Predator Oil Announces Update on Guercif Testing Program

Source: 11/30/2023, Location: Africa

- Petroleum Agreement Amendment No.3 and corresponding Exploration Permits being approved shortly
- Rigless testing programme re-scheduled for January 2024
- Memorandum of Understanding in relation to Gas Sales and Collaboration Agreements signed with Afriquia Gaz
- Afriquia Gas most recent reported revenue figure is 8.72 billion MAD, approximately equivalent to £700 million
- Fully funded for a pilot CNG development
- Environmental Impact Assessment commissioned for 3 wells proposed for 2024 drilling programme including the Jurassic target
- Cory Moruga Independent Technical and Resources Report to be published in December 2024

Predator Oil & Gas Holdings Plc (PRD), the Jersey based Oil and Gas Company with near-term operations focussed on Morocco and Trinidad, provides an update on the background to, rationale for and current progress of the Company's rigless testing programme within the northwest area of interest of the Guercif Petroleum Agreement and corresponding Exploration Permits onshore Morocco.

Petroleum Amendment No.3
Following the signing and approval of Petroleum Agreement Amendment No.2 dated 14 October 2022, the Initial Period of the Guercif Petroleum Agreement and corresponding Exploration Permits, which had been extended from 30 months to 42 months as a result of Petroleum Agreement Amendment No.1 dated 27 November, 2020, which allowed for force majeure due to COVID, was extended by a further 9 months to 5 August,2023. This allowed for the acceleration of additional drilling that would have otherwise been scheduled for the First Extension Period.

A further extension of six months to 5 February, 2024 was agreed with Office National des Hydrocarbures et des Mines ("ONHYM") to allow for the completion of the MOU-3 and MOU-4 drilling programme and associated reports and studies and for a potential rigless testing programme to be executed subject to a review of the drilling results.

Accordingly Petroleum Agreement Amendment No. 3 was executed by Predator Gas Ventures Ltd. ("PGVL") and ONHYM dated 31 July 2023 and extended the Initial Period of the Guercif Petroleum Agreement and corresponding Exploration Permits to 57 months until 5 February, 2024 subject to obtaining the required statutory approvals under the form of (i) a Joint Ministerial Order to be executed by the Ministry of Energy and the Ministry of Finance approving the Guercif Petroleum Agreement Amendment No.3 and (ii) an order to be executed by the Ministry of Energy approving the six months extension to the Exploration Permits Initial Period.

Rigless Testing Programme
Changes to the rigless testing programme were forced to be made due to operational constraints regarding the preparedness of the Sandjet testing equipment and required availability of chemicals in bulk to be imported from France.

Given the limited availability of the length of perforating gun strip for immediate use the following intervals were selected for perforating in sequence as follows:

1,406.0 to 1,412.0 metres RKB (within Moulouya Fan interval); and
845.0 to 849.0 metres RKB (Ma Sand)

1,236.5 to 1,241.1 metres RKB (TGB-2 Sand); and
844.0 to 848.0 metres RKB (Ma Sand)

Subject to establishing the potential quantum of gas flow rate for the Moulouya Fan interval in MOU-3, an option to replace the Ma Sand test in MOU-1 would be considered as follows:

873.85 to 879.85 metres RKB (within Moulouya Fan interval).

Accordingly the revised rigless testing programme for MOU-1 and MOU-3 was provided to ONHYM on the basis of which ONHYM sent letters to the Ministère de la Transition Energétique et du Développement Durable dated 12 October 2023 for authorisation for the use of the new quantity of explosives required for the rigless resting programme.

Following the receipt of all necessary approvals for rigless testing PGVL began the panning for the mobilisation on 6 November 2023 of those international crews required to perform certain elements of the testing programme.

The key objective of the testing programme was to ensure that all required rigless test data were available within the extension of the Initial Period of the Guercif Petroleum Agreement and corresponding Exploration Permits enabled by Petroleum Agreement Amendment No.3.

In preparation for entering the First Extension Period, PGVL has produced a partial 37.5% relinquishment map for the end of the Initial Period as required under the Moroccan Hydrocarbon Code but which retains all the prospective area within the original Guercif Licence.

Update on Guercif Petroleum Agreement Amendment No.3
On 8 November 2023 PGVL was informed by ONHYM of an unforeseen administrative regulatory issue as a consequence of which the Joint Ministerial Order approving the Guercif Petroleum Agreement Amendment No.3 had yet to be issued.

As a result PGVL had to stand down at short notice mobilisation of its rigless testing well services and international personnel to await resolution of the issue by third parties.

The matter was resolved and the Joint Ministerial Order is expected to be issued shortly.

We very much appreciate ONHYM's assistance in resolving this matter.

