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Longreach Oil & Gas Announces Final Results
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JERSEY, CHANNEL ISLANDS–(Marketwire – April 30, 2012) –
30th April 2012 LONGREACH OIL AND GAS LIMITED Q4 and Year End Results LONGREACH OIL AND GAS LIMITED (TSX-V: LOI), an oil & gas company focused on Morocco (“Longreach” or the “Company”), is pleased to announce its financial and operating results for the fourth quarter and the 12 months to 31 December, 2011. Today the Company filed its annual financials statements for the year ended December 31, 2011 together with the management’s discussion & analysis in respect of the Company’sfinancial results. Highlights Operational: * Geological and Geophysical work programme completed on Foum Draa and Sidi Moussa offshore licences * Farm-out of offshore licences underway, together with joint venture partners * Close of Sidi Moktar farm-in during September, giving Longreach operatorship and a net 50% working interest (post ONHYM back in) * Extensive geological and geophysical interpretation of existing data on Sidi Moktar is well underway, including interpretation of over 6,000km of 2D seismic and the 43 historical wells drilled on the acreage * Prospect evaluation underway on Sidi Moktar aimed at identifying a suitable location to shoot new seismic programme * 1,674 km of 2D seismic on Zag was completed in January 2012, with processing and interpretation expected to be completed this year * Completion in September of 608km 2D infill seismic programme on Tarfaya, concentrating on the J North prospect. Processing and interpretation of the new seismic nearing completion Financial / Management: * Cash of CND$10.5m (CND$5.2m Dec 2010) – fully funded for current work programmes * Working capital of CND$7.4m (CND$3.2m Dec 2010 / CND$9.9m Sept 2010) * Strengthened investor base with completion of $10.1m equity financing in July 2011 Commenting, Bryan Benitz, Chairman and CEO of Longreach, said: “Longreach completed all its work programme commitments during 2011. Extensive new seismic acquisitions were completed on the Tarfaya and Zag licences and completion of G&G work on the offshore licences has enabled Longreach and joint venture partners to begin a farm-out process to attract industry partners for the drill phase. We added the Sidi Moktar onshore licence to our portfolio and are well underway with the interpretation of existing data on this licence. We remain well funded to complete our work programme commitments this year, which will see Longreach develop the resource potential on our licences and advance us further to drill stage. ” Results Statement Longreach remained in a strong financial position at the year end with cash and cash equivalents of CND$10.5m, providing the Company with sufficient funding for its current planned work programme. Cash decreased from CND$11.8m in the final quarter of the year in principal due to costs related to new seismic acquisition on Zag and seismic interpretation costs on Sidi Moktar. The working capital surplus at the year end stood at CND$7.4m versus CND$9.9m at the end of the third quarter and CND$3.2m at the same time last year. Operational Update Sidi Moktar Onshore (Net Working Interest 50%) On 19 September 2011, the previously announced Sidi Moktar farm-in was signed. Longreach has acquired a 50% operating interest (post ONHYM back in), comprising three blocks totalling 4,711 square kilometres and with resource estimates of 111 Bcf (Low Estimate), 292 Bcf (Best Estimate) and 776 Bcf (High Estimate) of undiscovered gas initially-in-place. The licence has a significant amount of historical exploration data available to Longreach, including 6,172km2 of 2D Seismic and 43 exploration & development wells. Longreach’s exploration licence consists of three blocks surrounding the producing Meskala field (Morocco’s major producing field) which is owned by ONHYM, the Moroccan state company. According to information available from ONHYM, four fields within Sidi Moktar have historically produced 30.5 Bcf of gas from Jurassic aged reservoirs. In consideration for the acquisition of that interest, Longreach will be responsible for carrying out a work programme of acquiring, processing and interpreting 100 km2 of 3D seismic data and drilling of two exploration wells. Longreach began data loading and data interpretation in October 2011 and intends to complete a prospect high grading evaluation to identify a suitable location to shoot the new seismic programme. Sidi Moussa & Foum Draa Offshore (Net Working Interest 7.5%) In September 2009, Longreach agreed to terms to earn a 7.5% net interest in the Sidi Moussa & Foum Draa offshore licences. Located directly west of Agadir, the licences cover an area of approximately 12,714 square kilometres (3.14 million acres). Extensive high quality 2D and 3D seismic work has been completed on these licences, including 5,260 km2 of 3D seismic shot in 2001/2002. On Foum Draa, the reprocessing of 1,500km2 of 3D seismic (PSTM) is now complete. The processing of PSDM (500km2) was completed during Q4 2011. On Sidi Moussa the reprocessing of 2,000km of 2D seismic has been completed together with geological interpretation. Extensive geological and geophysical interpretation has enabled Longreach and its joint venture partners to identify 33 prospects and leads. Netherland, Sewell & Associates Inc. independently evaluated 14 identified prospects and 8 additional leads in the Sidi Moussa and Foum Draa licences. In Foum Draa these are predominately lower Cretaceous diapir related structures. In Sidi Moussa the identified prospects are fault related structures in the Jurassic or Triassic. Drill ready targets have been identified; project economics and well planning has been analysed. Subsequent to completing the geological and geophysical work programme, the joint venture partners have announced their intention to seek an industry partner for the drill phase of these licences, through a farm-out. Tarfaya Onshore (Net Working Interest 22.5%) In April 2010, the reprocessing of 1,400km of the original 2D seismic shot on the Tarfaya licence was completed. To date 15 prospects and leads have been identified, the most prospective of which are located in the north east section of the licence, including the J North prospect, which has an area of 105km2. The results of the seismic reprocessing allowed the joint venture partners to plot co-ordinates for a 2D infill seismic programme over the most