NORTHCOTE ENERGY LIMITED: Acquisition & Farm Out of Producing Unit, Oklahoma
NORTHCOTE ENERGY LIMITED: Acquisition & Farm Out of Producing Unit, Oklahoma Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector: Oil & Gas
6 December 2013
Northcote Energy Ltd (`Northcote' or `the Company')
Low Cost Acquisition & Farm-Out of the Producing East Blackwell Skinner Sand
Unit, Oklahoma Northcote (AIM: NCT), an onshore US oil and gas exploration and production company, is pleased to announce that it has acquired a 100% Working Interest (`WI') in the East Blackwell Unit (`East Blackwell') in Kay County, Oklahoma. Concurrently, the Company has agreed terms for the farm-out of a 20% interest in East Blackwell, in line with its strategy to significantly increase future production and reserves while at all times actively managing development costs and risk. * Northcote's net US oil and gas acreage is now over 6,058 including 4,496 net acres in Oklahoma and over 1,562 in Texas a 1300% increase from 462 net acres at IPO * Acquired 100% working interest (75% Net Revenue Interest) in 520 gross acres for total cash consideration of US$120,000 - includes five new drilling locations * Agreed farm-out terms where a third party will earn a 20% WI (15% NRI) in East Blackwell for a total consideration of US$75,000 - effectively funding Northcote's initial share of first phase development costs * Acreage held by production giving discretion as to when work is performed * East Blackwell's strength exists in its future development upside: * + Near term - field initiatives to improve production and operating efficiency + Mid term - new well targeting the lower skinner sands + Longer term - Enhanced Oil Recovery campaigns on existing and new wells
Northcote's Chief Executive Officer Randall Connally said "The East Blackwell Skinner Sand Unit acquisition is an extension of our activities in and around Osage County, Oklahoma and will be added to the portfolio of properties operated by Northcote. The speed and terms of the agreed farm-out, in our view, provide third party confirmation of the potential of East Blackwell which is held by production thereby allowing us to schedule development to best suit our resources. The addition of up to five new drilling locations in a field that has averaged about 39,000 barrels of oil per well from shallow wells that can be drilled and completed for approximately US$500,000 each fits our objective of adding low cost, oily upside for Northcote shareholders."
Northcote Energy Limited is pleased to announce the acquisition of the East Blackwell Skinner Sand Unit in Kay County, Oklahoma for US$120,000. After Farm-out Northcote's interest in the East Blackwell Skinner Sand Unit includes 520 gross acres with an 80% WI (60% NRI) that are held by production from two wells.
The East Blackwell Skinner Sand Unit has historically produced approximately 391,000 cumulative barrels from 10 productive wells to date. The field currently produces a stable 3 barrels per day from 2 wells.
Northcote intends to drill and complete up to five additional wells targeting the upper and lower Skinner Sands and the unit has excellent longer term potential as a waterflood. The funding of these future wells is at the Company's discretion and any investment will be subject to partnering or the availability of non-dilutive capital. The unit is held by production and, therefore, the work programme is at Northcote's discretion. In the near term Northcote will take steps to increase production rates from the two producing wells and improve the efficiency of the water disposal system to support longer term development drilling. Northcote will serve as operator of the unit and the Company looks forward to providing shareholders with an update as work commences at East Blackwell.
Northcote has concurrently agreed the terms of a farm-out of a 20% WI and 15% NRI in East Blackwell for a total consideration of US$75,000. This is comprised of US$60,000 with regards to the lease acquisition and a further US$15,000 towards Northcote's share of costs associated with the first development phase, which comprises field initiatives to improve production and operating efficiency.
All of the technical information, including information in relation to reserves and resources that is contained in this announcement has been reviewed internally by the Company's Technical Director, Mr. Kevin Green. Mr. Kevin Green is a Petroleum Geologist who is a suitably qualified person with over 30 years' experience in assessing hydrocarbon reserves and has reviewed the release and consents to the inclusion of the technical information.
`BOPD' means barrels of oil per day
`BOE' means barrels of oil equivalent: a unit of energy based on the approximate energy released by burning one barrel (42 US gallons or 158.9873 litres) of crude oil. There are 42 gallons (approximately 159 litres) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units (MBtus) or 1,700 kilowatt hours (kWh). The value is necessarily approximate as various grades of oil have slightly different heating values. BOE is used by oil and gas companies in their financial statements as a way of combining oil and natural gas reserves and production into a single measure.
`BOEPD' means barrels of oil equivalent per day
`MCF' means thousand cubic feet
For further information visit www.northcoteenergy.com, see below or contact the following:
Randy Connally Northcote Energy Ltd +01 214 675 7579
Ross Warner Northcote Energy Ltd +44 7760 487 769
Dan Jorgensen Northcote Energy Ltd +44 20 7024 8391
Roland Cornish Beaumont Cornish Ltd +44 20 7628 3396
Jerry Keen Shore Capital Stockbrokers Limited +44 20 7408 4090
Bidhi Bhoma Shore Capital Stockbrokers Limited +44 20 7408 4090
Stefan Olivier Cornhill Capital Limited +44 20 7710 9618
Hugo de Salis St Brides Media and Finance Ltd +44 20 7236 1177
Elisabeth Cowell St Brides Media and Finance Ltd +44 20 7236 1177
Northcote Energy Ltd is a revenue generative US onshore oil and gas production company focussed on the rapidly emerging Mississippi Lime formation in Oklahoma. The Company participates with leading operators, including Midstates Petroleum and Chesapeake Energy, in low risk development plays where advanced techniques, such as horizontal drilling and fracing, are used to unlock known oil accumulations and dramatically improve recovery rates. Management is focused on increasing production through a multi-well drilling and fracing campaign in 2013.
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