Loyz Energy Limited (Loyz Energy or the Group), a Singapore-based upstream energy group, is set to buy into its first oil-producing concessions, which are expected to be immediately cashflow-positive, for $65 million.
Under the sale-and-purchase agreement signed with Carnavon Thailand Limited, a subsidiary of an ASX-listed exploration and production company, Carnavon Petroleum Ltd, Loyz will acquire a 20 percent stake in three onshore concessions – SW1, L44/43 and L33/43 – located in Thailand’s Phetchabun Basin, which lie about 186 miles (300 kilometers) north of Bangkok. On completion, Loyz will make a payment of $33 million and the remaining consideration of $32 million will be funded through revenue generated by producing wells at the concessions.
Currently, the three concessions are producing at a rate of around 1,200-1,400 barrels of oil per day (bopd) in total. Based on the field development plans in place by the operator, ECO Orient Energy (Thailand) Ltd and ECO Orient Resources (Thailand) Ltd, Loyz expects the production rate to rise to 3,000 bopd by June 2014 and 5,000 bopd by December 2014, barring any unforeseen circumstances.
Adrian Lee, the Group’s Managing Director, said: “This latest deal is our first foray into producing concessions and marks a turning point for the Group. As soon as the agreement is completed, Loyz will enjoy immediate returns and positive cashflows from the producing wells at the three concessions, while seeing significant growth potential from exploration and improved production from existing operations.”
“In line with our overall strategy for the Group, we will continue to selectively acquire producing assets that will boost our earnings, while maintaining a balanced portfolio of exploration and producing concessions.”
The operator has planned for a new drilling program for 15 wells for the three Thai concessions. Three wells have been drilled so far in 2014. All three produced oil shows and testing results are pending. From the information provided by the operator, Loyz expects the remaining 12 wells to be drilled within the next 12 months, which will likely to increase daily production. The cashflows from their production are expected to fund the entire drilling program.
Based on the Dec. 31, 2012 reserve report prepared by Chapman Petroleum Engineering Ltd for the operator, the three onshore concessions have an aggregate 2P reserves (ie proved and probable) of 29.3 million barrels of oil. The Group’s 20 percent interest therefore equates to 5.87 million barrels of oil over the 20-year concession period. Based on the same reserve report, the Group’s share of undiscounted cash flow was about $166 million.
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