Mayan Energy Ltd: Acquisition and Issue of Equity

In addition, the Company has also announced that it has raised £850 000 gross via a Placing with a limited number of high net worth investors (the "Placing") of 141 666 666 new ordinary shares of no par value each (the "Placing Shares") at a price of 0.6p per share (the "Placing Price") with a warrant for every 2 shares subscribed exercisable at 0.9p (the “Placing Warrants”). The Placing Price represents a discount of 11.8% to the last closing price on 22 June 2018. The net proceeds of the Placing will be used to fund the Consideration, new work-overs at Stockdale and Austin Chalk, and general working capital. The Placing was arranged by Mayan and Novum Securities Limited who have been appointed as broker to replace Cornhill Securities following this Placing. In addition to the Placing, Mayan has also agreed to issue US$175 000 of new ordinary shares at a price of 0.7p per share in settlement of outstanding creditors.

Acquisition of seven vertical Stockdale wells and five Austin Chalk wells

7 Stockdale Wells (Working Interest 60%/ Net Revenue Interest 45%).

• Provides multiple opportunities to replicate the success of the Morris#1 well at the Stockdale field which has been producing at a gross rate of over 80 bpd following a low cost workover.
• Production at Stockdale is highly profitable due to low operational costs which at current oil prices generates excellent netbacks.
  • All-in operating costs at Morris#1 are expected to average less than US$14 per barrel based on an expected production level of 2760 gross BOPD over a 30-day month.
• Low cost development programme will involve reworking Stockdale wells using the techniques and technologies that were successfully deployed on the Morris #1 well.
  • All seven vertical wells will be completed in both upper and lower Anacacho zones as well as the lower Escondido sand where the Morris#1 encountered natural gas.
  • Water to be piped into existing salt water disposal well (“SWD”).
  • Due to work previously undertaken by Mayan to get the SWD well operational it will be able to quickly workover and tie-in production from new wells.

5 Austin Chalk Wells (Working Interest 60%/ Net Revenue Interest 50.25%).

• Near term workover and exploitation potential on three Austin Chalk horizontal wells and two vertical wells using low-cost techniques proven on Morris #1 well.
• The company intends to use a coiled tubing rig to clean out; work-over; and, acidise Austin Chalk zone in each of the horizontal laterals with estimated potential production of 60-80 barrels per day per well.
• The company estimates that the workover and acidisation procedure on each well will require no more than two days rig time allowing for near term, high impact results to be realised.
• Longer-term potential to re-frac wells targeting zones identified with the Roke Quad Neutron log tool.
• None of the wells have been re-entered or stimulated in any way suggesting significant upside potential from low cost stimulation and production enhancement techniques and technologies.
• The Company has established a 300 bpd (Gross) target from the five well package with potential for upside if the Company achieves the higher end of its expectation range on each well.
• Operating cost per barrel estimated to be US$18 - 20 per barrel as water from these wells will be transported via truck for disposal.

Update on Forest Hill Field work programme.

• Workovers on an additional 2 - 4 producing wells at Forest Hill Field due to recommence in July 2018 – follows satisfactory resolution of issues relating to access and rights regarding certain leases with a neighbouring operator.
• Production at Forest Hill is highly profitable due to low costs which at current oil prices generates excellent netbacks
  • Realised oil price is WTI plus US$2.00.
  • 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.

Eddie Gonzalez, Managing Director, said: "Whilst the SPA remains conditional on the agreement of the JOA and completion of due diligence, Mayan is confident of closing the Acquisition given its knowledge of the formations and work done to date on the

Transaction. With the potential addition of these 12 new wells plus ongoing work programmes at Forest Hill and now at Zink Ranch we are well positioned to push daily production towards our target range of 300 to 500 net bpd. Our technical team has successfully demonstrated the capability to achieve excellent results by exploiting existing well bores using cutting-edge and proprietary tools and techniques. Thanks to today’s agreement, our team now has many more opportunities to replicate this success. I expect Stockdale and the nearby Gonzalez County wells to form the backbone of our production, augmented by important contributions from Forest Hill and Zink Ranch.

“Importantly following my appointment, Mayan today is a streamlined organisation with low overheads. Together with our growing production base, we are able to deploy the majority of our new capital into the ground to add yet more production and in turn drive Mayan’s profitability and future growth. We now have an inventory of wells with which to take the next major step forward in terms of building the scale an oil and gas company requires to be successful over the long term. With work progressing across our asset base, the summer and the fall of 2018 will not be short of high impact news flow.”

Read the article online at: https://www.oilfieldtechnology.com/special-reports/25062018/mayan-energy-ltd-acquisition-and-issue-of-equity/