· Discussions opened to sell the Company's share of gas at the well head
· Financing options for the Company's share of future potential CNG development costs being discussed with preferred parties
· Rigless testing programme amended to test MOU-3 first
· High impact MOU-3 well to lead commercial negotiations for offtake of gas
Predator Oil & Gas Holdings Plc (PRD), the Jersey based Oil and Gas Company with near-term gas operations focussed on Morocco, announces an update for the Guercif Compressed Natural Gas ("CNG") project.
The Company has opened exploratory discussions with a group focussed on the downstream energy business to potentially sell its share of gas produced at the well head subject to an approved CNG development plan.
In order to accelerate the timing of substantive negotiations for the sale of its share of gas, subject to an approved Declaration of Commerciality, the Company has decided to amend its rigless testing programme. MOU-3 will now be the first well to be tested. This will establish the potential to maximise gas flow rates for the purpose of setting commercial parameters for the sale of the Company's share of potential gas produced to the present and future CNG industrial market irrespective of pre-drill production profile constraints imposed by its initial "Proof of CNG Concept" strategy.
The Company has been waiting for over three weeks for an in-country wireline logging unit. A perforating depth control (PDC) log is required to depth correlate the perforating points with a similar log run before the casing was set during well completion. Critically this ensures that perforations are aligned with the reservoir sand intervals to be tested.
As a result of this delay in the provision of a third party service the current slot for using Sandjet as the means of perforating has passed and therefore this phase of the testing programme is now being re-scheduled.
In order not to delay further it has been decided to test MOU-3 and MOU-1 using conventional perforating guns.
The Company is confident that the testing programme will deliver the results necessary to progress commercial negotiations for the offtake of its share of future potential CNG gas from the well head.
Rigless testing MOU-3 using conventional perforating guns is currently forecast to begin on or before 16 October 2023, assuming that the wireline logging unit is released from its present contract on or before 10 October 2023. The Company will provide an update if there is any change to this date.
A follow-up Sandjet testing programme will take place later to test other reservoir intervals that are likely to respond better to the Sandjet perforating technique compared to conventional perforating guns.
The Company is also in discussion with several parties regarding the financing of the CNG development. Upon achieving acceptable financial terms funds set aside in the Company's strong balance sheet would be re-purposed for follow-up appraisal drilling.
Paul Griffiths, Executive Chairman of Predator, commented:
"Following the completion of drilling and prior to the execution of the rigless testing programme the Company has had a period of time to integrate the results from its MOU-1, MOU-2, MOU-3 and MOU-4 wells and mature its understanding of the structures holding possible gas accumulations. On this basis the MOU-3 well and structure is now defined as the focal point for a potential CNG development hub. As a result this well has been promoted to the first well in the rigless testing programme.
Good progress has been made on opening discussions for the offtake of gas on a larger scale than was previously envisaged by the "Proof of CNG Pilot Concept" strategy.
Financing options are being crystallised which will allow funds to be re-purposed for further appraisal drilling activity and value accretion through drilling success."