23 July 2014
TANGIERS PETROLEUM LIMITED
Quarterly Report for Period Ending 30 June 2014
The Directors of Tangiers Petroleum Limited ("Tangiers" or the "Company") are
pleased to provide the following report on its activities during the quarter
ended 30 June 2014. A copy of the full quarterly report, including the diagrams
referred to in the text and the Appendix 5B (Quarterly Cash Flow Report), is
available on the Company's website at www.tangierspetroleum.com
Highlights
* The Company announced the appointment of Mr David Wall as Managing Director
on 15 April 2014 along with the appointments on 9 April 2014 of Mr Michael
Evans as Non-executive Chairman and Dr Stephen Staley as Non-executive
Director.
* As part of the Galp Energia Farm-Out Agreement ("FOA"), the Association
Contract was finalised on 1 May 2014. Under the FOA, Tangiers is due US$7.5
million as reimbursement of back costs and the return of a US$3 million
bank guarantee. These funds will contribute to the 33% share of any costs
in excess of the US$33 million free carry provided for by the FOA for the
drilling of the TAO-1 well, which the Company is contractually obliged to
pay.
* Tangiers successfully raised A$9 million in total during the month of May
in two separate tranches of A$5 million and A$4 million, respectively, to
specified wholesale, institutional and sophisticated investors, with the
second tranche approved at the Company's AGM on 12 June 2014.
* The exploration well TAO-1 in the Tarfaya Offshore Block, Morocco commenced
drilling on 26 June 2014 with the Joint Venture partner, Galp Energia, as
Operator.
* The dry hole cost for the drilling of the TAO-1 exploration well, on a
trouble free basis, is estimated at circa US$73 million and on this basis
Tangiers are fully covered for the drilling by existing cash and
receivables including headroom for material cost overruns.
Overview
Key operational activities during the quarter were:
* The Ralph Coffman Jack-up Rig was mobilised on 22 May 2014 ex Egypt
to undertake the exploration drilling of the TAO-1 well in the
Tarfaya Offshore Block, Morocco.
* The exploration well TAO-1 commenced drilling on 26 June 2014 with the
Joint Venture partner, Galp Energia, as Operator.
* The TAO-1 well is designed to test three stacked objectives within the
Jurassic carbonate fairway; Assaka, Trident and TMA. The youngest objective
Assaka(secondary), and the primary objective Trident are scheduled to be
intersected within 60 days from the spud date.
* Deepening of the TAO-1 well to intersect the TMA objective is contingent on
results at the Trident and Assaka objectives.
* The dry hole cost for the drilling of the TAO-1 exploration well, on a
trouble free basis, is estimated at circa US$73 million and on this basis
Tangiers are fully covered for the drilling by existing cash and
receivables including headroom for material cost overruns.
The key corporate activities for the quarter were:
* With the appointments of Michael Evans (Non-executive Chairman) and Dr
Stephen Staley (Non-executive Director) on 9 April 2014 the board of
Tangiers was again validly constituted.
* The Company resumed trading on AIM on 9 April 2014 and on the Australian
Securities Exchange (ASX) on 10 April 2014 following lodgement of the
Company's audited accounts for the year ended 31 December 2013.
* During the quarter the Company raised $9.342 million via the issue of fully
paid ordinary shares and the exercise of options held by option holders,
net of issue costs.
Financial
The ASX Appendix 5B attached to this report contains the Company's cash flow
statement for the quarter. The significant elements for the period were:
* exploration and evaluation expenditure of A$0.035 million (March 2014
A$0.019 million);
* administration and other operating costs of A$1.461 million (March 2014
A$2.268 million);
* net proceeds from the issue of shares from placements and option exercises
of A$9.342 million; and
* a net cash inflow of A$11.085 million recorded by the Company.
At the end of the quarter, the Company had net cash reserves of A$14.626
million which included the US$3 million currently in Morocco recognised as cash
in the quarter due to the release of the bank guarantee. The Company's cash
balance does not include the reimbursement of US$7.5 million in back costs
under the FOA as these remain as a current payable and are likely to be netted
off against Tangiers' share of the cost of drilling of the TAO-1 well.
New Ventures
The Company continues to review and evaluate selected new venture opportunities
predominantly focused in Africa.
Tarfaya Offshore Block - Morocco (25%)
The Tarfaya Offshore Block, Morocco comprises eight contiguous permits covering
an area of 11,281 sq km. The Tarfaya Offshore Block is situated approximately
600 km southwest of Morocco's capital, Rabat, inboard of the Canary Islands on
the Atlantic Margin. The Tarfaya Offshore Block contains multiple prospects and
leads within Jurassic sediments as well as potential within the Tertiary,
Cretaceous and Triassic Formations.
During the quarter, the TAO-1 well commenced drilling on 26 June 2014. The
primary objective Trident and the shallower secondary objective Assaka are
expected to be intersected within 60 days from spud.
