TIDMADME
RNS Number : 8251D
ADM Energy PLC
24 February 2020
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.
24 February 2020
ADM Energy PLC
("ADM" or the "Company")
ADM to Acquire a Further Interest in OML 113 from EER
ADM Energy PLC (AIM:ADME), an oil and gas investing company
quoted on AIM, is pleased to advise that it has entered into a sale
and purchase agreement ("Agreement") with EER (Colobus) Nigeria
Limited ("EER") to acquire, subject to satisfaction of certain
conditions, a participating interest of 2.25% from EER in oil
mining lease no. 113, which includes the Aje field ("Block"), in
which it already has an interest of 2.7%. Consideration for the
acquisition is $3,000,000, to be satisfied by the issue of
$2,000,000 of new ordinary shares at 7 pence per share
("Consideration Shares") and $1,000,000 in cash at the time of
completion.
Highlights of the Agreement
-- ADM will acquire 25% of the interests, rights and obligations
held by EER in the Block subject to conditions
-- On completion, ADM's participating interest will increase to approximately 4.9%
-- Corresponding revenue and cost bearing interests increasing to 9.2% and 12.3% respectively
-- Upon completion, ADM's net 2P reserves will increase from 8.9
MMboe (as announced on 2 May 2019) to 16.4 MMboe
-- Post completion, net daily production is expected to increase
to approximately 273 bopd from 148 bopd
Background
OML 113 covers an area of 858km(2) in the western Nigeria
offshore Dahomey basin, some 24km south of the coast and 64km from
Lagos, in water depths ranging from 100 to 1,000 metres. The West
African Gas Pipeline (WAGP) intersects the northwest part of the
licence. There are currently five partners in the licence: Yinka
Folawiyo Petroleum Company Limited, New Age Exploration Nigeria
Limited, Pan Petroleum Aje Limited, EER and ADM.
Interest in OML 113
Since 2016, ADM has held a participating interest in the Block
of 2.7% with corresponding revenue interest and cost bearing
interest of 5.0% and 6.7% respectively. EER holds an undivided
participating interest in the Block of 9.0% with a revenue interest
of 16.8% and a cost bearing interest of 22.5%. On completion, ADM's
interest will consolidate to a participating interest of 4.9% with
corresponding revenue and cost bearing interests increasing to 9.2%
and 12.3% respectively.
On 2 May 2019, the Company reported the results of an updated
Competent Person's Report ("CPR") produced by AGR TRACS
International Limited which included production data up to 31
December 2018. The table below updates this information to show the
corresponding estimates for the 2.25% interest being acquired
(subject to completion) for which the net attributable 2P reserves
are approximately 7.5 MMboe. On completion, ADM's net attributable
2P reserves are estimated to increase to 16.4 MMboe. Based on the
current average daily production for 2019 of 2,967 bopd, as
announced on 23 January 2020, ADM's net daily production will
increase from 148 bopd to 273 bopd on completion.
The increase in ADM's net 2P reserves following completion is
based on an extrapolation of reserves data from the latest CPR,
announced on 2 May 2019, and is outlined in the table below. The
information in this table has not been updated since the last
reported CPR and, therefore, does not take into consideration
production from 1 January 2019 onwards.
Oil & Gross Net Attributable Net Attributable
Liquids: to ADM from EER Interest
MMbbls Acquisition
Gas: Bscf
1P 2P 3P 1P 2P Proved 3P Proved, 1P 2P Proved 3P Proved,
Proved Proved Proved, Proved & Probable Proved & Probable
& Probable Probable & Possible Probable & Possible
Probable &
Possible
OML 113 Aje
OIL
Developed
Producing
(DP) 2.05 2.25 2.43 0.1 0.11 0.12 0.08 0.09 0.1
Justified
for
Development
(JD) 1.11 2.48 4.17 0.07 0.16 0.25 0.06 0.13 0.21
OML 113 Aje
CONDENSATE
Justified
for
Development
(JD) 10.32 17.41 27.87 0.65 1.12 1.66 0.55 0.94 1.4
OML 113 Aje
LPG
Justified
for
Development
(JD) 20.11 33.86 54.39 1.29 2.2 3.14 1.09 1.85 2.65
OML 113 Aje
DRY GAS
(Bscf)
Justified
for
Development
(JD) 292.7 492.8 791.9 18.8 32.1 45.7 15.84 27.05 38.51
TOTAL, MMboe 82.4 138.2 220.8 5.2 8.9 12.8 4.38 7.5 10.79
Details of the Agreement
Completion of the transaction is conditional upon the consent of
the Nigerian Minister of Petroleum Resources for the transfer of
the interest from EER to ADM. Subject to completion, ADM will
acquire 25% of the interests, rights and obligations held by EER in
the Block such that, on completion, ADM's participating interest
will increase to 4.9% with corresponding revenue and cost bearing
interests increasing to 9.2% and 12.3% respectively. Further, ADM
shall be responsible for a corresponding interest in EER's alleged
outstanding disputed unpaid cash calls with the operator of the
Block which, for ADM as a purchaser of 1/4 of EER's interest in the
Block, represents approximately $1,500,000 plus applicable
interest. Subject to verification through audit, should it be
determined that all or a portion of the outstanding cash calls are
due, it is the intention that any sums deemed outstanding by the
partners will continue to be settled from production revenue at the
project level.
