
forward-looking statements, estimates and forecasts are made as of
the date of this Announcement and the Company does not assume any
obligation to update or revise them to reflect new information,
events or circumstances.
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
Jefferies International Limited +44 (0)20 7]029
- Strategic Advisor 8102
Richard Kent +44 (0) 20 7029
Nima Mehdian 8105
VSA Capital Limited - Financial
Adviser
Andrew Monk
Andrew Raca +44 (0) 20 3005
Justin McKeegan 5000
Mirabaud Securities LLP - Joint
broker +44 (0) 20 7878
Rory Scott 3360
Pelham Bell Pottinger - PR
Lorna Cobbett +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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