Clontarf Energy, the oil and gas exploration company focused on Ghana, Bolivia and Australia today announces its preliminary results for the year ending 31 December 2021.
The Company expects to shortly publish its 2021 Annual Report & Accounts and a further update will be made in this regard as and when appropriate.
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014 .
Chairman’s Statement
Our main focus in the period under review was on delivering a high potential well in a stable jurisdiction. We also increased the pressure for ratification in our other projects, in anticipation of a recovering farm-out market, as demand surges while supply is slow to respond.
Adding gas reserves in Australia to feed existing and new LNG ( liquefied natural gas ) supplies is critical for Europe and Asia, given 2022’s geopolitical turbulence. The potential structure size was modelled as very large (a median or P50 of circa 17 trillion cubic feet or ‘tcf’), and estimated probability of success reasonably good (32%) by the standards of exploration wells – which are generally 1 in 8, and sometimes even-longer odds in frontier provinces.
Though drilled without incident, and substantially on the schedule, and at the costs planned, the relatively shallow gas targets were water-wet, and did not show commercial hydrocarbons. That is the nature of drilling in 2.5km of rock under 1km of water. There was uncertainty and risk, but also a huge stratigraphic trap that was going to be drilled.
The deeper Jurassic and Triassic targets, which are closer to the source-rock, have not yet been drilled. When the dust settles after the Sasanof-1 well, Clontarf Energy plc and its partners will consider the economics of drilling the deeper targets, especially the Jurassic Kingsburgh Upper and Lower (each of which has potentially 2 tcf of gas-in-place). There is also estimated to be in the mid-depth Triassic Mungaroo Hyperno over one tcf of gas-in-place, albeit with a higher expected recovery ratio (75%). The review will assess how the structure size and probabilities of success have been impacted by the data acquired from recent drilling.
Though the Sasanof-1 well did not intersect hydrocarbons, we retain our strategy to seek out gas and liquids in Western Australia: originally North-West Shelf discoveries were considered “stranded gas” because of long distances to population centres in the south-east across that vast continent. However, the development of a competitive LNG industry by several leading players, including our former partners Woodside-BHP, Exxon, Chevron, Inpex, and others, have transformed LNG into now the major export, by value, from Western Australia. Almost any likely State Government will be supportive, because of the many, high-paying jobs in gas & oil, and particularly mining. Moreover, statements of the recently elected majority Labour Government (in June 2022) confirmed the Australian Federal Government’s commitment to the LNG and minerals’ industries. Legal title is secure, the court system is independent and tax rates are reasonable (a windfall tax having been considered and rejected).
It is important to note that funding for the Sasanof-1 well (£3.5 million) was provided by local Australian investors who invested at a 25% premium to the then bid price of our shares (when the funding process began). We believed that we would struggle to raise such funding from traditional London investors, while institutional investors might expect a discount for a strategy to seek out opportunities without having a defined investment.
Accordingly, we are now evaluating further Australian prospects, in addition to the deeper prospects on WG-519-P. These include additional offshore prospects acquired by our partners Western Gas from the original Hess portfolio (on which Hess had invested circa $1.5 billion, before pulling out in the oil-price depression of 2015, in order to concentrate on the mega Guyana discoveries, as part of a widespread industry restructuring). There are also interesting onshore plays – especially in the Canning basin – which have been neglected due to the oil majors’ focus on offshore opportunities.
Just one of the offshore gas targets Clontarf is review is estimated to contain a potential gas-in-place of 5 tcf, with a potential 3 tcf recoverable, while 5 prospects – of Jurassic and Triassic ages – have potentially over 3 tcf of gas-in-place. These are tempting sizes at a time of hunger for feedstock to supply expanding LNG facilities.
We believe that additional funds will be available, possibly again at a premium to the current share price.
Although the Sasanof-1 well was water-wet, the Australian gas play remains excellent, with a world LNG shortage, high gas prices – as well as pro-mining policies, legal title, and reasonable fiscal terms.
Clontarf Energy is also pressing the Ghanaian authorities to complete the ratification of the signed Petroleum Agreement on offshore Tano 2A Block and is discussing with the relevant authorities in Chad on how to convert Clontarf’s signed Memorandum of Understanding on prospective sedimentary acreage, close to existing infrastructure in southern Chad, in a manner consistent with corporate governance. Progress on these promising projects had been slowed by the virtual disappearance of the farm-out market after 2014. It made little sense to commit to a substantial work programme, without a reasonable prospect of de-risking through partnering with companies with deeper pockets.
As expected, demand for lithium, specifications and lithium prices have surged. In Bolivia we hope to conclude a Technical Cooperation Agreement on a systematic mapping exercise shortly. Clontarf Energy did not participate in the pilot plant testing of Direct Lithium Extraction technologies in Bolivia, since Clontarf is a user of such services rather than a services provider. Our proposal is to explore and develop mid-sized Bolivian lithium salt-lakes.
Clontarf Energy maintains cordial communications with the relevant authorities in all these countries, despite personnel changes and prevailing circumstances, and continues to operate efficiently on minimal overheads.
Corporate – share capital reorganisation
To provide maximum flexibility with regards to future funding we are proposing to change the nominal value of existing shares from 0.25p to 0.01p per ordinary share and 0.24p deferred share as set out in Resolution 5 (and Resolution 6) in the notice of the Company’s forthcoming Annual General Meeting. This has no impact on the market value of existing shares or the number of shares in issue.
This process is effected as follows, subject to Shareholder approval being given for both Resolution 5 and 6:
Each of the 2,370,826,117 issued ordinary shares of 0.25 pence each in the capital of the Company (“Existing Ordinary Shares”) and any unissued ordinary shares of 0.25 pence each in the capital of the Company are subdivided into one new Ordinary Share of 0.01 pence each (“New Ordinary Shares”) and one deferred share of 0.24 pence each (“Deferred Shares”) on the basis of one New Ordinary Share and one Deferred Share for each Existing Ordinary Share; and
The New Ordinary Shares will have the same rights and be subject to the same restrictions (save as to nominal value) as the Existing Ordinary Shares in the Company’s Articles of Association and the Deferred Shares will have the rights and be subject to the restrictions as set out in the Articles of Association as amended by Resolution 6.
David Horgan
Chairman
21 June 2022
For further information please visit http://clontarfenergy.com or contact:
David Horgan, Chairman
John Teeling, Director
+353 (0) 1 833 2833
