LGO announces further progress on agreements with Beach Oilfield Limited ("BOLT") in the Cedros Peninsula of SW Trinidad with the conclusion of payments under the Data Agreement and the commencement of geochemical field work.
Neil Ritson, LGO Chief Executive, commented:
"We are very enthusiastic about the oil potential of the Cedros Peninsula and have now completed an initial review of the data we acquired from BOLT. In LGO's technical view there is undoubtedly significant untested potential in proven reservoirs and in a structural style that is simpler than much of onshore Trinidad relating more closely to the prolific East Venezuelan Basin. As new data is collected and integrated with the existing data that we have acquired from BOLT it is anticipated that a number of potentially large drillable prospects will be mapped."
In late 2013 LGO and BOLT concluded the main agreements necessary to proceed jointly on studies in the area. Payments under the Data Agreement totalling approximately £475,000 (US$750,000), through which LGO accessed all the existing geological, geophysical and well data in the area, were agreed to be spread over a 4 month period during which LGO assembled and assessed the data. A final payment in the previously agreed form of £125,000 of LGO shares was made recently with the issuing of 14,218,605 ordinary shares and application has been made for the admission of the shares to trading on AIM on the 8 April 2014.
The Consultancy Agreement was signed in October for an initial period of 12 months so that BOLT's principal expert, Dr Krishna Persad, could provide consultancy services to LGO. The final definitive agreement, the Farm-in Agreement, which cross-assigns all deep petroleum rights between the parties such that LGO would become 100% interest holder in all the private petroleum leases below 7,000 feet, is still being finalised as title due diligence has taken longer than was initially assumed. The extensive conveyancing associated with a number of private leases and royalty rights owners has been more time consuming that originally envisaged and is not as yet complete. The Company will update on the progress of the Farm-in Agreement at the time of its AGM; however, with the other agreements in place the overall project timetable is not affected by the additional due diligence.
The Farm-in Agreement secures LGO's access to a package of over 7,500 gross acres of underexplored leases on trend with large oil discoveries in both Trinidad and Venezuela. The most recent exploration of the onshore Cedros occurred in 2008 when the FRM-1 well was drilled and found oil below 11,750 feet in the Lower Cruse formation.
Field Data Collection
As previously announced, it has been agreed with BOLT to extend the existing knowledge of the Cedros with the acquisition of a geochemical soil sampling survey. Micro-seepage of oil associated with faults and deep structures is a proven technique for geological screening and will be combined with the extensive existing data to aid in the selection of drilling locations.
Locally employed field crews have now been trained by sampling experts from the USA and data collection is expected to be underway imminently. Samples will be shipped to a laboratory in the USA for analysis and will then be interpreted by experts from BOLT, before incorporation in the overall data synthesis by LGO. The geochemical program is estimated to cost £50,000 and to be completed by mid-year.
LGO is also in the final stages of negotiating with a specialist contractor for the acquisition of a wide scale airborne Full-Tensor Gravity ("FTG") survey to be flown over a large part of onshore Trinidad in a collaborative effort with the Ministry of Energy and Energy Affairs and several other active exploration and production companies in Trinidad. FTG is a modern high resolution gravimetric surveying technique that has so far proved very successful in exploration elsewhere in the world; for example in East Africa, but has yet to be deployed in Trinidad. The existing producing fields in the Cedros Peninsula, Icacos and Bonasse Fields, were discovered through the use of older gravity techniques and it is anticipated that FTG will complement other geophysical techniques in defining new prospects. It is hoped that the FTG data collection can start by end-May 2014 and that processed data will be available by the end of the third quarter.
The cost for these projects has been so far been provided for within existing cashflow and the short-term borrowing arrangements previously announced.
Competent Person's Statement:
The information contained in this announcement has been reviewed and approved by Neil Ritson, Chief Executive Officer and Director for Leni Gas & Oil Plc, who has over 35 years of relevant experience in the oil industry. Mr. Ritson is a member of the Society of Petroleum Engineers (SPE), an Active Member of the American Association of Petroleum Geologists (AAPG) and is a Fellow of the Geological Society of London.