LGO is pleased to provide an update on its plans to recommence production drilling at the Goudron Field in Trinidad following its announcements of the 7 and 9 December confirming the refinancing of the Company's loan facility.
The Company's local operating subsidiary, Goudron E&P Limited (GEPL), has submitted to the Petroleum Company of Trinidad and Tobago (Petrotrin) and the Ministry of Energy and Energy Industries (MEEI) the formal request for authority to drill the first of its planned Mayaro Sandstone infill wells. That well, currently designated H18 G-11, will be drilled vertically to a total depth of 1,250 feet and is expected to intersect oil pay between 650 and 1,050 feet. Receipt of drilling approvals from Petrotrin and the MEEI have typically taken less than 15 days. Approvals for the drilling of further wells will be submitted in the coming weeks. The cost of the first well is estimated to be less than US$500,000 and it is expected to take approximately 12 days to drill and complete.
Currently GEPL has outline approval for 45 new wells in the Goudron Field and well H18 G-11 will be the first in a campaign of infill wells designed to increase production from the ubiquitously present shallow oil pay in the Mayaro Sandstones (formerly termed the Goudron Sandstone). During the 2014 and 2015 C-sand drilling campaign, 15 wells were drilled through the Mayaro Sandstone reservoir interval and electric logs showed an average net oil pay of approximately 200 feet per well. Funding for the first well in the program is now available from GEPL bank accounts and the drilling campaign can be advanced over time on the basis of free-cash flows from Trinidad production.
To take advantage of the current market conditions, GEPL has re-tendered the drilling program and is in the final stages of negotiating a contract for a rig, signature of which is anticipated before Christmas. The drilling contractor selected will provide efficient and flexible drilling capability and has offered a turnkey drilling package in line with the Company's cost and risk management processes. Preparation of the small drilling site required for the footprint of the lightweight rig is anticipated to commence soon after the rig contract is signed.
Fergus Jenkins, LGO's Chief Operating Officer, commented:
"GEPL is looking to take advantage of the current lower rig rates and rig availability to recommence the drilling program at Goudron at the earliest opportunity. We anticipate having the approvals in place before January and will then start the drilling as soon as practical. With the current oil price and expected cost of drilling the economic payback on the incremental production from Mayaro Sandstone wells is expected to be less than 12 months."
