TIDMMSMN
RNS Number : 9114K
Mosman Oil and Gas Limited
10 May 2022
10 May 2022
Mosman Oil and Gas Limited
("Mosman" or the "Company")
Planned Cinnabar Development Drilling and Placing
Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration,
development, and production company, announces a GBP1.1 million
conditional placing to fund the drilling of the first
re-development well in the Challenger Project in Texas, of which
Mosman has a 97% working interest.
If the targeted production rates are achieved, Mosman Net
Production could increase 88% from 130 boepd (as reported for
quarter ending March 31, 2022) to circa 245 boepd.
Placing
In order to fund the planned drilling and anticipated completion
costs at Cinnabar, the Company has raised GBP1.1m (before expenses)
by way of a placing of 1,375,000,000 new ordinary shares of no par
value in the capital of the Company ("Placing Shares") through the
company's broker Monecor (London) Ltd, trading as ETX Capital, at a
placing price of 0.08p per share (the "Placing Price") (the
"Placing"). Investors are also receiving a one for two warrant
exercisable at a price of 0.16p with a term of 24 months,
687,500,000 warrants are being issued in aggregate (the "Placing
Warrants").
Based on current production rates and current oil and gas prices
the Company is currently operating above cashflow breakeven (not
including major capital costs such as EP145 seismic, larger
workovers that are not yet planned, and other potential drilling at
Cinnabar if the first well is a commercial success).
That situation will be further improved with a successful well
at Cinnabar.
This means that the Placing will allow for the drilling and
development at Cinnabar and, based on a successful well, is
expected to provide sufficient working capital for the next 12
months.
The Challenger Project and Cinnabar Lease
The Challenger Project is focused on the Cinnabar Lease, a
348-acre lease Held By Production. This area was originally drilled
in 1989 by Ballard Exploration on Atlantic Richfield Company leases
and has produced oil and gas from Wilcox sands since then. Mosman
acquired 97% of the lease in 2020 and agreed to farmout 12% with
Contour Exploration and Production LLC ("Contour"), in which
Contour may earn a 12% working interest in the Cinnabar Lease when
a well is drilled, in return for contract operator services. A
recent technical review included reprocessing and interpreting 3D
seismic. Updated geological mapping can now be used to optimize the
location of development wells.
Cinnabar has the potential to be a transformational project for
the Company. Mosman sees the potential for multiple development
wells in the 348-acre Cinnabar lease as the standard Wilcox spacing
is 40 acres per well. The economics to drill are compelling with
the current oil and gas price.
Drilling the first well is planned for August-September 2022 and
will be the next well drilled by Mosman. The location has been
chosen based on geological mapping and selecting a location near
existing roads and gas pipelines.
Cinnabar Reserves
A Reserve Report completed in 2017 indicated the project has
Reserves (100% working interest, net of royalties) as follows
(thousands of barrels of oil equivalent "MBOE"):
Proved Proved Proved Total Total Total
Developed Developed Undeveloped Proved Probable Proved
Producing Behind Pipe Plus Probable
2 49 614 665 184 849
This Reserves Report was prepared by an independent petroleum
engineering firm in June 2017 and conforms to SPE-PRMS petroleum
guidelines. Reserves are net of royalties, which are a standard
25%. The Report has not as yet been updated for the recent
technical work.
Discussions with an independent engineer have indicated that
based on prior production, the development well is estimated to
produce at approximately 100 bopd and 200 Mcfd. Mosman considers
that to be a reasonable target, however the technical work
completed will mean the well is being targeted at a crestal
location and may perform better than the old wells.
John W Barr, Chairman, said: "Recent focus in respect to the USA
projects has very much been about maximising production. That is
reflected in the recent strong production rates in the March
quarter.
"We are pleased that our early investment in Cinnabar has
matured at a time of strong oil and gas prices, making this well a
compelling investment and providing significant further growth
potential."
Admission to AIM and Total Voting Rights
The Placing is conditional on, inter alia, the Placing Shares
being admitted to trading on AIM. Application has been made to the
London Stock Exchange for the Placing Shares, which will rank pari
passu with the Company's existing issued ordinary shares, to be
admitted to trading on AIM and dealings are expected to commence at
8:00 a.m. on or about 17 May 2022.
Following the issue of the Placing Shares, the Company's share
and total voting rights will comprise 5,220,138,052 Ordinary Shares
of no par value and the Company does not hold any shares in
treasury .
Consequently, the above figure may be used by shareholders in
the Company as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in, the share capital of the Company
under the Financial Conduct Authority's Disclosure and Transparency
Rules.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR') which has
been incorporated into UK law by the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement via Regulatory
Information Service ('RIS'), this information is now considered to
be in the public domain.
Enquiries:
Mosman Oil & Gas Limited John NOMAD and Broker
W Barr, Executive Chairman SP Angel Corporate Finance LLP
Andy Carroll, Technical Director Stuart Gledhill / Richard Hail /
jwbarr@mosmanoilandgas.com Adam Cowl
acarroll@mosmanoilandgas.com +44 (0) 20 3470 0470
Alma PR Joint Broker
Justine James / Joe Pederzolli Monecor (London) Ltd trading as ETX
+44 (0) 20 3405 0205 Capital Thomas Smith
+44 (0) 7525 324431 020 7392 1432
mosman@almapr.co.uk
Updates on the Company's activities are regularly posted on its
website:
www.mosmanoilandgas.com
Notes to editors
Mosman (AIM:MSMN) is an oil exploration, development, and
production company with projects in the US and Australia.
Mosman's strategic objectives remain consistent: to identify
opportunities which will provide operating cash flow and have
development upside, in conjunction with progressing exploration of
existing exploration permits.
The Company has seven projects in the US: Stanley, Greater
Stanley, Livingston, Winters, Challenger and Champion in East Texas
and Arkoma in Oklahoma in addition to exploration projects in the
Amadeus Basin in Central Australia.
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END
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