A total of four Jurassic prospects have been matured in the carbonate play
fairway within the Tarfaya Offshore Block. All of the Jurassic prospects are
covered by 3D seismic data. The Assaka 3D seismic survey, comprising 680 sq km,
was acquired by Tangiers in 2012 and covers the TAO-1 prospects; Trident,
Assaka and TMA. The La Dam prospect, located in the south of the Tarfaya
Offshore Block, is covered by a separate 580 sq km 3D seismic survey acquired
by Maersk in 2006 which was reprocessed by the Company in 2011.
The gross prospective oil resource for the four Jurassic prospects identified
in the Tarfaya Offshore Block was independently assessed by Netherland, Sewell
& Associates Inc. (NSAI, 2011). The combined total best estimate prospective
resource net to Tangiers (25%) for the four Jurassic prospects in the Tarfaya
Offshore Block is *217 million barrels of oil (NSAI, 2011).
Cautionary Statement: The estimated quantities of petroleum that may be
potentially recovered by the application of a future development project relate
to undiscovered accumulations. These estimates have both an associated risk of
discovery and a risk of development. Further exploration, appraisal and
evaluation is required to determine the existence of a significant quantity of
potentially movable hydrocarbons.
* Independently certified by NSAI as at 1 May 2011 - see NSAI Assessment of
Prospective Oil Resources, market announcement dated 27 May 2011.
The information in this announcement relating to estimates of prospective
resources is based on, and fairly represents, information and supporting
documentation prepared by, or under the supervision of, Mr Brent Villemarette.
Mr Villemarette is a full time employee of the Company with over 30 years
experience and is a member of the Society of Petroleum Engineers. Mr
Villemarette consents to the release of the information in this announcement
relating to estimates of prospective resources in the form and context in which
it appears. The estimates of prospective resources referred to in this
announcement are reported as at 1 May 2011 and were prepared using a
combination of the probabilistic and deterministic methods.
Additional Information required under ASX LR 5.4.3
List of petroleum tenements held by Tangiers at quarter ending 30 June 2014:
Reference Project Name Location Company Acquired during Disposed of
Interest the Quarter during the
Quarter
Tarfaya Tarfaya Offshore Morocco 25% - -
Block
Unless stated elsewhere in this report, there were no beneficial interests held
in farm-in or farm-out agreements at the end of the quarter and no beneficial
interest in farm-in or farm-out agreements acquired or disposed of during the
quarter, and there have been no activities relating to oil and gas production
or development during the quarter.
Hydrocarbons in Place Summary
Detailed below are the estimated oil estimates for the Company's project
interest.
Gross (100%) Tangiers Net Attributable
Interest
Project Low Best/ High Low Best/ High Operator
Mean Mean
Oil-in-Place Estimates (unrisked) (All figures in millions of barrels)
Morocco 1,564 4,335 12,399 25% 391 1,084 3,100 Galp Energia
Total 1,564 4,335 12,399 391 1,084 3,100
Prospective
Resources
Prospective Resources Summary
Detailed below are the estimated Prospective Resources delineated across the
Company's project interest.
Gross (100%) Tangiers Net Attributable Risk
Interest Factor
Project Low Best/ High Low Best/ High Operator
Mean Mean
Prospective Oil Resources (unrisked) (All figures in millions of barrels)
Morocco 156 867 4,959 25% 39 217 1,240 unrisked Galp Energia
Total 156 867 4,959 39 217 1,240
Prospective
Resources
Qualified Person
The information in this announcement was produced by Mr Brent Villemarette who
is an Executive Director of Tangiers. Mr Villemarette is a petroleum engineer
with over 30 years of experience and is a member of the Society of Petroleum
Engineers. Mr Villemarette has reviewed this announcement and consents to its
release.
Terminology and standards adopted by the Society of Petroleum Engineers ("SPE")
"Petroleum Resources Management System" have been applied in producing this
document.
Under these standards:
"Undiscovered Oil Initially in Place" is that quantity of oil which is
estimated, on a given date, to be contained in accumulations yet to be
discovered. The estimated potentially recoverable portion of Undiscovered Oil
Initially in Place is classified as Prospective Resources, as defined below;
and
"Prospective Resources" are those quantities of oil or gas which are estimated,
on a given date, to be potentially recoverable from undiscovered accumulations.
ROBERT DALTON
Company Secretary
Tangiers Petroleum Limited
Level 2, 5 Ord Street
West Perth WA 6005, Australia
Ph: + 61 8 9485 0990
www.tangierspetroleum.com
Contacts
RFC Ambrian Limited
As Nominated Adviser
Mr Oliver Morse / Ms Trinity McIntyre
+61 8 9480 2500
As Corporate Broker
Mr Charlie Cryer
+44 20 3440 6800
Mr Ed Portman (Media and Investor Relations - United Kingdom)
Tavistock Communications
+44 20 7920 3150