Enegi spreads risk with new partnership deal
OIL exploration firm Enegi Oil has announced that its main asset – its most advanced well at the Garden Hill South site in Newfoundland, is finally set to become operational.
Moreover, the Manchester company has announced a new strategy which has seen it sign agreements with Dragon Lance Management Corporation (DLMC) over PL2002-01 – the other potential gas shale sites off the coast of Newfoundland.
Chief executive Alan Minty said that the farm-out deal signed would mean that Enegi Oil maintains a significant interest in the assets identified but reduces its financial commitment to the project and makes it less dependent on its success.
“Following these farm-out agreements, the Company is no longer solely reliant on the outcome of a single event. We have gone from the dependence on the performance of a single well to having a number of real options.
“We believe that this strategy and having DLMC onboard, together with their financial and technical input, will give the company a solid foundation from which to deliver further value to its shareholders.”
The company said that it would continue to work in western Newfoundland and appraise potential development projects where the presence of hydrocarbons is known, but would spend less money on each exploration site and would not get involved with projects where the presence of hydrocarbons is not clearly established.
The company said that Dragon Lance Management plans to re-enter the well at the Garden Hill South site on August 30 to stimulate it and hopefully bring oil to the surface.
DLMC will then undertake a seismic programme and drill a test well at the coastal PL2002-01 site and then go on to do the same at another site known as EL1070.
DLMC will pay for half of the seismic test programme and once the results are known Enegi’s subsidiary PDIP will decide whether or not it wants to contribute towards its development.
If it does it can retain a 60% interest in the well. If it doesn’t, DLMC will take on 100% of the costs of development in return for a 70% interest in it.
Enegi’s shares rose by 2p to 19p a share, giving the company a market cap of over £13.5m.