prospective area. In July 2011, a 2D seismic programme commenced, with the acquisition completed on time and within budget on 23 September 2011. A total of 608km of 2D seismic was shot by seismic contractor Novaseis, beyond the minimum work programme requirement of 500km. Processing and interpretation of this new seismic is nearing completion. Zag Basin Onshore (Net Working Interest 22.5%) Having completed successfully the reconnaissance permit requirements, a full exploration permit was signed with ONHYM in September 2009. The exploration licence is for 8 years, split into three work phases. Following successful completion of the Tarfaya seismic programme, Noveseis were contracted to acquire new 2D seismic on Zag. In total 1,674 km of 2D seismic, largely on the eastern part of the licence area was acquired. This was completed in January 2012 and is the first seismic data ever acquired on this licence. Processing and interpretation is expected to be completed this year. There is no resource estimate on this licence area yet. Outlook The Company has continued to make progress across its licence portfolio and believes that it is well placed to continue to make further progress during 2012. Longreach believes that Morocco remains an extremely supportive country to operate in, with strong growth in the demand for hydrocarbons and significant resource potential. We look forward to continuing our operation in the year ahead. For Further Information: Longreach Bryan Benitz Chairman & CEO +44 20 3137 7756 Pelham Bell Pottinger Mark Antelme / Philip Dennis / Rollo Crichton-Stuart +44 207 861 3232 Additional information on Longreach Oil and Gas Limited can be found at www.longreachoilandgas.com or through Longreach’s investor relations agent. Additional information on Longreach Oil and Gas Limited can also be found at www.sedar.com Special Note Regarding Forwarding Looking Statements: This press release contains forward-looking statements. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “project”, “potential”, “targeting”, “intend”, “could”, “might”, “continue” or the negative of these terms or other similar terms. Forward-looking statements in this press release include, but are not limited to the completion of evaluations and processing and interpretation of data, the performance characteristics of the Company’s oil and gas properties, capital expenditure programs, supply and demand for oil, gas and commodities, prices for oil and gas, drilling plans, and realization of the anticipated benefits of acquisitions. Forward-looking statements are only predictions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: general economic conditions in Canada, the Kingdom of Morocco and globally; industry conditions, including fluctuations in the price of oil and gas, governmental regulation of the oil and gas industry, including environmental regulation; fluctuation in foreign exchange or interest rates; risks inherent in oil and gas operations; political risk, including political risk; geological, technical, drilling and processing problems; unanticipated operating events which could cause commencement of drilling and production to be delayed; the need to obtain consents and approvals from industry partners, regulatory authorities and other third-parties; stock market volatility and market valuations; competition for, among other things, capital, acquisitions of reserves, undeveloped land and skilled personnel; incorrect assessments of the value of acquisitions or resource estimates; any future inability to obtain additional funding, when required, on acceptable terms or at all; credit risk; changes in legislation; any unanticipated disputes or deficiencies related to title matters; dependence on management and key personnel; and risks associated with operating in and being part of a joint venture. Although the forward-looking statements contained in this press release are based upon assumptions which management of the Company believes to be reasonable, the Company cannot assure that actual results will be consistent with its expectations and assumptions. Undue reliance should not be placed on the forward-looking statements contained in this news release as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. These statements speak only as of the date of this press release, and the Company does not undertake any obligation to publicly update or revise any forward-looking statements except as expressly required by applicable securities laws. Special Note Regarding Certain Estimates Longreach cautions readers that volumes described in this press release as prospective resources and gas initially-in-place are an arithmetic sum of multiple estimates, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes and appreciate the differing probabilities of recovery associated with each. The probability associated with the high estimate would be considered far less likely than the best estimate, and conversely, the low estimate would be expected to be much higher than the presented arithmetic sum. Prospective resources and gas initially-in-place are undiscovered resources. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Longreach is not able to assign a more specific category to such estimates of prospective resources or gas initially-in-place until additional seismic data has been obtained and the results of that data, and of geological and geophysical studies, have been completed. Special Note Regarding the Use of Analogous Information The Company cautions that information regarding the Meskala licence contained in this press release is “analogous information” as that term is used in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”), and is not the result of an independent estimate prepared by a qualified reserves evaluator or auditor nor has such information been prepared in accordance with the COGE Handbook. Although the Company believes that production on the Meskala field, which is adjacent to the Sidi Moktar licences, may indicate that production is possible on the Kechoula field, no assurance can be given by the Company that commercial production on any of the Sidi Moktar exploration licences will be achieved, or as to the levels of production that may be possible on any of the Sidi Moktar exploration licences if production is achieved. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This information is provided by RNS The company news service from the London Stock Exchange END
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