Anglo African Oil & Gas plc (AIM: AAOG), an independent oil and gas developer, is pleased to provide details of its plan to bring the TLP-103C well (‘the Well’ or ‘TLP-103C’) at its Tilapia licence in the Republic of the Congo into production.
· TLP-103C to produce from the upper reservoirs by comingling production from R2 and the Mengo, following a double completion including a one-off frack of the Mengo
· Initial anticipated aggregate flowrate in excess of 1,500 bopd for the first 14-18 months
· Projected financial metrics at 1,500bopd:
o c.US$1 million/month net free cashflow generated
o breakeven oil price falls to below US$20 per barrel
· First production targeted for April 2019
· Completion of the Well to production will be funded from existing cash resources
David Sefton, Executive Chairman of AAOG, said: “We are excited by this funded plan for TLP-103C and are working hard to bring the Well into production as soon as possible. The development schedule is predicated on the availability of Schlumberger’s fracking equipment which we have been informed will be available in the beginning of April.
“Bringing TLP-103C into production is the key to realising the value that we believe has been unlocked by the very successful results from the Well. With production rates of up to 1,500 bopd expected, TLP-103C will provide considerable cashflow for the Company of approximately US$1 million net per month. The board is focused on building shareholder value and bringing TLP-103C into production is the next step in what has been a very successful programme so far.”
As previously announced, TLP-103C encountered hydrocarbons in each of its target reservoirs. Based on the Company’s analysis of the results from the Well and the board’s long-stated desire to become cashflow positive as quickly as possible, management has concluded that TLP-103C is to be brought into production through comingling of the R2 and Mengo reservoirs via a double completion. This can be achieved from the Company’s existing cash resources whereas production from the Djeno would require improvements to the topside infrastructure at Tilapia.
Analysis of TLP-103C in conjunction with the TLP-101 well and older well TLPM-1 gives the Company confidence of an initial flowrate in excess of 1,500 bopd with a steady decline after 14-18 months in the Mengo and a sharper decline in the R2. The Company then expects to see a long-term production profile of approximately 400 bopd.
The production plan developed provides for a dual completion from both R2 and the Mengo, with a one-off frack being used to bring the latter horizon into production. Schlumberger fracking equipment is due to arrive in the Congo at the beginning of April and the Well will be brought into production immediately following fracking, around the end of April 2019. The Company is currently funded for this work stream.
At 1,500bopd the Company has a breakeven oil price, including covering all operating and G&A costs in both the Congo and London, of less than US$20 per barrel and produces monthly net free cashflow of approximately US$1 million. To the extent that the Company is still owed monies by SNPC, it will be able to recover such amounts from gross oil receipts otherwise due to SNPC from the Well.
The board is encouraged by the progress made to date on its negotiations to renew the Tilapia licence and having now received a letter of intent to re-award from the government anticipates further news in the coming weeks regarding an extension of the licence to 2040.