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Enegi Oil

  • BY: Andrew Hore |
  • POSTED: 26/12/2013 |

Enegi Oil has decided to focus its own resources on buoy technology that enables borderline offshore oilfields to become economic. 

A 50/50 joint venture called ABT Oil & Gas has been set up with ABTechnology, which has developed the buoy technology that lowers capital and operating costs and reduces decommissioning liabilities. This uses known technology but it has yet to be proved commercially. The plan is to farm-in to stranded North Sea and similar regional assets of oil companies. Oil services provider Wood Group wants to increase its participation in the marginal field initiative.

The first such deal is with Antrim Energy and this will help to prove the technology.  Antrim owns the Fyne Field in the North Sea and the joint venture will earn a 50% interest by using its technology to get the field into production. A field development programme will be submitted at the beginning of 2014.

ABT is also working on marginal fields in the Dunmore and Helvick discoveries in the North Celtic Sea. The current owners, which include Providence Resources, have agreed to ABT earning a 50% interest in the discoveries. A three stage programme will determine commerciality, apply for a petroleum lease and submit a plan of development. There is oil in each of the discoveries but up until now it has not been commercial.

Enegi has completed the farm-out deal with Black Spruce Exploration (BSE) for its Newfoundland assets. BSE will pay all the costs of a Newfoundland multi-well drilling programme in two phases in order to earn 50% interests in the exploration licences and then an additional 10% stake in them. Drilling will start on a new well by April. BSE will pay the drilling deposit of $250,000. When the deposit is released it will go to Enegi.

The cash outflow was £2.52m in the year to June 2013.  That left £71,000 in the bank. In July 2013, Enegi raised £2.02m at an average price of 8.11p a share. As part of this placing, BSE acquired 13.4m shares for £1.2m (9p a share). Yorkville bought the rest of the shares but £150,000 was subject to an equity swap at a benchmark price of 7.78p a share which lasts six months. However, the Enegi share price has been below 7.78p for most of the time since then so Enegi may not receive the full £25,000 each month and even if the share price price was more than 7.78p on one or more occasion when the equity swap price was set Enegi may not raise the full £150,000.

BSE has sold 12.33m shares in Enegi back to the company for 7.25p a share – a total cost of £966,000. Enegi has borrowed £1m to finance the purchase. Enegi either has to pay back £1.12m within six months or £1.2m between six and 12 months.

At 7.05p a share, Enegi is values at £11.1m.

Download the latest AIM Journal from http://wwww.hubinvest.com/AIMPDFDecember2013_51.pdf

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