RNS Number : 4488X
Xtract Energy plc
25 June 2008
25 June 2008 AIM: XTR
XTRACT ENERGY PLC
AGM Statement by Elko Energy Inc
Xtract Energy plc ("Xtract") is pleased to refer shareholders to the announcement below
made by Elko Energy Inc ("Elko").
Xtract currently holds approximately 35.4% of the total issued capital of Elko.
Andy Morrison, CEO of Xtract, commented:
"Xtract Energy is pleased to see the continuing development of Elko Energy and its
preparations for an IPO scheduled for later this
year. We continue to believe that Elko's assets in Netherlands and Denmark offer a compelling
investment opportunity".
"24 June 2008
AGM Statement
Elko Energy Inc ("Elko"), a private oil exploration and development company, is pleased to
update shareholders at its AGM held on 20
June 2008.
Summary of key achievements to date -
* Cash on hand US $ 17 Million
* Potential Resources verified by independent engineers (Tracs) for both Netherlands
(860 BCFG in place) and Denmark (1.8 Billion
barrels recoverable)
* Technical Work in Netherlands has resulted in increase of resources
* Data reprocessing in Denmark showed positive results
Summary of immediate plans:
* IPO later in 2008
* Early development concept and use of modern drilling techniques in the Netherlands
* Hiring of additional staff and integration into team
President's Letter
Rudolf Kleiber, President and CEO of Elko Energy Inc ("Elko"), a private oil and gas
exploration and development company, made the
statement below at Elko's AGM on June 20 2008 in Toronto, Canada.
Elko has made very encouraging progress during 2007 and the beginning of 2008, from our
starting point of the award of the Danish
Licence 02/05 in 2005. Within the context of our exploration strategy, we continued to convert
the potential of our group resource assets to
maximize our long term shareholder value. 2007 has seen strong performance in line with our
core objectives to discover, appraise, develop
and commercialise our assets for maximum shareholder return. Elko raised a total of US$20
million in equity during fiscal 2007 and is well
positioned to continue to finance its plans.
Denmark
Our licence portfolio for the North Sea begins with 80% of Licence 02/05, located offshore
Denmark (20% held by a Danish government
entity). Through our Danish subsidiary we operate the largest exploration licence in Denmark
with an area of 1.3 million acres offshore.This license offers P50 un-risked net prospective resources of 1.8 billion barrels oil or 8.4
Tcf of gas (evaluated by Tracs International,
an independent reservoir engineer, in May 2008).
During 2007, PGL, a UK-based subsurface consultant, completed their Phase I evaluation
report and then we commenced re-processing a
number of 2D seismic lines from the field tapes to improve the resolution of the Rotliegendes
interval. The re-processing work was completed
in October 2007 and has enabled seismic attribute mapping. We are currently finalizing the
plans for two additional technical studies to
evaluate the migration pathway from the Central Graben and to reduce the risk of the chalk
prospects. An optional drilling commitment has to
be firmed up on entering the third exploration period in 2010.
Phase II will be for two and a half years rather than the two originally stipulated as
certain data was unavailable within the first
period. This will not alter the overall exploration period of six years. Our plans remain to
farm out part of our 80% interest before moving
ahead with drilling the first exploratory well, which is projected to cost approximately $25
million.
Netherlands
The mix of appraisal and near-term development type projects offered by the Dutch assets
balances the higher risk exploration ventures
in the Danish sector. The Dutch assets comprise a 33% operator working interest in the P1 and
adjacent P2 licences. The geological risk is
limited as previous operators had performed 3D seismic and drilled 17 exploration wells that
have confirmed the presence of a number of
Rotliegendes gas bearing structures. The discoveries were not developed for a variety of
reasons, including the prevailing gas price, low
well productivity and the carbon dioxide content of the gas. However, these challenges have
been significantly reduced by today's much
higher gas price and improved offshore technology. Given surging demand for gas, there is
every incentive for Elko to continue to move
forward with partners and to exploit the dormant resources in these two licences. The early
part of 2007 was spent in preparing the
applications and support for our submission with presentations to the Dutch government, which
resulted in Elko being awarded operatorship and the P1 exploration licence. Immediately
following the award of P1
in June 2007, the Company commenced work to review cores, cuttings and logs to improve our
understanding of the Rotliegendes reservoirs on
the Block. This work was then combined with seismic attribute studies and a preparation of a
static reservoir model. A significant amount of
time has been spent to improve our database by obtaining additional well and seismic data from
a number of sources. The reservoir studies
were carried out by a number of specialist contractors and management expects a significant
upgrade of the reserves of the P1 FA structure
which was the focus of this work. The resulting interpretations are now being reviewed in
order to prepare a NI 51-101 for our planned IPO.
