Offer to Acquire FRAM Exploration (Trinidad) Ltd.

 

FOR IMMEDIATE RELEASE

 22 July 2020

 

Predator Oil & Gas Holdings Plc / Index: LSE / Epic: PRD / Sector: Oil & Gas

Predator Oil & Gas Holdings Plc

("Predator" or the "Company" and together with its subsidiaries "the Group")

 

       Offer to Acquire FRAM Exploration (Trinidad) Ltd.

                             Subject to Contract

 

Predator Oil & Gas Holdings Plc (PRD), the Jersey-based Oil and Gas Company with operations focused on developing carbon-neutral businesses in Trinidad, Morocco, and Ireland, announces that pursuant to the Well Participation Agreement ("WPA") dated 17 November 2017 as amended by Supplemental Agreement No.1 dated 31 May 2018, Supplemental Agreement No.2 dated 21 January 2019 and Supplemental Agreement No.3 dated 26 September 2019 between FRAM Exploration (Trinidad) Ltd ("FRAM") and Predator Oil & Gas Trinidad Ltd ("POGT"), POGT  served written notice on 14 July 2020 of its intent to  exercise its option under Recital B of the WPA to make an offer (the "Offer") to enter into a Share Purchase Agreement to acquire the entire outstanding issued share capital of FRAM assuming zero net debt at the time of Completion, and Subject to Contract, technical, legal and commercial due diligence.

Conditions Precedent, Cash Consideration and Terms and Conditions were commercially sensitive at the time but can now be summarised below

Conditions Precedent

1.   The receipt of written consent prior to Completion from the Ministry of Energy and Energy Industries ("MEEI") and Heritage Petroleum Company Ltd. ("Heritage") for the proposed Change of Control of FRAM.

2.   The receipt prior to Completion from FRAM of a mutually agreed Working Capital Statement.

3.   Columbus Energy Resources Plc ("Columbus"), FRAM's parent company, to provide a written, legally binding, warranty to POGT prior to Completion that there are no outstanding claims against Columbus of whatsoever nature as a consequence of which a lien on the assets of FRAM might arise.

Cash Consideration

The Offer comprised a cash consideration of one million seven hundred and fifty thousand United States Dollars (US$ 1,750,000) exclusive of VAT, where applicable.

Terms and Conditions

1.   The Offer was valid for five (5) business days from 14 July 2020, expiring at 5pm UK GMT on Tuesday 21 July 2020

 

2.   The Offer was conditional on, among other matters, a Working Capital Adjustment to be mutually agreed at Completion

 

 

Offer Deadline Expired

 

The validity of the Offer expired at 5pm UK GMT on Tuesday 21 July 2020.

 

Columbus are currently in a proposed merger that under the Scheme Document prevents the disposal of any material asset.

 

Accordingly Predator will progress discussions further with Columbus when facilitated by conclusion of the Columbus proposed merger and before the expiry of the period under the WPA relating to Predator's rights upon a change of control of FRAM, insofar as it may or may not impact Predator's forward planning for expansion of CO2 EOR activities in the Inniss-Trinity field.

 

Predator is recommending to carry out an oil rate test for well AT-5X within the next two weeks to assess the impact of significant CO2 injection to date on the potential for oil to flow from the injected reservoirs in Inniss-Trinity at enhanced rates and to assess changes in the properties of the oil with which to re-calibrate the CO2 injection parameters if required. Effectiveness and retention of CO2 sequestration capacity can also be assessed.

 

 

Financing

The cash consideration for an acquisition of FRAM would be financed by a local Trinidadian company in return for it being assigned  operatorship and certain rights as defined in the Incremental Production Services Contract for  the Inniss-Trinity field , subject to consent from the MEEI and Heritage for any  proposed Change of Control of FRAM. POGT would  retain the tax losses in FRAM and the profits from its Pilot Enhanced Oil Recovery in the AT-4 Block using injected Carbon Dioxide ("Pilot CO2 EOR"),  on terms similar to those defined in the current WPA, except that in addition, on Completion of  an  Offer to acquire FRAM, POGT shall be entitled to  the profits from all future CO2 EOR operations anywhere within the confines of the Inniss-Trinity field on the same commercial terms as currently exist for the AT-4 Block.

 

New opportunities

 

Separate to an Offer to acquire FRAM, POGT and the local Trinidadian company have agreed to look at evaluating together two new CO2 EOR opportunities in existing fields onshore Trinidad together with a potential collaboration onshore Guyana, whereby Predator can provide its technology, experience and skills  to, at Predator's sole discretion, have the option to participate in any new joint venture arising from our joint evaluation of the opportunities.

 

Morocco

 

Predator notes that ConocoPhillips Morocco Ventures Ltd., whose parent company is ConocoPhillips Company, one of the world's largest independent exploration and production companies ,  was awarded on 12 June 2020 the Mesorif Reconnaissance Contract adjoining to the west the Predator Oil & Gas Ventures Ltd. Guercif licence.

