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Byron Energy to Drill Bivouac Peak East Prospect

Source: www.gulfoilandgas.com 7/9/2018, Location: North America

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Byron Energy has announced that all partners have now formally elected to participate in the drilling of the initial test well in the Bivouac Peak Prospect Area. The initial test well is expected to spud in the second half of August.

Byron has recently proposed and, Otto Energy, Metgasco, and NOLA Oil and Gas Ventures have all elected to participate in the Weiss-Adler et. al. No. 1 well to be drilled to a depth of 18,294 ft MD/18,000 ft TVD to test the Bivouac Peak East Prospect.

As part of finalisation of the commitment to drill, the participation interests have been restructured. Byron Energy Inc, a wholly owned subsidiary of the Company, remains as the operator.

The initial test well is designed to test the Bivouac Peak East Prospect, targeting a mapped gross prospective resource of 125.6 billion cubic feet ('Bcf') and 11.3 million barrels oil ('Mmbo') (32.2 million barrels oil equivalent ('Mboe'). The Bivouac Peak project area comprises two prospects, the Bivouac Peak East Prospect and the Deep Prospect. As reported in Byronís 2017 annual reserve and prospective resources report, the total gross prospective resources for the two combined prospects at Bivouac Peak are estimated at 16.0 Mmbo and 177.7 Bcf (45.6 Mmboe). After allowing for the earn in by Otto and Metgasco, Byronís share of total Bivouac Peak prospective resource would be 5.1Mmbo and 56.9 Bcf (14.6 Mmboe), net after royalties. Although the prospects are independent, success at the East Prospect would provide positive seismic calibration potentially reducing risk at the Deep Prospect as well.

By electing to participate in the initial test well both Otto and Metgasco have agreed to pay their previously agreed disproportionate share of the first US$10.0 million of drilling costs for drilling of the initial test well to earn into the prospect, and their proportionate share of costs thereafter. Drilling costs for the first well are currently estimated at US$10.8 million. Otto and Metgasco will pay 53.33% and 13.33% respectively of the first $10.0 million of drilling costs (Otto US$5.33 million and Metgasco US$1.33 million). Byron and NOLA will pay 26.33% and 7.00% respectively of the first $10.0 million of costs (Byron US$2.63 million and NOLA US$0.7 million). Drilling costs for the first well are currently estimated at US$10.8 million. Any drilling costs above US$10.0 million in respect of the initial Bivouac Peak test well and all future expenditure on the leases will be in accordance with relevant participating interests (Byron 43%, Otto 40%, Metgasco 10% and NOLA 7%).

As previously reported, the all necessary permits from the State of Louisiana and the US Army Corps of Engineers have been approved.

Byron is finalising the engagement of a drilling contractor and is well advanced in securing all other downhole and surface service providers to allow the drilling operation to begin second half of August 2018. Site preparation work will begin in early August. Subsequent to completion of site work, the shallow water barge drilling rig will be towed to the location and the drilling phase will begin. The well is expected to take approx. 75 days to reach total depth.

In case of success, completion and development costs to first production are currently estimated in the range of US$9.0-11.0 million (gross). Should the well be productive, it is currently estimated that this well would commence production within 8-10 months following drilling of the initial test well.

Maynard Smith, Byronís CEO had this to say regarding Bivouac Peak:
'We welcome the commitment of our partners to drill the initial test well on Byronís Bivouac Peak prospect. Election to participate by all of our partners clears the way for drilling of this high potential prospect. Byron initially utilised advanced 3D seismic to identify multiple exploration objectives on the acreage which lies within a regionally proven trend with prolific Miocene production. Subsequent evaluation and re-processing of 3D seismic data has matured drilling targets, including Bivouac Peak East. Increasing our equity by 3% in this project confirms our belief in the technical merit and commercial prospects of Bivouac Peak. We look forward to the commencement of drilling operations.'

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