Trap Oil Group Announce Corporate and Operational Update
Trapoil (AIM: TRAP), the independent oil and gas exploration, appraisal and production company focused on the UK Continental Shelf (“UKCS”) region of the North Sea, announces a further corporate and operational update.
Additional Licence Relinquishment
Further to the Company’s announcement of 8 January 2015, the Board has decided to also relinquish Licence P.1556 Block 29/1c (“Orchid”), which was becoming unduly expensive to maintain. The decision to relinquish this additional licence was taken in conjunction with our partner following extensive efforts to secure a potential farm-out.
The impairment charge associated with the relinquishment of Orchid, to be recorded in the Company’s results for the current financial year to 31 December 2014, is expected to amount to approximately £5.8m. This impairment charge will not affect the Company’s net unrestricted cash reserves, which, as previously announced, amounted to approximately £7m as at 31 December 2014.
Licence P.1293, Block 14/18b – Athena Oil Field
As announced on 8 January 2015, the Athena Oil Field, Licence P.1293, Block 14/18b (“Athena”), in which Trapoil holds a 15 per cent. equity interest, had achieved stabilised gross production rates of approximately 4,800 barrels of oil per day (“bopd”) (720 bopd net to Trapoil), following the completion of the workover and certain other further intervention work. Production rates continue at around this level, however at the currently depressed oil price of approximately US$58/barrel the field is significantly loss making and the Company is currently incurring a cash outflow of approximately £380,000 per month after absorption of its share of the field’s operating costs. We are working closely with the operator and our other licence partners to advance opportunities to enhance the financial performance of the field.
Exploration and Appraisal Interests
We continue to develop, and seek potential farm-out partners where appropriate, the remaining attractive exploration and appraisal assets in the group’s portfolio, including Licence P.1889, Blocks 12/26b and 12/27 (“Niobe”), for which a well is planned for Q2 2015; Licence P.1610 Block 13/23a (“Magnolia”), for which seismic evaluation work is ongoing in respect of a possible extension of the adjacent Liberator discovery; Licence P.1666, Block 30/11c (“Romeo”), a discovery requiring further appraisal; Licence P.1989 Blocks 14/11, 12 & 16 (“Homer”) and Licence P.2170, Blocks 20/5b and 21/1d (“Cortina”).
Source: Trap Oil Group Plc