 

 

 

 

Paul Griffiths, Chief Executive of Predator, commented:

"We are looking to begin to execute our M & A strategy by building on the businesses we have initiated and developed in three separate jurisdictions. New opportunities in Trinidad and potentially Guyana, combined with our exclusivity over Trinidad's surplus liquid CO2 supply and our successful implementation of CO2 sequestration, creates the catalyst for value-enhancing M & A transactions. However, these will not be executed at unrealistic prices as management believes that specific assets can be enhanced in value only through the application of its particular skill sets and proven track record in the countries where it operates.

Naturally, we welcome ConocoPhillips as our new next-door neighbour as we progress to drilling material gas prospects adjacent to the Maghreb gas pipeline. It is reassuring to know that the potential for gas in this specific part of Morocco has now also been recognised by a multi-national E & P company, validating our decision last year to move quickly to secure the Guercif opportunity for early drilling. Previously unrecognised, material gas potential has recently been identified in the area selected for drilling, which is an addition to the 320 BCF of gas resources attributed to our net interest. Further information will be included in an updated corporate presentation to be made available on our website in the next week or two." 

 

Background - Trinity Inniss CO2 Project

As previously announced, the term of the Inniss-Trinity Incremental Production Service Contract ("IPSC") has been extended to allow for the implementation of Pilot CO2 EOR.

The first tranche of CO2 has now been injected into well AT5X in the Inniss-Trinity field and will over time contribute to the determination of any impact on enhancement of  production in offset wells to AT5X. Predator and Columbus, its joint venture partner, will inject further tranches of CO2 as is required to fully evaluate the potential of CO2 injection to increase oil production from the offsetting wells in the AT-4 Block, which is the site of the initial Pilot CO2 EOR.

Predator benefits from a Well Participation Agreement with FRAM Exploration Trinidad Ltd ("FRAM"), a wholly owned subsidiary of Columbus, whereby Predator will help plan and fund the Pilot CO2 EOR in return for 100% recovery of its project costs from Pilot CO2 EOR profits from oil sales, and thereafter 50% of all profits attributable to the Pilot CO2 EOR.  As part of the agreement with FRAM, Predator has the right (until 30 September 2020) to acquire FRAM's 100% interest (the "Interest") in the Inniss-Trinity field Incremental Production Services Contract. 

 

 

The following table summarises the range of total gross and net CO2 EOR audited Inniss-Trinity contingent, pending development, resources attributable to the Interest, as previously announced following an independent Competent Persons Report by SLR Consulting commissioned by Predator.

 

 

Table 1           Contingent Resources Inniss-Trinity

Gross
Inniss-Trinity Field	Low Estimate	Best Estimate	High Estimate	Operator
OOIP (MM bo)	89	68	89	FRAM
Recovery Factor	6%	10%	10%	FRAM
Gross Contingent Resources (MM bo)	5.3	6.8	8.9	FRAM	C02 EOR Development Pending

 

 

 

 

This announcement contains inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 on market abuse

  

For more information please visit the Company's website at www.predatoroilandgas.com: 

 

Enquiries:

Predator Oil & Gas Holdings Plc Dr. Stephen Staley   Non-executive Chairman Paul Griffiths             Chief Executive Officer	Tel: +44 (0) 1534 834 600 [email protected]
Novum Securities Limited Jon Belliss   Optiva Securities Limited Christian Dennis	Tel: +44 (0) 207 399 9425     Tel: +44 (0) 203 137 1902
Flagstaff Strategic and Investor Communications Tim Thompson  Mark Edwards Fergus Mellon	Tel: +44 (0) 207 129 1474 [email protected]

 

 

Qualified Person's statement:

The information contained in this document has been reviewed and approved by Mr. Paul Griffiths, Chief Executive Officer. Mr Griffiths has a BSc in Geology from Imperial College London and is an Associate of the Royal School of Mines. Mr. Griffiths has over 43 years of relevant experience in the upstream oil industry.

 

 

 

 

 

Notes to Editors:

 

Predator is an oil and gas exploration company with the objective of participating with FRAM Exploration Trinidad Ltd. in further developing the remaining oil reserves in the producing Inniss Trinity oil field onshore Trinidad, primarily through the application of C02 EOR technology. Potential for cash flow exists by executing a Pilot Enhanced Oil Recovery project using locally sourced liquid carbon dioxide for injection into the oil reservoirs ("C02 EOR"). Near-term expansion and growth potential is focussed on upscaling the C02 EOR operations in the Inniss-Trinity oil field and potential acquisitions of assets suitable for C02 EOR development, subject to all necessary approvals. 

 

In addition, Predator also owns and operates exploration and appraisal assets in current licensing options offshore Ireland, for which Successor Authorisations have been applied for, adjoining Shell's Corrib gas field in the Slyne Basin on the Atlantic Margin and east of the Kinsale gas field and Barryroe oil field in the Celtic Sea.

 

Predator is operator of the Guercif Petroleum Agreement onshore Morocco which is initially prospective for Tertiary gas in prospects less than 10 kilometres from the Maghreb gas pipeline.

 

The Company has a highly experienced management team with a proven track record in the oil and gas industry.