Predator Completes the Acquisition of T-Rex Resources (Trinidad) and Cory Moruga

Source: www.gulfoilandgas.com 11/7/2023, Location: South America

Predator Oil & Gas Holdings Plc (LSE: PRD), the Jersey based Oil and Gas Company with near-term gas operations focussed on Morocco, is pleased to advise that further to announcements of 20 December 2022, 8 March 2023, 1 June 2023 and 30 August 2023 the transaction for the acquisition from Challenger Energy Group Plc ("CEG") of T-Rex Resources (Trinidad) Limited ("TRex") and an 83.8% the Cory Moruga licence ("Cory Moruga"), onshore Trinidad, has today, 7 November 2023 (the "Completion Date"), completed.

Completion of the transaction follows receipt of agreements from the Trinidadian Ministry of Energy and Energy Industries ("MEEI").

As a consequence of negotiations associated with securing those agreements, PRD and CEG agreed to vary certain of the terms of the previously announced agreement between them, as follows:

· On completion, PRD has paid to CEG US$1 million;

· A further US$1 million, due to be paid by PRD to CEG 6 months after the Completion Date, will instead be paid immediately by PRD direct to the MEEI, in part agreed settlement of past dues on the Cory Moruga licence; and

· A contingent US$1 million payable by PRD to CEG in the event of the Cory Moruga field achieving certain future production benchmarks, and PRD granting to CEG a future back-in right to a 25% interest in the Cory Moruga field at an uplifted multiple of cost base, will no longer apply, reflective of CEG's contribution to the value of settlement of the balance of past dues on the Cory Moruga licence, which by agreement will be recovered by MEEI via agreed quarterly arrears payments, which are deductible against Petroleum Profit Tax and supplemental petroleum tax.

In parallel with completion, all historical differences, and disputes between PRD and CEG in relation to the Inniss-Trinity pilot CO2 EOR Project have been completely and amicably resolved pursuant to the terms of the previously announced Settlement Agreement between PRD and CEG.

Initial Work programme

The Initial Work Programme agreed by PRD with the MEEI will be conducted over the next three years effective from the Completion Date and will include:

· Re-entering Snowcap-1 to bring the Herrera #8 Sand back onto production;

· Reprocessing, subject to the availability of seismic field tapes, the existing 3D seismic on Cory Moruga; and

· Drilling an appraisal/exploration well to test all eight Herrera reservoir intervals (Herrera #1 to #8 Sands) that produced in the adjoining ex-BP and Shell Moruga West field and several of which had tested oil in Rochard-1 drilled in 1955.

Snowcap-1 and Snowcap-2ST1

Snowcap-1 initially flowed at a stabilised rate of 406 bopd with no water. The Snowcap-1 test waxed off downhole during the test with the test tool recovered covered in wax.

The well produced 3,277 barrels of oil with a final shut-in reservoir pressure of 2076 psi.

A re-entry and work-over with a wax treatment is planned and designed to restore production to a predicted rate of 100 to 200 bopd based on a successful wax treatment programme and re-completion of the well.

Snowcap-2ST-1 also encountered oil-bearing Herrera Sands but no resistivity log was run and no testing operations were performed at the time due to operational issues.

PRD plan to survey this well for possible re-entry and if achievable will run a resistivity wireline log to select intervals for re-completion and testing, which if successful will allow this well also to come onto production.

Planning for the workovers will start immediately with production recommencing in early 2024 if all operations are successfully executed.

Field Development Plan ("FDP") PRD has outlined an amended FDP to the MEEI which includes up to 20 development wells to be drilled over 3 years from completion of the Initial Work Programme.

A long-term production potential for the fully developed Cory Moruga field of 5,000 to 9,000 bopd (100% equity - PRD net 83.8%) was presented to the MEEI.

PRD also presented to the MEEI a possible longer-term miscible CO2 EOR scheme which could be implemented at the appropriate time in the FDP after a period of primary oil recovery.

PRD at its discretion can advance the timing of implementation and execution of any or all of the elements of its proposed amended FDP if warranted and subject to MEEI consent and regulatory approvals.

Collaboration with MEEI and Historical Outstanding Financial Obligations ("HOFO").

MEEI and PRD have jointly agreed to work collaboratively together with a shared common goal of developing and realising new oil production from Cory Moruga.

Under the Letter Agreement in Relation to Various Outstanding Matters Regarding the Moruga Block Exploration and Production Licence dated 27 August, 2007 (the "Agreement") the MEEI calculate the HOFO incurred by previous operators to be US$4,192,690.

It has been agreed with the MEEI that this will be satisfied by a payment of US$ 1 million to the MEEI by PRD on the Completion Date together with a quarterly arrears payment of 7.5% of gross revenue derived from the sale of all production on Cory Moruga up to 250 bopd and 12.5% of gross revenue derived from the sale of all production on Cory Moruga above 250 bopd until the balance outstanding of US$3,192,690 of the HOFO is recovered by the MEEI.

Through these negotiations with the MEEI there is now commercial alignment and a common objective of accelerating the production from Cory Moruga at the earliest opportunity.

For the avoidance of doubt there is an element of risk-sharing in that if production is not achieved then the HOFO liability falls away.

Joint Operating Agreement ("JOA") and Operating Committee Meeting ("OCM")

T-Rex remains the operator of Cory Moruga approved by the MEEI.

T-Rex will convene under the existing JOA an OCM with its partner, who hold a 16.2% interest in Cory Moruga, before the end of 2023.

T-Rex will present its budget and work programme for 2024 and a request to its partner under the terms of the JOA and the Cory Moruga licence commitments for payment in full of its share (16.2%) of the gross amount of the HOFO of US$4,192,690.

Independent Technical Report

Following the Completion of the acquisition of Cory Moruga and the crystallisation of commercial terms together with the receipt of additional technical data PRD can now finalise its Independent Technical Report ("ITR") for Cory Moruga including volumetrics and forecast projected production profiles.

A summary of the ITR will be published before the end of 2023.

Paul Griffiths, Executive Chairman of Predator, commented:

"We are delighted to have successfully closed out this transaction. Once PRD participated for the first time directly in face-to-face meetings with the MEEI in Trinidad during the week of 24th September this year and made our proposals to the MEEI the historical matters that had been outstanding for a very long period of time were successfully resolved within one month. We sincerely appreciate the efforts and resolve of the MEEI in concluding negotiations quickly. We look forward to working collaboratively with the MEEI towards the common goal of realising the oil production potential at Cory Moruga.

Cory Moruga will provide newsflow over the next 12 months but most significantly creates the opportunity for cash flow in 2024 to protect against difficult market conditions and negative investor sentiment caused by uncertainty generated by regional conflicts and poorer global economic performance.

For the avoidance of doubt, executing the rigless testing programme onshore Morocco remains our top priority together with moving to a CNG development subject to regulatory approvals. Everything is in place and all approvals have been received to commence testing. One final element in relation to our business development strategy for Morocco is the execution of a potential Memorandum of Understanding for gas sales. Our preference is for commercial reasons to have this in place before testing commences and we are working to finalise this as soon as possible."


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