PGVL has begun the process of re-scheduling and re-mobilising its rigless well testing team as a matter of urgency. It is currently forecast that rigless testing operations will begin as early as possible in January 2024.

The current rigless testing programme will remain as defined herein in order to minimise the lead time to commencement of enable the information to be acquired to support an application for an Exploitation Concession at the earliest opportunity in Q1 2024.

A follow-up rigless testing programme using Sandjet may also be scheduled for later to evaluate additional potential reservoirs in MOU-1, MOU-3 and MOU-4.

Memorandum of Understanding in relation to Gas Sales and Collaboration Agreements
In anticipation of a successful upcoming rigless testing programme and in preparation for a potential submission of a future application for an Exploitation Concession, PGVL successfully negotiated a Memorandum of Understanding in relation to Gas Sales and Collaboration Agreements (the "Agreement") with Afriquia Gaz, a downstream potential purchaser of gas (together the "Parties"). The Parties have subsequently executed the Agreement on 27 November 2023, the main terms of which are also announced today in a separate RNS.

2024 Drilling Programme
A 2024 drilling programme and schedule will be proposed to ONHYM after completion of the rigless testing programme and upon entering the First Extension Period of the Guercif Petroleum Agreement.

In preparation for a drilling programme, PGVL has awarded a contract for an Environmental Impact Assessment covering five potential well locations.

These locations include a potential well to approximately 1,100 metres RKB to test the Jurassic prospect updip from the MOU-4 well. An independent geochemical desk-top study has commenced to assess the potential for mature oil and/or condensate source rocks in the Jurassic in MOU-4.

Two well locations are planned to follow up the shallow sand intervals behind casing in MOU-3, that was not capable of being logged, and the Ma Sand interval in MOU-3 and MOU-1. Well depths are forecast to be approximately 800 and 1,000 metres RKB respectively.

Financing and Funding
PGVL is fully funded to execute a pilot CNG development project (the "CNG Project") in Guercif.

The previously announced acquisition of TRex Holdings Trinidad Limited ("TRex") and the Cory Moruga field was completed using discretionary cash on the Company's balance sheet that was surplus to the CNG Project financial requirement.

Initial development of the Cory Moruga field will require only low cost workovers of up to four existing wells and is fully funded by the discretionary cash on the Company's balance sheet.

The Cory Moruga workover programme will begin to be put together in January 2024 with the objective of re-entering the first well in Q1/Q2 2024. There is a significant and diversified well services industry in Trinidad. Cory Moruga is an existing Production Licence that does not require additional regulatory approvals before value-generating operations can be executed.

By the second half of 2024 TRex is expected to be generating significant positive cash flow from workover operations.

Cash flow from Cory Moruga production revenues and remaining discretionary cash on the balance sheet in H2 2024 would be potentially available to fund a high-impact Jurassic well in Morocco.

The Company will maintain an opportunistic strategy with respect to potential sale or farmout of some project equity where market conditions are conducive to such transactions and the commercial terms are attractive. Given that the Company is well-financed to deliver all of its current near-term firm strategic objectives for its substantially de-risked oil and gas portfolio, any dilution of project equity would need to be a compelling value proposition for shareholders.

Independent Technical Reports and Reserves Estimation
An independent technical report for the Cory Moruga asset with indicative production profiles and near-term revenue projections is expected to be released before the end of 2023.

An independent technical report for the Guercif gas assets and prospects including updated volumetric estimates will be available after completion of the rigless testing programme.

Paul Griffiths, Executive Chairman of Predator, commented:
"We have worked diligently to plan the necessary sequence of activities required to highlight the gas potential of the area and to be in a position after rigless testing to submit an application for an Exploitation Concession.

Unfortunately an unforeseen administrative regulatory issue totally out of the Company's control caused a delay in the execution of the rigless testing programme. It is not possible to keep well services, equipment and personnel on standby indefinitely. Such services are in high demand at present elsewhere in North Africa. The costs that would have been incurred by the Company are simply not justifiable when prudent management of cash resources is essential during a time of uncertainty in the equity markets in the oil and gas sector.

However the additional time that is being accumulated before rigless testing can commence has enabled us to execute a Memorandum of Understanding in relation to Gas Sales with Afriquia Gaz.

Furthermore the Company was able to conclude the acquisition of TRex and oversee the transfer of a large quantity of technical and commercial data to enable us to begin to plan the initial Cory Moruga workover programme for early in 2024.

The Cory Moruga Project is equally as exciting as Morocco, which will be demonstrated through the publication of an Independent Technical Report expected by the end of this year summarising potential resources.

We are extremely fortunate in these difficult times not only to be fully funded but also to have two projects competing for the generation of production revenues in the near-term.

Administratively it has been a difficult couple of months, but we are exiting 2023 stronger and even more resilient and secure in the knowledge that the Company has been transformed over the past 12 months. "

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