TIDMMSMN
RNS Number : 0568V
Mosman Oil and Gas Limited
29 November 2023
29 November 2023
Mosman Oil and Gas Limited
("Mosman" or the "Company")
Operations Update and Placing
Mosman Oil and Gas Limited (AIM: MSMN) the hydrocarbon, helium
and hydrogen exploration, development, and production company,
provides a project update on its US and Australian projects and
confirms it has today raised GBP250,000 (before expenses) by way of
a placing of 2,000,000,000 ordinary shares (the "Placing").
Review of Business Plan and Funding
The new Board has considered the business strategy and sees the
way forward as adding value by continuing to selectively develop
producing oil assets in the US , then monetising them, and
maximising the helium, hydrogen and hydrocarbon opportunity at the
exploration permits in Australia.
In Australia, the recent farmin agreement on EP145 with
Greenvale Gold Pty Ltd ("Greenvale"), which remains subject to
completion, provides a reference see through valuation of the EP
145 asset; based on the farmin expenditure of at least circa AUD7.5
million to earn a 75% interest in the lease indicates the Company's
remaining 25% has significant value.
In the USA, the Cinnabar leases are held by production, have
Reserves and significant value that can be realised with further
technical work and investment. The Board considers that given the
upside potential at Cinnabar, this should be the focus area in
2024.
At Stanley, jet pumps have demonstrated that higher flow rates
are possible. The surface equipment has been modified and is now
expected to be more reliable. Whilst it is too early to provide
meaningful production data, the modified system should result in
higher production with a target of 100 boepd (gross) .The two
obvious ways to commercialise this asset are through ongoing
cashflow, or through a future sale of this asset once production
has been optimised. The Board believes there is currently strong
local demand for oil production assets and based on general
industry valuations of Texas assets based on boepd, the market
value of Stanley (and associated leases) is potentially significant
in the context of the current market capitalisation of the Company.
If a decision were taken on a future sale of Stanley, it has the
potential to provide capital for re-investment in other growth
projects, for example at Cinnabar.
Cost control remains a focus of the Board, and Australian
overhead costs have been reduced by approximately 40% including the
reduction from two Executive Directors to one.
Certain one-off costs in relation to the business
re-structuring, as well as some unexpected costs at Stanley, have
depleted cash reserves. While the EP 145 farmin agreement includes
a cash payment of AUD160,000 upon Completion, this is subject to
government approval, hence the timing is not within our control. In
the meantime, there are value adding opportunities that have
significant short-term upside, including workovers to increase
production at Stanley and installing artificial lift at Cinnabar.
The Board therefore resolved that this placing of shares was
appropriate in order to take advantage of these opportunities.
Details of the Placing
The Company has raised GBP250,000 (before expenses) by way of a
placing of 2,000,000,000 new ordinary shares of no-par value in the
capital of the Company ("Placing Shares") through CMC Markets UK
Plc, at a placing price of 0.0125p per share (the "Placing
Price").
The net proceeds received from the Placing will be used for:
-- Workover (s) at Stanley to optimise production and cash flow;
-- Technical work and installation of artificial lift to
optimise production at Cinnabar to increase understanding of the
reservoir and production issues;
-- EP145 operating costs until farmin Completion; and
-- Working capital requirements.
Directors intention to participate
In addition to the Placing, two Directors have indicated their
intent to subscribe for up to a further AUD30,000 (the "Director
Subscription") on the same terms and conditions as the Placing to
demonstrate their ongoing commitment to the Company. The proposed
Director Subscription will be subject to disclosure as a Related
Party Transaction in accordance with the AIM Rules for Companies
and the requirements of the Australian Corporations Act which
includes shareholder approval. A further announcement is expected
to be made shortly.
Warrants
1,000,000,000 warrants have been granted by the Company on the
basis of 1 warrant for every 2 Placing Shares, with an exercise
price of 0.025p and two-year expiry, issued to the Placees.
Additionally, 120,000,000 broker warrants have been granted to
CMC Markets UK Plc, exercisable at the Placing Price and with a
two-year expiry.
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 5 December 2023.
Following the issue of the Placing Shares, the Company's share
and total voting rights will comprise 9,811,047,141 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 Company's Constitution
Andy Carroll, CEO of Mosman commented : "The business plan for
the US is to focus management time on the significant upside at
Cinnabar, and monetise producing assets by cash flow or sale. In
Australia, we look forward to the completion of the Greenvalue farm
in at EP145 which will put us in the position of funding for both
permit/permit application beieng managed by farmin agreement."
US projects
Stanley (34.85% to 38.5% WI)
Positive progress has been made at Stanley to resolve the
production challenges and the jet pump surface facility has been
changed to use natural gas engines rather than diesel or natural
gas fired electrical power generation and electric pumps. This
change will result in lower operating costs due to reduced rental
costs and no fuel costs since the wells produce sufficient
associated gas to run the natural gas engines. Importantly, system
downtime is expected to improve as the natural gas engines are
direct drive to the pumps, eliminating the intermediate electrical
power generation that had frequent shut-downs for various reasons,
resulting in lower production.
There were two operations that took management time and incurred
one-off costs. The water injection well failed a pressure test and
required a workover to meet regulatory requirements. This had an
adverse effect on production as this well is the primary means of
water disposal, and hence the higher water producing wells were
shut in. There was also a regulatory requirement to abandon one of
the shut-in wells.
Now that the water injection well is back in service and the
modified jet pump equipment is less susceptible to downtime, it is
expected that target production of 100 boepd (gross) will be
achieved in December.
Cinnabar (75% WI)
As previously announced, all three wells produce oil and gas but
do not maintain continuous flow; once shut-in, pressure builds and
then the wells will flow again. As is common in the USA, it seems
that artificial lift is required. The most appropriate method for
this situation is a modest investment in a traditional pump-jack.
The cost of acquisition and installation is circa USD 50-70,000 per
well. The economics are compelling with short term payout of the
investment. Importantly, this will provide more information on the
reservoir and help to plan future development and production of the
considerable Reserves.
Australian projects
EP 145
The farmin agreement with Greenvale Gold Pty Ltd ("Greenvale")
signed in October 2023 will, subject to completion, deliver a
strong Joint Venture partner to work with in Australia which will
fund exploration and is validation of the helium, hydrogen and
hydrocarbon potential of EP 145. The farmin will become effective
from Completion at which point Greenvale will pay AUD160,000 and
ongoing operating costs.
Documentation has been submitted and Norther Territory
government approval is anticipated in the near future. The seismic
acquisition programme is planned for the first half of 2024, with
results due and a well location announced before end of Permit Year
3 in August 2024, followed by drilling in the following Permit
Year.
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 NOMAD and Joint Broker
Andy Carroll SP Angel Corporate Finance LLP
CEO Stuart Gledhill / Richard Hail /
acarroll@mosmanoilandgas.com Adam Cowl
+44 (0) 20 3470 0470
Alma Joint Broker
Justine James CMC Markets UK Plc
+44 (0) 20 3405 0205 Douglas Crippen
+44 (0) 7525 324431 +44 (0) 020 3003 8632
mosman@almastrategic.com
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 several projects in the US, in addition to
exploration projects in the Amadeus Basin in Central Australia.
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END
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