Block P1 is located on the southern margin of the Southern Permian Gas basin and covers
approximately 209 km2 (51,623 acres). The
Company benefits from seven wells having been drilled by previous operators, of which five
encountered gas on three separate structures
which are currently under appraisal for development.
Awarded in February 2008, Block P2 is directly adjacent and east of Block P1. Significant
new data has been acquired on Block P2
including a previously unavailable 3D survey over the western portion of the block.Interpretation of this data was mixed -- the size of the
P2 Charley structure earmarked for early production has been reduced, however management
expects that the overall reserves of the Block have
been increased significantly with several new structures identified. These numbers are being
revised and certified by an independent
evaluator.
The award of Blocks P1 and P2 has established Elko as a recognized offshore Operator in
the Netherlands in addition to already being
Operator in Denmark. As joint licensees with Oyster Energy BV (a subsidiary of Horizon Energy
Partners BV), an invitation to take up a 40%
working interest was extended to and accepted by the state oil and gas company, Energie Beheer
Nederland B.V. ("EBN"). At the end of 2007,
Horizon announced that it would be selling its 100% interest in Oyster which has slowed down
the accelerated work program intended to lead
to an early production project; a new partner is currently being identified.
Financing and Other Interests
In 2007, Elko increased its interest in Dragon Energy Inc. to 51%. Dragon is a private
Canadian oil and gas exploration company that has
a 30.7% working interest in the Kotaneelee gas field in the Yukon and is currently benefiting
from strong gas prices in Canada.
In September 2007, the Company secured further financial support from Xtract Energy Plc
which increased its equity stake by US$2
million. In December, Elko undertook a highly successful private placement with Jennings
Capital Inc., and Cormark Securities Inc as joint
lead agents, mainly with US and Canadian investors, for an additional US$12.1 million. At the
same time Xtract contributed a further US$6
million to increase their ownership in the Company to 35.4%.
Outlook
The present business environment is characterized by high and rising oil and gas prices,
which to some degree is counteracted by high
and rising costs and a tight market for personnel and other vital resources. Elko remains
confident about its prospects in the North Sea and
the Company's ability to execute on its plans.
The development of the very significant gas reserves on our Netherlands blocks, clearly
identified through drilling, testing and
extensive 3D seismic coverage, remains our highest priority project. We are working on a plan
to develop one of the low CO2 gas discoveries.The development of the majority of the gas reserves would require the removal of the
associated CO2 before the sales gas can be transported
onshore in the existing pipeline system. Conceptual engineering work has started to design and
cost out an early development concept, which
is a requirement to define reserves. It will also be desirable to increase production rates on
the new wells which we are planning to drill. It is planned to achieve this through the use of modern drilling techniques, i.e. the use of
extended horizontal wells steered through the
best parts of the reservoirs that have been identified previously through seismic attribute
studies.
The Company is committed to drilling at least one well on its Denmark 02/05 Licence and we
believe that with the addition of a partner,
additional wells could be drilled which would improve the chances of making a discovery. In
the Netherlands, although there are technical
and commercial issues to be resolved before full scale production can start, the anticipated
reserves should provide for a successful
resolution of these issues. Prior to drilling the first well, anticipated in 2009, the Company
plans to image the proposed structure with a
Pre-Stack Depth Migration (PSDM) study which will improve our understanding of the potential
resources within the structure.
We believe that the support of both the Dutch and Danish state oil companies, as well as
the support of new and existing shareholders
during difficult world economic circumstances, represents strong recognition of our expertise
and the potential of our assets in the North
Sea. This also lends support to the key role to be played by junior international oil and gas
companies in finding and developing the
remaining reserves in countries such as The Netherlands and Denmark. Discovered but
undeveloped fields, which were considered to be
immaterial by the majors and larger independents, can be highly significant to a focused,
motivated and well financed junior international
company such as Elko. In addition, work carried out both in the Netherlands and Denmark has
demonstrated our ability to identify significant
new reserves potential in established areas that have seen significant activity in the past.
