Mayan, the AIM listed oil and gas company, has provided an update on its proposed low-cost development programme at the 1520 net acre Zink Ranch Field (‘Zink Ranch’), Osage County, Oklahoma in which the company has a 100% working interest (‘WI’) and 75% net revenue interest (‘NRI’). As announced on 15 May 2018, the multi-phase work programme, consisting of workover, new drill and pressure maintenance operations, is focused on increasing production and proving up substantial reserves at Zink Ranch that are believed by the company to be economically recoverable.
- Turnkey contract entered into with a third-party oilfield service company (the 'contractor') to initiate a well workover programme, for a total of five wells at Zink Ranch targeting 100 net barrels of oil per day in the mid-term.
- Following the approval of Mayan as the Operator at Zink Ranch, intention for four wells to be worked over as producers from the Pennsylvanian Sands formation – initial baseline level of production for each well to be established over a 30 day period.
- A fifth well will be worked over as an injection well as part of a pilot pressure maintenance test project focused on enhancing production levels.
- Nitrogen will be injected in three phases with the amount injected increasing with each phase - the performance of the wells will be closely monitored after each phase to evaluate the impact of the test project.
- Subject to positive results, the company intends to implement a field wide pressure maintenance programme in 2019 to enhance production on the remaining 12 wells in the field.
- As part of the turnkey contract an environmental impact study, permitting and site selection for the drilling of possible future new wells, beyond the initial five referenced above, will be undertaken.
- The total cost of the programme is US$255 000 which includes the following payments to the Contractor:
- Initial payment of US$125 000 (£94 700) payable in Mayan shares based on £0.0085 per share equivalent to 11 141 176 Ordinary Shares.
- Additional payment of US$100 000 upon completion of the five well workovers prior to the nitrogen injection. Mayan can elect to pay in cash or Ordinary Shares at the time of completion.
- Payment of US$5000 per month in cash for six months for pumping and regulatory reporting services.
- The contractor indicated a preference to receive the initial US$125 000 payment in shares of Mayan which the Directors believe highlights the contractor’s confidence in the success of not only the programme at Zink Ranch but also ongoing activity across Mayan’s Texan assets.
- The contract anticipates initiation and completion of the five workovers within 30 days of Mayan assuming operatorship at Zink Ranch - the Company has engaged counsel to complete this process and anticipates a timely resolution of this matter.
Eddie Gonzalez, Managing Director, said: “Zink Ranch represents untapped value for Mayan. With the signing of this contract we have now taken the first tangible step towards unlocking what could become a significant asset for the company. Together, with the success we are having at the Forest Hill and Stockdale Fields in Texas, we believe that Zink Ranch can make a substantial contribution towards achieving our production goal of 300 to 500 net bpd. Furthermore, oil production from the Pennsylvanian Sands tends to be longer-lived than production elsewhere and as a result, the implied value of a barrel of oil in the ground from this horizon has historically realised a premium to other formations. We are therefore keen to commence this programme which, subject to positive results, could confirm our view that Zink Ranch is a high quality and valuable asset. As development milestones and nitrogen test results become available, Zink Ranch will generate much news flow in the coming weeks and months.
“I am further encouraged that seasoned oilfield professionals are interested in receiving shares as payment for their services in lieu of cash. This serves as a testimony to the hard work the Board and our employees have done not only in restoring the reputation of the company with both investors and industry partners but also in delivering on our strategy to build a highly cash flow generative oil and gas company.”
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/19062018/mayan-energy-establishes-plan-to-unlock-substantial-oil-reserves-at-zinc-ranch-oklahoma-significantly-increasing-production/