Curzon Energy plc (LON:CZN) the London Stock Exchange listed oil and gas development company, pursuing a targeted acquisition strategy of oil and gas appraisal and development assets, announces an operations update on its Coos Bay Coal Bed Methane (“CBM”) project.
Highlights
· Well testing operations at Coos Bay suspended
· Curzon to undertake a comprehensive review of Coos Bay strategy to determine optimum forward plan
· Considering attracting a suitably qualified joint venture partner
· Ultimate commerciality of the project requires additional appraisal drilling and testing
· Project with Pared Energy, LLC (“Pared Energy”) offers potential participation in the drilling and development of a multi-TCF onshore natural gas project in Texas
· Negotiations with Pared Energy have commenced and are proceeding constructively
Scott Kaintz, Chief Executive Officer comments:
“While gas flow at Coos Bay has not been in line with expectations, following the 2018 workover program, we remain bullish that the real potential of Coos Bay has yet to be adequately tested, fully explored or definitively determined. Not having drilled new wells over the past year has meant that the technical data gained on the project since IPO has been limited and should not be considered decisive or representative of actual field commerciality.
“Ultimately, to take the field forward will demand a dedicated appraisal and drilling program conducted by Curzon alongside potential development partners, and designed not only to discover the true commerciality of the known gas deposits, but also to establish a replicable well template for scalable development. Unfortunately, as Curzon inherited the existing wells and pad locations from the previous operator, we could not design an optimal appraisal program around them nor verify how exactly they were drilled and completed and so have now completed the workover and test program that was undertaken during 2017-18.
“As such, the Board feels that to expend further funds and management resources on testing the existing wells was unlikely to yield meaningful results in the short term, and that a more sensible course of action would be to step back briefly to consider the best way forward at Coos Bay.
“This decision on Coos Bay gives us the needed bandwidth to work towards completion of our agreements with Pared Energy on the potential multi-TCF Texas gas deal recently announced, while offering the chance to look at Coos Bay with a fresh top-down technical and commercial perspective. A potential next step includes looking to attract a suitably qualified joint venture partner to help fund the next stage of appraisal drilling activity and testing at Coos Bay with the objective of confirming the ultimate commerciality of the project.
“Meanwhile, our negotiations with Pared Energy are proceeding constructively and we look to update the market with final commercial details in the near term.”
Operations Update
Coos Bay Energy – Coal Bed Methane Project
Following an internal review of the Company’s 100% owned Coos Bay Energy CBM project, the Company has decided to suspend well testing operations at Coos Bay in order to focus its available resources on coming to commercial terms with Pared Energy regarding its Texas gas project.
Results from recent well flow rate tests have been interpreted as inconclusive, and the Board believes that the ultimate commerciality of the project has yet to be adequately tested, fully explored or definitively determined.
The Board is of the view that the basic investment thesis that underpinned the 2017 IPO, still holds today. The primary aspects of Coos Bay CBM project are listed below:
Coos Bay Coal Bed Methane Project Highlights:
o 45,000+ acres of known gas bearing coals
o 1 TCF of gas in place and 273 BCF of 2C resource
o 12 historic wells with 5 tested in 2017-18
o Over 400 potential well locations
o 12 inch regional pipeline crosses the property
o Low royalty rates
o $38 million + historic spend
o Multi-year natural gas price premium to Henry Hub
o Regional LNG terminal planned
o 10 distinct coal seams with net thickness of 70+ feet
o Average permeability of 6 millidarcies
o Inexpensive well drilling and development costs
Considering the advantages and despite the lack of progress over the last year on site, the Board believes that the original vision of conducting appraisal drilling at Coos Bay and proving the commerciality of new CBM wells, remains both sensible and potentially economically attractive.
The Company intends to conduct a period of assessment of its strategy at Coos Bay with a view to determining the most effective route forward and will provide further updates as this review process proceeds.
A potential future next step includes looking to attract a suitably qualified joint venture partner to help fund the next stage of appraisal drilling activity and testing at Coos Bay with the objective of confirming the ultimate commerciality of the project.
Pared Energy – Multi-TCF onshore natural gas project in Texas
Negotiations with Pared Energy continue following the Memorandum of Understanding first announced on 21 November 2018. Meetings were held over the past weeks in the United States between representatives of Pared Energy and Curzon, and substantial progress was made on agreements on funding and development, and investment terms.
