10th Cargo Lifting and Corporate Update

Source: www.gulfoilandgas.com 4/15/2019, Location: Africa

MX Oil plc, an oil and gas investing company quoted on AIM, announces the following corporate update:

- OML 113, the Aje field in which MX Oil holds 5% equity investment, continues to produce oil from its two producing wells at a stable rate of around 3,150 bopd (157.5 bopd net to MXO).
- The 10th lifting was completed in March 2019.
- The profit from the 10th lifting was used to significantly reduce the project level debt allocated to all the partners.
- The Company's share of the 10th lifting equates to 17,323 barrels. The lifting was sold by the joint operators at an oil price of $66.97 per barrel meaning that, at the project level, the company's investment produced $1.16 million revenue and net profit of approximately $600,000. The profit from the lifting was applied against the project level debt.
- Subject to normal operating conditions with current oil prices and production costs remaining stable, it is anticipated that the project debt should be repaid after the next 2 liftings.
- The Company anticipates that the 11th lifting should take place in June 2019.
- From the 13th lifting, which is anticipated in Q1 2020, the Aje investment is anticipated to generate material free cash flow for the Company assuming continued stable production and no change to capital or operational expenditure at project level.
- Based upon this and assuming no significant increase in the Company's overhead, the directors believe that the Company should move to profitability during the first half of 2020.

Corporate Update
The Company is pleased to advise that production from Aje has remained broadly consistent at 3,150 bopd since the last update on 4 February 2019. This led to the operating partners successfully concluding the 10th lifting from the field in March 2019. Current operating costs remain as forecast and there is no planned or required capital expenditure anticipated in the short term. As a result, it is expected that the project will only require two further liftings and sales of the oil to repay the liabilities at project level and to start generating free cash flow for the investors. This assumption is based on normal operating conditions, the current price of oil and continued production from Aje remaining stable.

Further to its announcement on 4 February 2019, the Company understands that the technical work being carried out by RPS is now mostly complete with some further scenario based evaluation still to take place. This study is expected to complete in Q2 2019.

Production modeling of the two Aje wells by both AGR Tracs and the RPS Group demonstrates that both wells are exceeding expectations as the rate of decline in production is less than anticipated. The result of this work is that the 2P reserves of the producing wells are expected to increase and AGR Tracs are working on an update to the CPR.

Further, based on the revenue assumptions above, the Company currently anticipates that the Aje investment should start producing positive cash flow from Q1 2020 and move the Company to profitability. Shareholders are reminded that should the price of oil or the production rate from Aje decrease materially or should there be unanticipated costs, or interruptions in operations, then it may take longer than anticipated to repay the project level debt and, in turn, take longer for the investment to produce positive cash flow for the Company and hence move to profitability.

Change of Name of Broker
The Company advises that its broker, Cornhill Capital Limited, has changed its name to Pello Capital Limited.

Stefan Oliver, the Company's CEO commented:
"I am pleased to be able to update the market with regards to the most recent cargo sale and Aje's operations more generally. Aje has now completed 10 cargo sales, the cash flow from which has enabled the partners to repay material amounts of debt held at partnership level. Assuming normal operating conditions, current production rates and oil price, we estimate that two further liftings of similar size and value to our last, should result in project level debt being repaid or significantly reduced Once this debt is repaid, assuming the factors above, our investment should generate free cash flow from each cargo sale which are estimated to cover all the Company's operating overheads at current levels, allowing the Company to move to profitability. It has been a difficult journey and I would like to thank shareholders for their continued patience. I am optimistic that we will shortly be in a position to provide regular updates from this point onwards."

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