LGO has completed the acquisition of a 25% stake in Beach Oilfield Limited ("BOLT") with which LGO already holds an agreement to acquire the deep petroleum rights to all of BOLT's South West Peninsula ("SWP") interests in Trinidad. Through this acquisition LGO also has access to an interest in the shallow petroleum rights held by BOLT, including the producing Bonasse Oilfield.
Neil Ritson, LGO's Chief Executive, commented:
"We consider the South West Peninsular of Trinidad to be a major medium term investment opportunity, especially the deep targets which have so far not been adequately explored, however, the acquisition of an interest in BOLT also gives rise to immediate access to shallower objectives including within the producing Bonasse Oilfield. We expect to be in a position to report on our plans to reinvigorate that asset in the next few months."
Background
BOLT is a private Trinidadian company incorporated in 2013 with the express purpose of acquiring and operating the private petroleum leases previously operated by Trinidad Exploration and Development Limited ("TED"). BOLT is controlled by the Persad family and operates approximately 5,450 acres of petroleum rights in the SWP. LGO signed a binding Letter of Intent in 2013 to acquire 100% of the rights contained in the BOLT controlled leases below 7,000 feet ("the Deep Rights"). That agreement envisaged that, on completion, BOLT would retain a 100% interest in the petroleum rights shallower than 7,000 feet ("the Shallow Rights").
BOLT and LGO subsidiary, Leni Trinidad Limited ("LTL"), have requested the issue of new private petroleum licenses to carry out petroleum operations on the Shallow Rights and Deep Rights, and those license applications are under consideration by the Trinidad and Tobago Ministry of Energy and Energy Industries.
Consideration and further Terms of the Acquisition
- LGO has paid a total consideration ("Consideration") of US$250,000 to BOLT's ultimate parent company Energy Technology Centre Inc. ("ETCI") to acquire a 25% stake in BOLT
- The Consideration was made up of US$50,000 in cash and US$200,000 by means of the issuing to ETCI 14,679,556 new LGO Ordinary Shares of 0.05p each ("Ordinary Shares") issued at a price of 0.9p
- LGO has also obtained binding undertakings from the owners of ETCI which ensure that LGO has effective corporate control of BOLT
- Through its ownership of BOLT, LGO will offset 25% of the outstanding payments due to BOLT for the Deep Rights, currently equivalent to US$475,000
South West Peninsula
The SW Peninsula, where LGO already has production from the shallow Icacos Oilfield, is significant since it is largely unexplored with regard to deep potential and in close proximity to the prolific East Venezuelan Basin of which the SWP is geologically a part. The only deep onshore well, FRM-1, drilled in 2008 to a depth of 12,301 feet, found oil shows in the Lower Cruse and Lengua formations at around 11,700 feet before the well was lost for mechanical reasons. The significant Herrera Sandstone formation was not reached in the FRM-1 well. The en-echelon structures offshore at Soldado have yielded major oil fields, up to over 200 million barrels, and it is LGO's view that similar structures may lie onshore beneath the SWP.
The SWP was one of LGO's the principal targets in acquiring the Full Tensor Gravity ("FTG") gradiometry survey acquired by ARKeX Limited earlier in 2015. The final FTG data was transferred to LGO in early June 2015 and is presently being interpreted along with a soil geochemistry survey acquired jointly with BOLT and the existing well and seismic data, which includes a 3D seismic survey over much of the peninsula.
The Bonasse Oilfield lies some 10 km from Icacos and has been producing, since its discovery in 1911 by the Greig-1 well, from a total of up to 16 wells at depths up to 1,200 feet. Present production restarted in 1997 has now dropped to below 10 barrels of oil per day from just 3 active wells. Oil production comes from sandstones of the Cruse formation and the oil quality averages 23 degree API gravity. BOLT and LGO are in agreement that significantly greater potential exists for additional production through the application of proven technologies. Additional, shallow, drilling targets are also available within the field boundaries.
LGO, through its interests in Icacos, its wholly owned Cedros leases and the BOLT leases has in excess of 10,900 gross acres under lease within which to explore, as well as the existing producing assets that can support enhanced production activities, such as well recompletions and the drilling new production wells.
