TIDMMSMN
RNS Number : 4408Y
Mosman Oil and Gas Limited
05 December 2017
5 December 2017
Mosman Oil and Gas Limited
("Mosman" or the "Company")
USA Operations Update
Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration,
development and production company, announces an update in respect
to its USA production projects.
Strategy
Mosman's strategic objective continues to be that of identifying
opportunities which will provide operating cash flow and have
further development upside, in conjunction with adding value to the
Company's existing exploration permits.
Interests in three onshore US producing projects were acquired
in 2017.
Welch Permian Basin Project (Texas): 100% Working Interest and
Operator
Mosman commenced well workovers and a production optimisation
process in late October. Seven wells have now been worked over to
replace worn downhole equipment and re-establish production. This
work has seen a significant short-term increase in production,
however failure of some well rods and flowlines that require
repairs have reduced production. Future work will be measured to
find an optimal level of the cost of further investment and repairs
compared to additional oil revenue, and this will establish the
commercially optimal level of production.
This month it is planned to replace well rods and a flowline
that is in need of repair.
Oil sales for November 2017 were 689 barrels (gross) (October
843 barrels gross).
Mosman has commenced a pre-feasibility study to determine the
economics of drilling horizontal wells. This study should be
complete in the first quarter of 2018.
Strawn (Texas): 50% Working Interest and Operator
A second stage of workovers has been completed, as well as
routine repairs. Production, however, has not stabilised at a
desired level and the owners are considering options for the asset
including possible further investment or alternatively a strategy
of reducing costs to focus on cash generation.
Oil sales in November 2017 were 345 barrels (gross) of which 50%
is attributable to Mosman. (October 513 barrels gross).
Arkoma Stacked Pay Project (Oklahoma): 10% Working Interest with
options over a further 45%
As previously announced two Directors met Moyes & Co. and
representatives of the Arkoma vendors last month, as well as
conducting other activities including meetings with banks to
discuss potential debt facilities. Those banking discussions remain
ongoing.
As a result of meeting with Moyes and the vendors; Mosman agreed
to fund USD 125,000 of additional testing operations and the
vendors agreed to extend the First Option date to February 2018 so
that Reserve estimates can include the additional information. Full
details of this have been previously announced.
The USD 125,000 has been paid and the additional test work has
now commenced.
The Arkoma Project has the potential to add both additional
production and Reserves and Resources, however Mosman will only
exercise the option if it is fully satisfied with the test work,
the Moyes Reserve Report and that the investment meets the Mosman
commercial criteria.
Other Potential Acquisitions
Mosman is frequently presented with other potential
acquisitions. Only a small number are moved from initial
discussions to review and negotiations, and then appropriate
documentation. Mosman will update the market in relation to any
potential acquisitions as appropriate.
Other Comments
Oil is sold direct from storage tanks on site to the local oil
marketing company. The revenue is based on volume of oil collected
from the tanks and the price, which is the monthly average West
Texas Intermediate price (WTI) less a small per barrel charge which
covers transport costs and administration of royalties.
Sales volumes have been reported as they are an independent
measure of oil produced and directly related to revenues and
accounts. This avoids potential errors in reporting production
which can be periodically adjusted for water content, limitations
of measuring levels in tanks and occasional access issues during
wet weather.
In addition to sales, at the end of each month there is
inventory, being oil produced and held in tanks ready for
collection. At the end of November total inventory was estimated to
be in excess of 1,400 barrels.
Similar to many other Companies, Mosman does not intend to
report on operations on a monthly basis. Mosman has been providing
more regular updates to date due to the early stage of development
of its US operations. While a fuller report is planned to coincide
with the release of the six monthly financials which are expected
in February 2018, Mosman does not expect to provide further monthly
sales updates unless otherwise required to under its regulatory
obligations.
John W Barr, Chairman, said: "We are pleased to achieve progress
on our stated goals in 2017. The strategy of acquiring oil
production when oil prices were low appears to be sound with the
recent increase in oil price. Rejuvenating the two older oil fields
continues to be work in progress, and we are continuing to gather
information and adjusting plans accordingly.
"The strategy of taking an option at Arkoma remains sound. The
multi-reservoir resource and production rates required time to be
determined and the value is linked to those matters and the change
in oil price."
Competent Person's Statement
The information contained in this announcement has been reviewed
and approved by Andy Carroll, Technical Director for Mosman, who
has over 35 years of relevant experience in the oil industry. Mr.
Carroll is a member of the Society of Petroleum Engineers.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Enquiries:
Mosman Oil & Gas Limited NOMAD and Broker
John W Barr, Executive Chairman SP Angel Corporate Finance LLP
Andy Carroll, Technical Director Stuart Gledhill / Richard Hail
jwbarr@mosmanoilandgas.com / Soltan Tagiev
acarroll@mosmanoilandgas.com +44 (0) 20 3470 0470
Gable Communications Limited
Justine James / John Bick
+44 (0) 20 7193 7463
mosman@gablecommunications.com
Updates on the Company's activities are regularly posted on its
website
www.mosmanoilandgas.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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