TANGIERS PETROLEUM LIMITED: Quarterly Report September 2013
28 October 2013
TANGIERS PETROLEUM LIMITED
Quarterly Report for Period Ending 30 September 2013
The Directors of Tangiers Petroleum Limited ("Company") are pleased to provide the following report on its activities during the quarter ended 30 September 2013. A copy of the full quarterly report, including the diagrams referred to in the text and the Appendix 5B (Quarterly Cash Flow Report), is available on the Company's website at www.tangierspetroleum.com
The joint Moroccan ministerial order approving the assignment of the 50% interest in the Tarfaya Offshore Block and operatorship to Galp Energia is expected soon.
Planning of the initial Tarfaya Offshore Block exploration well, TAO-1, continued with a view to spudding the well in the first half of 2014.
During the quarter, the Company and CWH Resources Ltd ("CWH") continued to work towards satisfying the conditions precedent under the Farmout Agreement between the Company and CWH for Australian exploration permits WA-442-P and NT/P81. The conditions precedent were due for completion by 30 September 2013. As this deadline was not met, the Company announced that it had terminated the Farm-out Agreement on 8 October to allow it to seek another farminee and submit an application for an extension to the time needed to complete the minimum work program from the National Offshore Petroleum Titles Administrator. Subsequently, the Company submitted an application for a suspension for WA-442-P. The Company received a response on 22 October restating the request to provide a copy of the contract for a seismic vessel.
The Company also continued to focus its efforts on expanding its position in Africa with multiple opportunities presently being evaluated.
Overview The key operational activities during the quarter were: * planning for drilling the first exploration well in Morocco with the draft basis of well design for the proposed exploration well (TAO-1) completed and well services contract awarded. Galp continued to move forward with environmental approvals and well planning for TAO-1 with a view to spudding the well in the first half of 2014. * calling for and evaluating tenders for the seismic survey vessel to be used in exploration permits WA-442-P and NT/P81. The Company provided assistance to CWH with the selection process. However, CWH did not reach a decision on the award of the seismic vessel contract within the timeframe needed to meet the government's work commitment requirements. The key corporate activities for the quarter were: * ensuring that the farm-out process with Galp remains on target as it is anticipated that the remaining conditions precedent will be closed out in the fourth quarter of this year. * the commencement of an intensive investor relations road show from 24 September to 17 October with presentations taking place in Perth, Sydney, Melbourne, Hong Kong and London.
Of note, the Company announced that it had signed an underwriting agreement with Foster Stockbroking Pty Ltd on 10 October, to underwrite the $0.16 listed options expiring on 31 October 2013, securing funding of A$7.1 million before costs.
Financial The ASX Appendix 5B attached to this report contains the Company's cash flow statement for the quarter. The significant elements for the period were: * exploration and evaluation expenditure reduced to A$0.065 million (June 2013 A$0.168 million); * administration and other operating costs of A$0.846 million (June 2013 A$0.843 million); * the exercise of 4,480,222 listed options at $0.16, netting the company $0.717 million; and * the company recorded a net cash outflow of A$0.125 million.
At the end of the quarter, the Company had net cash reserves of A$1.62million excluding the US$3 million bank guarantee in Morocco.
On satisfaction of the remaining conditions precedent for the Galp Farm-out Agreement which relate to approvals from the Moroccan government, cash reserves will be augmented by US$7.5 million of back costs and return of the US$3 million bank guarantee.
The Company's ongoing strategy is to review and acquire new venture opportunities in Africa to create a diversified and balanced portfolio.
During the last quarter, the Company evaluated multiple selected new venture opportunities in various African countries. The focus continues to be on farm-in opportunities both onshore and in shallow offshore waters in a number of prospective basins. Potential corporate deals are also being considered.
Tarfaya Offshore Block - Morocco (75% and Operator) The Tarfaya Offshore Block (Figure 2), Morocco comprises eight contiguous permits covering an area of 11,281 sq km. The Tarfaya Block is situated approximately 600 km southwest of Morocco's capital, Rabat, inboard of the Canary Islands on the Atlantic Margin. The Block contains multiple prospects and leads within Jurassic sediments as well as potential within the Tertiary, Cretaceous and Triassic Formations. During the quarter, the Joint Working Group established between the Company and Galp continued its work on the transition plan whereby Galp will assume operatorship. The Joint Working Group was designed to ensure that operations run smoothly with minimal delays in regard to the Tarfaya Work Program. The following work was undertaken by the Joint Working Group: * continued geophysical interpretation of the Assaka 3D seismic survey including maturation of the well location to test the Trident structure in an optimal location; * further refinement of the preliminary basis of well design for the first exploration well; and * the award of the well services contract.
