Operations Update and relinquishment of interest in Shoats Creek Field
Mayan Energy Limited (AIM: MYN), the AIM-listed oil and gas company, is pleased to announce that a combined total of 272 gross / 137 net barrels of oil per day (‘bopd’) is now being produced across its Texan assets (being the Stockdale Field and Forest Hill Field). This follows the commencement of continuous production at a rate of 83 gross/37 net bopd from the Company’s Morris #1 well. In addition, the Company announces it has relinquished its 50% working interest in the Shoats Creek Field in Louisiana (“Shoats Creek”).
Stockdale Field, Wilson County, Texas
• 498 gross barrels of oil (average of 83 gross/37 net bopd) recovered during initial six days of production from the Morris #1 well (not including 92 barrels recovered from the gas spike – see RNS dated 20 April 2018)
• Follows successful completion of acidisation and comingling of the lower and upper Anacacho zones on 18 April 2018 and swab-test after Morris #1 was shut-in for a period to allow the well to pressurize
• A downhole pump was then installed and the well shut in for two-days prior to initiation of production reported
• Oil production at Stockdale is low cost and highly profitable at current oil prices:
o Realised oil price is WTI less US$5.00 which based on current oil prices will yield approximately US$62 per barrel gross
o All-in operating costs are expected to average less than US$14 per barrel based on an expected production level of 2,760 gross BOPD over a 30 day month, consisting of US$12,360 per month fixed cost for operator, contract pumping services and electricity cost to operate the downhole pump; US$8.00 per barrel for other variable costs including disposal of formation water, chemicals and other services and supplies
o State of Texas production taxes on oil production are 4.6%
Forest Hill Field, Wood County, Texas
· Four wells (the Gilbreath 15, 19, 48 and Amason #1 wells) currently producing at an average rate of 190 gross bopd – 100 bopd net to Mayan
• Oil production at Forest Hill is low cost and highly profitable:
o Realised oil price is WTI plus US$2.00 which based on current oil prices will yield approximately US$69 per barrel at current oil price levels
o All-in operating costs are expected to average less than US$15 per barrel of oil based on an expected production level of 5,730 gross BOPD over a 30 day month, consisting of US$12,500 per month fixed cost for operator, contract pumping services and electricity cost to operate the downhole pump and US$12.30 per barrel of oil produced for other variable costs including liquid fuels used onsite, chemicals, and disposal of formation water
• Plans to add additional wells to production at Forest Hill have been developed with work scheduled to commence in coming weeks, subject to completion of certain regulatory filings currently underway and scheduling of vendors.
Shoats Creek Field, Beauregard Parish, Louisiana
Mayan has relinquished its 50% working interest in Shoats Creek. The decision follows an evaluation by Mayan based on both external and internal developments impacting Shoats Creek as well as an assessment of the potential to realize a positive outcome for shareholders through continued investment in this asset. While the decision to exit Shoats Creek is based entirely on considerations specific to that field, the decision taken by the Board was made easily given the level of success the Company is enjoying at Stockdale and Forest Hill Fields. The relinquishment will also protect Mayan from potentially significant Plug & Abandonment (‘P&A’) liabilities associated with abandoned well bores at Shoats Creek. The re-valuation of Shoats Creek will be recognised in the 2017 financial year.
Eddie Gonzalez, Managing Director, said: “Thanks to the excellent well result at the Stockdale Field and the four producing Forest Hill wells, production of over 130 barrels per day net to Mayan’s interest places us in a strong position: positive operating cash flow from growing production in a robust oil price environment. By removing what had proven to be a significant burden and resource drain (of both capital and human resources), the relinquishment of Shoats Creek strengthens the Company’s position and further focuses our energies on high return assets.
“The Board is committed to directing capital to where it makes positive returns for our shareholders and as such believe that our Texan assets are the optimum place for Mayan capital moving forward. With multiple additional low cost workover opportunities to further increase production identified across our portfolio of Texan assets, shareholders can expect more of the same, as we focus on building on the excellent production growth we have delivered to date, and in the process build a highly cash flow generative US onshore focused oil and gas company.”
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