TIDMOEX
RNS Number : 7397X
Oilex Ltd
23 December 2019
ASX-RNS Announcement
23 December 2019
ASX: OEX
AIM: OEX
East Irish Sea Licence Acquisition
The Board of Oilex Limited (the "Company") is very pleased to
announce that it has entered into a binding term sheet with Burgate
Exploration and Production Ltd ("Burgate"), to acquire a 100%
participating interest in the Doyle-Peel licence (P2447) in the
East Irish Sea (EIS), offshore the United Kingdom ("Term Sheet").
In addition, the Company has entered into an exclusivity agreement
with Burgate, Comtrack (UK) Ltd, and Simwell Resources Ltd
(collectively "BCS") for the potential acquisition of a 100%
participating interest in the Castletown licence (P2076).
The EIS licences provide an attractive entry into a proven gas
fairway in the centre of the East Irish Sea Basin. Furthermore, the
licences are in shallow water near existing infrastructure reducing
the complexity, risk and cost of development. The EIS is a prolific
basin which has produced around 8 TCF of gas to date with
considerable existing gas production, gathering, processing and
transportation infrastructure. The depth to the target reservoirs
is less than 2,000 metres thus providing modest drilling costs.
Project Overview
The licenses lie on the west dipping graben edge of the Tynwald
Fault Zone on the structural trend with the Rhyl and North
Morecambe producing gas fields. Historical production from the
primary Triassic Ormskirk reservoirs on this trend show excellent
deliverability characteristics.
The Ormskirk sandstones were deposited in a continental fluvial
regime which became drier and more aeolian (with a higher
proportion of dune sands) towards the top. The regional seal is
provided by the evaporites and mudstones of the Mercia Mudstone
group which attains a thickness in excess of 1,000m across the
basin resulting in low seal risk. Gas charge comes from the
Carboniferous Coal Measures which underlie much of the basin. A
secondary reservoir-seal pair is provided by the Permian Collyhurst
sandstone and overlying evaporites.
Doyle-Peel Prospects
The Doyle prospect consists of a tilted fault block closed on
the up dip east side by the north-south trending boundary fault of
the Tynwald Fault Zone. This fault down throws to the east and the
footwall of Ormskirk sandstone juxtaposes Mercia Mudstone salts and
shales forming a very effective cross fault seal. There is a
clearly defined east-west fault bounding the southern extent. The
fault block is distinguished by the strong reflection response
shown on the amplitude display.
The Peel prospect is a fault block occupying a structurally
similar setting to Doyle and the producing Rhyl gas field. It is
fault bounded to the east by the Tynwald Fault Zone, with effective
cross fault and top seal provided by the Mercia Mudstone. To the
south and southwest dykes have been emplaced which would provide
near vertical seals. The amplitude of the Ormskirk reflector is
similar in reflection strength to the Rhyl productive area
providing the possibility that this indicates a gas charge.
Blocks 113/22a (Doyle) and 113/27e (Doyle and Peel) have been
merged into a single licence being P2446 ("P2446 Licence"). Block
113/22a was awarded in the UK Offshore 31st licensing round whereas
block 113/27e was awarded in the 30th round.
Pursuant to the award of the P2446 licence, the committed work
programme comprises a firm commitment by October 2021 to obtain and
reprocess 50 square kilometres 3D seismic data, obtain 2,500 kms
Aeromagnetic data and complete a Rock Physics study. Following
which the Licence has a three-year drill or drop election.
Castletown Structure
The Castletown structure is also situated within the Tynwald
Fault zone, just east of the Peel prospect. Well 113/27-2 was
drilled in 1988 and discovered the Castletown gas accumulation in
both Omskirk and St Bees Triassic sandstones and the Permian
Collyhurst Sandstone. The Omskirk and St Bees provide the producing
reservoirs in the adjacent Morecambe complex. The more recent depth
migrated 3D seismic data indicates that the well was drilled
significantly down flank of the crest and through a major fault and
that a large gas accumulation may be proven up-dip.
The Castletown discovery is in Block 113/27d under Licence
P2076. An additional fault closed prospect (Prospect A) is present
in the Licence to the southwest of the Castletown structure. The
prospect has similarities to the producing Rhyl gas field.
