LGO Energy: Update on Goudron production investment

LGO Energy plc (LSE AIM: LGO) has provided an update on its Goudron Field work plans announced on 9 March 2016. The company previously announced that it was planning to increase investment in production operations due to the general stabilisation in the oil price and in anticipation of reduced Overriding royalties as announced on 24 February 2016.

LGO's local subsidiary, Goudron E&P Limited, currently has Altech Rig 2 working in the field and has the option to remobilise Altech Rig 1 shortly should the need for additional capacity arise. A programme to restore production from a number of existing wells is expected to occupy Rig 2 for the next two to three weeks and it is believed that this work will add 100 bpd to current output.

Following that phase of operations several well recompletions are envisaged which will take approximately three weeks to prepare, including securing necessary approvals and planning for the mobilisation of the required downhole equipment. Specifically it is planned to perforate an upper C-sand interval of 180 ft of net pay previously not perforated in well GY-671 and then to perforate a 100 ft interval of Goudron sandstone net oil pay in legacy well GY-50 which has previously not been opened for production. These operations are expected to cost approximately US$75 000 each and to increase production by a total of at least 100 bpd.

Funding for this work is to be provided by LGO's wholly owned Trinidad service company, Columbus Energy Services Limited, from cash balances from work conducted by that company and pre-payments for future work which the company has been contracted to perform.

The two proposed well recompletions offer the greatest potential return on investment of the immediate options identified. Further heavy workovers and recompletions are being planned based on availability of further funding.

Neil Ritson, LGO's Chief Executive, commented on the investment:

"In light of improved oil prices and in anticipation of reduced royalty rates which we expect to be approved shortly, the company has now commenced additional work designed to increase production and revenues at the Goudron Field."

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/14032016/lgo-energy-update-goudron-production-investment/