Not a good day for shareholders with Angus Energy stating that it is extremely unlikely that commercial hydrocarbon flow can be established from the Kimmeridge layer at Brockham. The shares price has fallen over 57% on the morning trading.
Managing Director, George Lucan, writes:
“The result from recent works is clearly disappointing although as stated above we are examining our options for the Pl235 Licence including the Brockham site.
This serves to underline the importance of our strategy of diversifying our source of hydrocarbons by participating in the developments of fields which already have a proven production record but bring with them very substantial reserve opportunities.
The Saltfleetby opportunity which has been brought to Shareholders fits exactly this profile and will also complement the near term stable cash flow we anticipate, with a high level of confidence, from our onshore oil interests at Balcombe.”
Further to our announcement of 3 June 2019, Angus hereby updates Shareholders on the results of the work programme which began at Brockham on 12 April 2019. Further works on the BR-X4Z borehole have been completed and, following analysis of the results, it is the view of the Company that, on any conventional approach, it is extremely unlikely that commercial hydrocarbon flow can be established from the Kimmeridge layer at Brockham. Supplementary stimulation techniques including hydraulic fracturing have been ruled out by the present Operator. The Company, in its role as Operator, has already made clear that it is not a proponent of the use of such unconventional production techniques in the Weald and this position remains unchanged.
In the interim, whilst the Company evaluate options for the site and the Licence, including addressing the Portland reservoir, the Company announces that it has entered into preliminary discussions with a third party regarding a sale of the Company’s own 65% interest in the Licence. These negotiations are at a very early stage and there can be no certainty as to the outcome including the terms on which any such sale can be made. In the light of this, the Company will be considering whether any impairment will be required in the carrying cost of the Brockham licence, currently representing 26% of the Company’s gross asset valule as at 31st March 2019. The Company will update Shareholders as soon as any material development takes place.
The Company is pleased to announce the extension of the Second Term of the PEDL 244 Licence to 1 July 2020. Furthermore, the partners in the Licence convened on 23 June 2019 to formulate their plans for an extended well test at Balcombe and a planning application to that end is already in the process of preparation. The application is expected to be submitted to West Sussex County Council before the end of August.
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