e&p leaders summit - 27.09.11
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Is EOR beyond the reach of juniors? “LGO pilots N2 EOR in Spain” Neil Ritson| Chief Executive Officer 27th September 2011| E&P Leaders Summit | LondonTRANSCRIPT
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Is EOR beyond the reach of juniors? “LGO pilots N2 EOR in Spain”
Neil Ritson| Chief Executive Officer 27th September 2011| E&P Leaders Summit | London
LSE (AIM): LGO
Forward Looking Statements
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Certain statements in this presentation are “forward looking statements” which are not based on historical facts but rather on the management’s expectations regarding the Company's future growth. These expectations include the results of operations, performance, future capital, other expenditures (amount, nature and sources of funding thereof), competitive advantages, planned exploration and development drilling activity including the results of such drilling activity, business prospects and opportunities. Such statements reflect management's current beliefs and assumptions and are based on information currently available. Forward looking statements involve significant known risks, unknown risks and uncertainties. A number of factors could cause the actual results to differ materially from the results denoted in these statements, including risks associated with vulnerability to general economic market and business conditions, competition, environmental and other regulatory changes, the results of exploration, development drilling and related activities, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although these statements are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that the actual results will be consistent with these forward looking statements.
Summary
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Introduction to the Company
The Ayoluengo Field in Spain
Status of the planned EOR scheme
Challenges and potential solutions
Answer to the question…….. Is it doable?
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UK based - HQ in London LSE AIM Listed - IPO in March 2007 Assets - in Spain, Trinidad, USA, Malta Operator - in Spain and Trinidad Production - in Spain, Trinidad and USA Average Net Production - approx. 300 bopd Current Market Cap - approx. £15 million
Company Profile
Delivering Growth through Acquisition of Proven Reserves & Enhancement of Producing Assets
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Board of Directors and Management
Chairman David Lenigas Holds a Bachelor of Applied Science in Mining Engineering and has 30 years of resources industry experience. Currently he is the Executive Chairman of Lonrho plc, Lonzim plc, Lonrho Mining Ltd and Solo Oil plc. He is an Executive Director of Vatukoula Gold Mines plc and Rare Earth Minerals plc.
Chief Executive Officer
Neil Ritson Has a BSc in Geophysics. He has worked in the energy sector for nearly 35 years, initially with BP plc for 23 years before managing the international operations of Burlington Resources Inc. and more recently as CEO at Regal Petroleum plc, before founding the Vanguard Energy Group where he was Chairman and CEO. He is a Director of Solo Oil plc and a Non-Executive at Enovation Resources Ltd.
Chief Operating Officer
Garry Stoker Is a Chartered Engineer with a BSc in Control Engineering and an MBA. He has worked in the energy sector for over 20 years in UK, India, Nigeria and North Africa. Initially with Occidental Petroleum, he has set up and managed international E&P operations for BHP Billiton, Kellogg Brown and Root, Centrica and most recently with the BG Group as their COO in India and Tunisia.
Finance Director Don Strang A qualified chartered accountant with 20 years experience in the financial and natural resources sectors including extensive experience with AIM. He has also held senior financial positions with Ernst and Young and several publicly listed Australian Resource Companies.
Non-Executive Director
Steve Horton Holds a BSc in Mining Engineering and an MBA. He has 34 years experience working in the energy industry including 27 years with BP plc where he held executive roles including worldwide Director of Drilling. He co-founded Silverstone Energy Limited in 2005.
Outline
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Introduction to the Company
The Ayoluengo Field in Spain
Status of the planned EOR scheme
Challenges and potential solutions
Answer to the question…….. Is it doable?