The Assaka 3D seismic data covers the Trident, Assaka and TMA prospects, certified by ISIS Petroleum Consultants (ISIS) and Netherland, Sewell & Associates, Inc (NSAI). The La Dam prospect in the south of the Tarfaya Block is covered by a 580 sq km 3D seismic survey acquired in 2006 and reprocessed in 2011 by the Company. The combined total best estimate gross unrisked original oil-in-place for the four Jurassic prospects in the Tarfaya block is 4,335 million barrels.
WA-442-P (Turtle) and NT/P81 (Barnett) (90% and Operator)
These two contiguous exploration permits encompass 3,900 sq km and are located approximately 20 km offshore in the Commonwealth waters off the coasts of Western Australia and Northern Territory, approximately 320 km southwest of Darwin (Figure 3). The permits are located in shallow water (less than 60m) with extensive 2D and modest 3D seismic coverage.
During the quarter, the joint venture partners and CWH continued to work towards satisfying the conditions precedent under the Farmout Agreement between the Company and CWH for Australian exploration permits WA-442-P and NT/P81. This included the planning of the acquisition of 3D seismic data across the two contiguous permits, specifically the calling for and evaluation of tenders for the seismic vessel which were submitted by 13 September 2013. The conditions precedent were due for completion by 30 September 2013. As this deadline was not met, the Company announced that it had terminated the Farm-out Agreement on 8 October to allow it to seek another farminee and submit an application for an extension to the time needed to complete the minimum work program from the National Offshore Petroleum Titles Administrator. Subsequently, the Company submitted an application for a suspension for WA-442-P. The Company received a response on 22 October restating the request to provide a copy of the contract for a seismic vessel.
NT/P83 Exploration Permit, Offshore Darwin, Arafura Sea (100% and Operator)
Following extensive assessment, the Company has decided to surrender this permit and an application for surrender has been submitted to NOPTA.
Hydrocarbons in Place Summary Detailed below are the estimated oil and gas-in-place estimates for the Company's portfolio of project interests. Gross (100%) Tangiers Net Attributable
Project Low Best/ High Low Best/ High
Mean Mean Oil-in-Place Estimates (unrisked) (All figures in millions of barrels)
Morocco 1,564 4,335 12,399 75% 1,173 3,521 9,299
Milligans Fan 118 683 1,489 90% 106 615 1,340
Tangiers Leads, Australia
Total 1,682 5,018 13,888 1,279 4,136 10,639 Prospective Resources
Gas-in-Place Estimates (unrisked) (all figures in trillions of cubic feet)
Nova Prospect, 0.375 6.930 15.704 90% 0.338 6.24 14.134
Prospective Resources Summary
Detailed below are the estimated Prospective Resources delineated across the Company's portfolio of project interests.
Gross (100%) Tangiers Net Attributable Risk
Interest Factor Project Low Best/ High Low Best/ High
Mean Mean Prospective Oil Resources (unrisked) (All figures in millions of barrels)
Morocco 156 867 4,959 75% 117 650 3,720 unrisked
Milligans Fan 35 218 505 90% 32 196 455 unrisked
Tangiers Leads, Australia
Total 191 1,085 5,464 149 846 4,175 Prospective Resources
Prospective Gas Resources (unrisked) (all figures in trillions of cubic feet)
Nova Prospect, 0.17 3.46 7.83 90% 0.15 3.11 7.04 unrisked
Tangiers Qualified Person The information in this announcement was produced by Mr Brent Villemarette who is an Executive Director of Tangiers. Mr Villemarette is a petroleum engineer with over 30 years of experience and is a member of the Society of Petroleum Engineers. Mr Villemarette has reviewed this announcement and consent to its release. Terminology and standards adopted by the Society of Petroleum Engineers ("SPE") "Petroleum Resources Management System" have been applied in producing this document. Under these standards: "Undiscovered Oil Initially in Place" is that quantity of oil which is estimated, on a given date, to be contained in accumulations yet to be discovered. The estimated potentially recoverable portion of Undiscovered Oil Initially in Place is classified as Prospective Resources, as defined below; and "Prospective Resources" are those quantities of oil or gas which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations. ROBERT DALTON Joint Company Secretary Tangiers Petroleum Limited Level 2, 5 Ord Street West Perth WA 6005, Australia Ph: + 61 8 9485 0990 www.tangierspetroleum.com Contacts RFC Ambrian Limited (Nominated Adviser) Mr Stuart Laing +61 8 9480 2506 Peel Hunt LLP (Joint AIM Broker) Mr Richard Crichton Mr Andy Crossley + 44 20 7418 8900 Shore Capital Stockbrokers Ltd (Joint AIM Broker) Mr Jerry Keen Mr Bidhi Bhoma + 44 20 7408 4090 Mr Ed Portman (Media and Investor Relations - United Kingdom) Tavistock Communications +44 20 7920 3150 END -0- Oct/28/2013 07:00 GMT