ADM Energy Provides Operations Update

Source: 6/15/2020, Location: Africa

ADM Energy PLC, an oil and gas investment company quoted on AIM, provides an update on its operations at OML 113 offshore Nigeria.

Key Points
- Operations at OML 113 have continued uninterrupted despite macro conditions
- Operational costs reduced at OML 113 by 37.5% on average, including a decrease in FPSO lease cost and general operational and maintenance costs
- Break even cost of production reduced to $28 per barrel
- Joint Venture Partners ("Partners") continue to exercise their right to store crude production from OML 113 on the FPSO
- Continued focus on capital discipline and the preservation of cash while the commodity price weakness prevails
- ADM remains positioned to withstand current market volatility and pursue the Board's stated core investment strategy

Update on Aje Field (OML 113)
The Aje Field continues to produce oil from the Aje-4 well in the Cenomanian oil reservoir and Aje-5 well in the Turonian reservoir. The Partners are continuing discussions and technical appraisal on the next phase of activity at the field based around the Turonian gas and liquid reserves.

As announced on 27 April 2020, in light of unprecedented market conditions affecting the oil industry, the Partners were seeking to mitigate the impact of the oil price reduction. The Board is pleased to confirm that the Partners have reached agreement with several service providers to achieve significant cost reductions at an operating level. These include:

- reduction in operational and maintenance costs of 35%; and
- reduction in the cost of the lease of the FPSO of 40%.

The Partners, including ADM, have also agreed to the option of storing production from OML 113 on the FPSO, which has up to 755,808 barrels of storage capacity. This will allow the Partners to store production for sale later as, in the view of the directors, the crude oil price is anticipated to recover in Q3-Q4 2020.

Focus on capital discipline and cash preservation
These asset-level measures, in addition to those announced on 27 April 2020, enable the Company to conserve cash during the current commodity price weakness.

As such, following the placing and loan facilities announced on 27 April 2020 and a recent VAT refund, the Company as of 12 June 2020 had cash and cash equivalents of £200,000 with access to a further £100,000 from a new loan facility. This will be sufficient, at current run rates, to maintain the Company's operations until the end of 2020.

Osamede Okhomina, CEO of ADM, said: "We are pleased to report that operations at OML 113 have been largely uninterrupted by COVID-19, which is a consequence of the safety procedures in place to protect workers. To steer ADM through the current low oil price environment, we have taken appropriate measures with a significant cost reduction plan, both at a corporate level and on the asset side, to streamline our operations while maintaining production levels. This flexibility ensures we remain profitable at an asset level and allows us to benefit from a positive forward curve in the oil price. As a result of these actions, ADM is now better positioned to execute its growth investment strategy, supported by a strong foundation of our quality oil producing asset."

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