Brief History
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Discovered in 1964 by Chevron
Largest onshore field in Spain, 53 wells
30-37oAPI fuel oil grade low sulphur crude Total production 17 mmbbls, peak in 1969 of
5,900 bopd by primary depletion
Remaining oil in place 105 mmbbls (P50)
Original facilities handling 10,000 bopd
Acquired by LGO in October 2007
Current production 200-300 bopd
Field-wide 3D seismic, cores and logs Well intervention and facilities upgrades
undertaken in 2011 SMP-2 rig on well Ayo-22, June 2011
Field Outline
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Relatively remote Well established infrastructure Compact (10 km2) Mixed arable & pasture land 1400 metres asl Cool climate, cold winters Located in a National Park
Typical well pad Ayo-46 Central Processing
Facility
Reservoir Architecture
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Simple faulted anticline 3D seismic Fluvial to shallow marine sands U. Jurassic, Purbeck age Main reservoirs 800 to 1200 mbgl Recovery range from 4 to 20% Compartment-alised and fractured
Potential Prize
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Source: STOOIP Report, Equipoise, March 2010
Incremental Recovery
Factor %
Implied total
recovery %
Incremental Reserves mmboe
5 22 5.27
10 27 10.5
15 32 15.8
20 37 21.0
Operating Margin €/bbl
Estimated Project NPV10
€ million
20 179
25 223
30 271
35 316
40 367
45 (current)
416
50 463
Assumptions: US$100/bbl, BP Contract
Historic recovery by primary depletion = 17%
Outline
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Introduction to the Company
The Ayoluengo Field in Spain
Status of the planned EOR scheme
Challenges and potential solutions
Answer to the question…….. Is it doable?
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2011 Programme
Mar April May June July Aug Sept Oct Nov Dec
Ayoluengo well logging and recompletions
Hontomin fishing and re-perforation
Dynamic Model
EOR Planning
N2 EOR pilot
Facilities up-grading and Environmental Compliance work
Phase 1a
1b Phase 2
Select partners
Outline
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Introduction to the Company
The Ayoluengo Field in Spain
Status of the planned EOR scheme
Challenges and potential solutions
Answer to the question…….. Is it doable?
What do we need?
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For a successful EOR project we will need: 1. Wells, oil-in-place, static and dynamic models
2. Large volume of suitable gas and water handling
3. Land access, planning and environmental permits
4. Confidence and access to capital
5. Patience and perhaps some luck
What do we have (1)?
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Wells, oil-in-place, static and dynamic models Yes: 50 wells, 105 mmbbls OIP, 10-20 mmbbls 3P recoverable However: poor historic pressure data, no dynamic model yet Solution: additional study work Large volume of gas and water handling Land access, plus planning and environmental permits Confidence and access to capital Patience and some luck
What do we have (2)?
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Wells, oil-in-place, static and dynamic models Large volume of suitable gas and water handling Yes: 75,000 m3 water pa available and adequate disposal However: nitrogen limited to ~60 tonnes/day by road tanker Solution: build a dedicated local nitrogen plant (Praxair) Land access, planning and environmental permits Confidence and access to capital Patience and some luck
What do we have (3)?
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Wells, oil-in-place, static and dynamic models Large volume of suitable gas and water handling Land access, planning and environmental permits Yes: field-wide access and large central processing facility Yes: field-wide environmental permit to operate all wells Note: located in a National Park so high level of sensitivity Confidence and access to capital Patience and some luck
What do we have (4)?
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Wells, oil-in-place, static and dynamic models Large volume of suitable gas and water handling Land access, planning and environmental permits Confidence and access to capital Partial: field trials to date with only water, need a gas pilot and access to long-term capital to build reservoir pressure Solution: strategic partnership Patience and some luck
What do we have (5)?
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Wells, oil-in-place, static and dynamic models Large volume of suitable gas and water handling Land access, planning and environmental permits Confidence and access to capital Patience [and some luck] Yes: excellent potential, a team and business plan in place Further improve: reduced impact on LGO portfolio (Trinidad), work with a strategic partner
Summary
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Introduction to the Company
The Ayoluengo Field in Spain
Status of the planned EOR scheme
Challenges and potential solutions
The answer to the question. Is it doable?
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LSE (AIM): LGO
Delivering Growth through Acquisition of Proven Reserves & Enhancement of Producing Assets www.lenigasandoil.com