ADM is required to pay a refundable deposit of $250,000 within
90 days of signing the Agreement. Upon completion and following the
issue of the Consideration Shares, EER and any connected person or
other person to whom the Consideration Shares may be issued and
their associates ("Relevant Shareholders") will enter into a
relationship agreement, lock-in agreement and orderly market
agreement with ADM. Under the terms of the relationship agreement,
the Relevant Shareholders will have the right to nominate a
director to be appointed to the Board of ADM from completion,
subject to normal regulatory approval, and such right shall
continue until such time as the Relevant Shareholders cease to hold
20% or more of the entire issued share capital of the Company.
It is expected that the requisite consents and authorisations
may take a number of months to be received such that a long stop
date of 180 days after signing of the Agreement has been agreed,
following which either party is entitled to terminate the
transaction.
Related Party Transaction
Osamede Okhomina, the CEO of the Company, is a non-executive
director of EER. Accordingly, the signing of the Agreement in
respect of the proposed acquisition of the interest from EER and
related documents constitutes a related party transaction pursuant
to Rule 13 of the AIM Rules for Companies. Accordingly, the
independent directors (comprising the Board of ADM other than
Osamede Okhomina), having consulted with the Company's nominated
adviser, consider that the terms of the transaction are fair and
reasonable insofar as the Company's shareholders are concerned.
A further announcement will be made in due course.
Osamede Okhomina, CEO of ADM, said: "In keeping with our
strategic development agenda, I am pleased to announce our first
investment under the Company's new leadership. OML 113 is well
known to us and it is a fantastic asset that covers the spectrum of
field types from current oil production to several appraisal plays.
It is also very wet-gas rich which provides the potential for the
operator to be able to bring into the market, alongside dry gas,
resources like condensate and LPG.
"As envisaged under the intended Strategic Alliance signed
earlier this month, we have proposed this project as one Trafigura
may consider investing in. We look forward to updating the market
further in due course."
Yinka Ogundare, CEO of EER, commented: "We are very pleased with
this transaction that was structured to help further consolidate
our working relationship with ADM. The transaction would result in
deepening our collaborative relationship and help the partners and
the operator develop the asset further."
Enquiries:
ADM Energy plc +44 20 7786 3555
Osamede Okhomina, CEO
Cairn Financial Advisers LLP +44 20 7213 0880
(Nominated Adviser)
Jo Turner, James Caithie
Fox-Davies Capital Ltd +44 20 3884 8450
(Lead Broker)
Daniel Fox-Davies, Lionel Therond
Pello Capital Limited +44 20 3700 2500
(Joint Broker)
Dan Gee
Luther Pendragon +44 20 7618 9100
(Financial PR)
Harry Chathli, Alexis Gore, Joe Quinlan
About ADM Energy PLC
ADM Energy (AIM:ADME) is a natural resources investment company
with an existing asset base in Nigeria. ADM Energy holds a 5%
profit interest in the Aje Field, part of OML 113, which covers an
area of 858km(2) offshore Nigeria. Aje has multiple oil, gas and
gas condensate reservoirs in the Turonian, Cenomanian and Albian
sandstones with five wells drilled to date.
ADM Energy is seeking to build on its existing asset base in
Nigeria and target other investment opportunities across the West
African region in the oil and gas sector with attractive risk
reward profiles such as proven nature of reserves, level of
historic investment, established infrastructure, route to early
cash flow and exploration upside.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Company's control, are difficult to
predict, and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
The Company cautions security holders and prospective security
holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the
date of this announcement. The forward-looking statements made in
this announcement relate only to events as of the date on which the
statements are made. The Company will not undertake any obligation
to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory
authority.
Notes
The announcement has been reviewed by Wim Burgers, technical
consultant for ADM, a qualified production geologist with more than
40 years' experience in the oil and gas industry, who has also
reviewed the AGR TRACS report to which it relates.
In estimating reserves, contingent and prospective resources AGR
TRACS has used the standard petroleum engineering techniques. These
estimates are based on the joint definitions of the Society of
Petroleum Engineers, the World Petroleum Congress, the American
Association of Petroleum Geologists and the 2007 PRMS (Petroleum
Resources Management System).
It should also be noted that in producing the figures of the net
attributable reserves extracted from the CPR, the CPR calculations
use both the cost and revenue interests to derive the numbers.
Glossary of Key Terms
1P Proved reserves; represent volumes that will be recovered
with 90% probability
2P Proved + Probable; represent volumes that will be recovered
with 50% probability
3P Proved + Probable + Possible; represent volumes that
will be recovered with 10% probability
bbls barrels
boe barrels of oil equivalent
bopd barrels of oil per day
Bscf Billion standard cubic feet
condensate A mixture of hydrocarbons in either gas or liquid form
gross 100% of the resources attributable to the licence
MMbbls Million barrels
MMboe Million barrels of oil equivalent
Reserves Those quantities of petroleum anticipated to be commercially
recoverable by application of development projects to
known accumulations from a given date forward under
defined conditions on production, approved for development
or justified for development. Reserves are also classified
according to the associated risks and probabilities
(1P, 2P and 3P)
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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