Transaction Overview
Burgate holds a 100% participating interest in Peel-Doyle, in
the United Kingdom Seaward Production Licence (P2446, Blocks
113/22a and 113/27e).
Oilex has entered into a binding Term Sheet with Burgate to
acquire a 100% participating interest in the P2446 Licence for
consideration of:
a) payment of GBP60,000;
b) issue of 42,500,000 fully paid ordinary shares in Oilex Ltd
with a deemed value of GBP85,000; and
c) overriding royalty to be paid on the following basis:
i. 0.5% of actual gross revenue from commercial production up to
the point when gross capital expenditures related to the
development of the licence have been fully recovered from net cash
flows ("Payback"); and
ii. following Payback, the royalty to be paid shall be 2.25% of actual gross revenues.
The completion of the acquisition of the Licence is subject to
the following conditions precedent by 30 June 2020:
a) the UK Oil and Gas Authority ("OGA") approving the assignment
and transfer of the Licence from Burgate to Oilex;
b) the execution of applicable documents necessary to transfer the Licence to Oilex; and
c) execution of a royalty agreement in a form acceptable to the parties.
The shares to be issued as consideration for the acquisition of
Doyle-Peel are under Listing Rule 7.1.
Oilex has also entered into an Exclusivity Agreement with BCS to
secure an exclusive right to negotiate with BCS in respect of the
proposed acquisition of Castletown. In this regard, Oilex has
undertaken to pay GBP68,000 to BCS in January 2020 regarding the
applicable licence fees payable to the OGA for the 2020 year.
BCS has granted Oilex exclusivity until 31 March 2020, during
which time it is intended that the terms of the definitive
documentation and funding for the Proposed Transaction will be
finalised, and Oilex will seek confirmation from ASX that Listing
Rules 11.1.2 and 11.1.3 will not apply to the potential Castletown
acquisition.
Managing Director of Oilex, Joe Salomon, said;
"The EIS licences provide an attractive entry particularly as
they lie adjacent to existing producing fields in a proven gas
fairway in the centre of the East Irish Sea Basin. The Doyle-Peel
prospects have the potential to host substantial prospective
resources and Castletown has discovered gas in multiple reservoirs
with the next step being the preparation of a field development
plan including appraisal/development drilling.
Importantly, the Doyle-Peel licence is the Company's first
committed entry into the UKCS. In 2020, the Company will seek to
build the Company's critical mass in the UK with further
synergistic acquisitions including the potential Castletown
acquisition.
The Company continues to make solid progress on three fronts
with the clear objective of building value for its investors by
adding to the Company's opportunity set. Outside of the UK, the
Company's Cooper Basin strategy is progressing steadily with
demonstrable milestones anticipated in early 2020. Importantly, in
India the Company's Cambay project is at the final stages in
resolving a long running and complex dispute with its Joint Venture
partner ahead of an active drill programme planned in 2020."
For and on behalf of Oilex Ltd
Joe Salomon
Managing Director
For further information, please contact:
Investor AIM Broker AIM Nominated Media Enquires Media Enquiries
Enquires Novum Securities Adviser (UK) (Aus)
Oilex Ltd Broker Strand Hanson Vigo Communications Citadel-MAGNUS
Joe Salomon Colin Rowbury Limited Public Relations Michael Weir
Managing Email: Nominated Adviser Patrick Email:
Director crowbury@novumsecurities. Rory Murphy/Ritchie d'Ancona/Chris mweir@citadelmagnus.
Email: com Balmer McMahon com
oilex@oilex.com.au Tel: +44 20 Email: Email: Tel: +618
Tel: +61 7399 9427 oilex@strandhanson.c patrick.dancona@vigo 6160 4900
8 9485 3200 UK o.uk comms.com Australia
Australia Tel: +44 20 chris.mcmahon@vigoco
7409 3494 mms.com
UK Tel:+ 44 20 7390
0230 UK
Jonathan Salomon, B App Sc (Geology), Member of AAPG, SPE and
PESA, GAICD, Director of the Company, has reviewed and approved the
technical information contained within this press release in his
capacity as a qualified person, as required under the AIM
Rules.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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