The Board of Elko is continuing to work towards an Initial Public Offering and a listing on a
recognized stock exchange. The pre-IPO
fund-raising completed in December 2007, indicated an intended listing within one year and
this remains the objective, however timing will
be influenced by market conditions and the completion of technical reports.
We are very grateful for the continuing support of our shareholders without whom none of
our progress would have been possible.
Rudolf Kleiber
President and Chief Executive Officer
June 24, 2008"
Further information on Elko can be found at www.elkoenergy.com. As a private company, Elko
is not subject to the AIM Rules and this
information has not been reviewed by a named "qualified person" as defined and required by the
AIM Guidance Note for Mining, Oil and Gas
companies.
Enquiries please contact:
Xtract Energy plc Andy Morrison, CEO +44 (0) 20 7079 1798
Smith & Williamson Corporate David Jones +44 (0) 20 7131 4000
Finance Ltd Azhic Basirov
Scott Harris Stephen Scott +44 (0) 20 7653 0030
Annabel Michie
For further Information on Xtract please visit www.xtractenergy.co.uk
About Elko Energy Inc
Elko Energy Inc ('Elko') is a Canadian oil and gas exploration company formed in 2005.
Elko has an 80 per cent interest in a 5,370 km2 exploration and production license in
close proximity to the prolific Central Graben in
the Danish North Sea. The licence covers 26 Danish licence blocks with a 6 year exploration
term and 30 years for exploitation. Elko is an
approved offshore operator in Denmark and has set up a Danish subsidiary to hold the licence.The current partnership is Elko (80%) and
Nordsoen - a Danish government entity (20%).
In early 2007, Elko applied for two off-shore blocks in the Dutch sector of the North Sea,
both of which contain a number of drilled and
tested gas bearing structures. Block P1 has now been awarded to a consortium in which Elko
will be the operator and will retain 33%
interest. The award of adjacent Block P2 was announced in early 2008 with Elko retaining
operatorship and a 55% interest.
In addition to its exploration assets, Elko owns 51% of Dragon Energy Inc. ("Dragon"), a
private Canadian company. Dragon's principal
assets are a 30% share of the producing Kotaneelee gas field in Canada and a joint venture in
respect of the Maling oil field in Gansu
province, China.
About Xtract Energy Plc
Xtract identifies and invests in a diversified portfolio of early stage energy sector
technologies and businesses with very significant
growth potential. We aim to work closely with the associated management teams to achieve
critical project milestones, to finance later
development stages and to build and crystallise value for all shareholders and partners.
Xtract is supported by its cornerstone investor, Cambrian Mining Plc (AIM:CBM) a
diversified resource investment house which, together
with its wholly owned subsidiary Cambrian Investment Holdings Ltd, holds approximately 50.1%
of the issued share capital of the Company.
A short description of the principal assets of Xtract (other than Elko Energy) is set out
below. These assets are either held directly
or through wholly owned subsidiaries of the Company.
MEO Australia
MEO is focused on developing gas-to-liquids ("GTL") projects in the Timor Sea Australia,
in an area of shallow water known as Tassie
Shoal. It has secured Commonwealth Government environmental approvals for two large scale (1.8
Mtpa) methanol plants (50 per cent. interest)
and a 3 Mtpa LNG plant (100 per cent. interest) which are adjacent to the Evans Shoal gas
field.
Wasabi Energy
Wasabi is a diversified investor in renewable energy and low greenhouse emission
technologies, with interests in geothermal waste/heat,
uranium exploration in Australia's Northern Territory and biodiesel investments in Victoria.
Central Asian Interests
Xtract's Central Asian interests include a production sharing agreement with
Kyrgyzneftegaz to instigate a water injection project on
the Beshkent- Togap oil field. Xtract also holds interests in several exploration licences in
the Tash Kumyr area and in the Toktogul
exploration licence.
Oil Shale
Xtract has oil shale and related petroleum product exploration rights over mining
tenements in the Julia Creek area of Queensland and
has recently been granted an exploration permit which gives rights to explore for oil shale in
an area in the South of New Zealand. It is
investigating the commercial production of hydrocarbons (crude oil) from oil shale.
Xtract is also available for trading on the open market segment of the Frankfurt Stock
Exchange (ticker R9X.FSE).
This information is provided by RNS
The company news service from the London Stock Exchange
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