MOROCCO: Predator Oil & Gas Receives £900,000 loan for Expansion of the MOU-1 testing programme & MOU-3 long-lead drilling items

Highlights 

·    Commencement of MOU-2 drilling currently projected for mid-December 2022 

·    All remaining well inventory and drilling materials on way to Morocco 

·    Exercise of options and Directors’ loan will provide aggregate additional net funds of £1,256,880 for the expansion of the MOU-1 testing programme and the placing of orders for MOU-3 long-lead drilling items 

·    Strategic objective to demonstrate a potential gas field production profile of between 150 to 250 mm cfgpd 

·    In response to industry interest in respect of the Guercif gas opportunity based on latest operation update 

·    Industry interest in the Corrib South successor authorisation generated by Mag Mell Project public consultation submissions

Use of proceeds

Predator oil and gas says it wishes to further develop its asset portfolio ahead of a currently projected date of mid-December 2022 for the commencement of the drilling of the MOU-2 well. This is in order to take advantage of recent industry interest in respect of the Company’s portfolio of assets in of Morocco, Ireland and Trinidad following the most recent operations update announced by the Company on 8 November 2022.

Morocco

In view of the supply chain issues caused by the Ukraine-Russia war resulting in extended out lead times for key well equipment and materials, the Company made advance payments for long lead well inventory for MOU-3. To ensure rapid implementation and scaling up of a  gas development, pending the results of MOU-2, and to avail of currently projected attractive forward gas prices in Europe, an additional gas delivery well needs to be accelerated to demonstrate the ability to fast-track development drilling. Industry interest in any future participation in the Guercif gas project has referenced an export option to Europe should Guercif gas resources be proved up more quickly by additional drilling. The Company believes that a target gas production profile of 150 to 250 mm cfgpd will be required in order to create the potential for winter-focussed gas sales of surplus Moroccan gas into the European market. The MOU-1 and MOU-2 structure is in close proximity to the Mahgreb gas pipeline (less than 5 kilometres away) creating the infrastructure link to a potential European gas market. As a licence operator the Company has rights of access to the Maghreb Gas Pipeline subject to regulatory approval. A potential tie-in access point is within the Company’s licence area.

To address this additional export option the MOU-1 and MOU-2 testing programmes are being expanded to include all potential gas reservoirs in the wells to maximise gas deliverabilities. This involves some additional costs in equipment and for extra operational days. The costs are justified by creating an opportunity to demonstrate the ability to quickly scale up gas production to embrace both a domestic market and a larger export gas markets. This is an incremental near-term strategic objective that is not in competition  with the current commitment  to develop initial gas production for the Moroccan industrial market using a trucked Compressed Natural Gas option.

The total additional costs to fulfil the Company’s near-term strategic objective are forecast to be approximately of £900,000.