LGO today announces that the farm-in to the Advance Oil Company (Trinidad) Limited ("Advance") North Moruga area leases, has now been successfully concluded. LGO plans to work-over the existing wells as soon as practical and will drill up to ten new wells on the leases over a 3 year period commencing in 2013.
As previously announced in the heads of terms in July 2011 LGO will:
be assigned a 49% interest in the private petroleum leases and Petrotrin sub-leases,
assume operatorship of all the Advance leases,
initiate a programme to reactivate the production from the existing oil wells on the leases,
drill a minimum of three exploration and up to six appraisal/development wells,
over a period of three years,
gain an immediate 33% interest in production revenues, which will increase as LGO
completes the planned wells, to a maximum of 49%.
The leases cover an area of approximately 1,220 acres and lie between the West Moruga Field which has produced 25 million barrels of oil (mmbbls) and the Innis,
Antilles and Trinity Fields which have produced approximately 15 mmbbls of oil.
Moruga North is approximately 35 kilometres west of the existing LGO operations at Goudron.
Advance have held the North Moruga leases for a number of years, during which they have integrated all existing geological and production data and drilled three exploration wells.
New wells in the Moruga area will be drilled to depths of between 1,500 to 2,500 feet and are estimated at a gross cost of between US$300,000 and US$500,000 per well. This drilling will be funded over a period of three years from cashflow generated from the Company's other production operations in Trinidad and the cashflow or sale proceeds from assets in Spain.
Assignment of the private petroleum licence requires approval from the Trinidad and Tobago Ministry of Energy and Energy Affairs and is expected to be obtained in early 2013. The first new well will be drilled as soon as practical after the assignment. Work on the reactivation of existing wells will commence when equipment is available and the final arrangements to prepare the crude oil for sale have been agreed with owners of nearby facilities.
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