Leni Gas & Oil announced an agreement to farm-in to the Advance Oil Company (Trinidad) Limited ("Advance") North Moruga area leases. LGO plans to work-over existing producing wells and drill up to nine (9) new wells on the leases.
The Heads of Agreement with Advance sets out the framework for a full farm-in agreement and joint operating agreement by which LGO will:
A signature bonus of TT$250,000 (US $39,000) has been paid to Advance and gives LGO exclusivity to conclude the definitive agreements and assignment of interests envisaged under the Heads of Agreement.
Advance, have held the North Moruga leases for a number of years, during which they have integrated all existing geological and production data and have already drilled three (3) exploration wells. Importantly, they have also acquired the environmental baseline data necessary to facilitate the permitting of further new wells. The leases cover an area of 1,223 acres and lie less than 5 kilometers east of the West Moruga Field which has produced 25 mmbbls of oil and 3.5 kilometers west of the Innis, Antilles and Trinity Fields which have produced approximately 15 mmbbls of oil.
Short-term production potential from the existing wells is estimated to be of the order of 120 bopd and LGO has agreed to spend up to TT$300,000 (US $47,000) during 2011 to raise the production to at least that level.
The definitive agreements require approval and a formal assignment of interests by the Trinidad and Tobago Ministry of Energy and Energy Affairs. These agreements are anticipated to take up to 90 days to obtain. The first new well will be drilled as soon as practical after interest assignment, likely to be in late 2011.
Neil Ritson, Chief Executive Officer commented, "This is the first of a number of new opportunities that LGO is negotiating in Trinidad as we seek to significantly increase our operations there. The Advance leases lie in a highly prospective, but under-explored, part of the Southern Basin and the combination of existing proven reserves and several undrilled structures is especially attractive."
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