Mayan Energy Ltd Completion of Acquisition of New Five-Well Package

Posted by OilVoice Press - OilVoice


Mayan (AIM: MYN), the AIM listed oil and gas company, is pleased to announce that, further to its announcements of 25 June and 26 July 2018, it has now completed the acquisition of a 60% working interest/ 45% net revenue interest in three horizontal and two vertical Austin Chalk wells in Gonzalez County, Texas (the ‘Acquisition') for a total consideration of US$500,000 (the “Consideration”). The Acquisition is in line with Mayan's objective to increase net production to 300 – 500 bopd by securing select under-exploited US onshore assets at attractive prices and enhancing production by applying the Company's in-house expertise and advanced technologies and techniques.  Following extensive due diligence the Company has elected not to proceed with the purchase of 7 Stockdale Wells, which were also subject of the conditional Sale and Purchase Agreement.    The Company will continue to assess additional well packages in the region as it builds out its production base.
The Company will be mobilising equipment to the Gonzalez County field in the first week of September.  The initial work-over program is expected to take 8 weeks.   All permits required to work-over and produce the wells are in place once the transfer of the wells are completed.
For details of the Austin Chalk well package please refer to the Company announcement dated 25 June 2018.
5 Austin Chalk Wells (Working Interest 60%/ Net Revenue Interest 45%)
  • 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, acidize 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 acidization procedure on each well will require no more than two days rig time allowing for near term, high impact results to be realized
  • 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 bopd (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
Eddie Gonzalez, Managing Director, said: "With the addition of these 5 new wells plus ongoing work programmes at Forest Hill and Zink Ranch we are well positioned to drive daily production forward.  Our technical team has demonstrated their capability to achieve 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 the Gonzalez County wells to form the backbone of our production, augmented by important contributions from Forest Hill and Zink Ranch & Stockdale.”
Sale and Purchase Agreement Amendment (‘SPA')
On 25 June 2018 Mayan announced a conditional Sale and Purchase Agreement with Smart Bit LLC (“Smart Bit”) to acquire interests in 12 well bores, including seven additional vertical wells at the Stockdale Field in Wilson County, and three horizontal and two vertical Austin Chalk wells in Wilson and Gonzalez Counties, Texas (the "Acquisition") for a total consideration of US$605,000 (the "Consideration"). As announced at that time, completion is conditional on the satisfactory completion of full due diligence, agreed form of assignment of wells, and Mayan and the Vendor entering into a Joint Operating Agreement ("JOA").   
SPA Amendment
On July 26 2018 Mayan entered into a revised Sale & Purchase Agreement to extend the due diligence and completion period until 22 August 2018.  As announced at this time it was to ensure clear title could be passed across with all necessary permits and approvals in place to enable immediate work-overs and production to commence from the target well packages.
Consideration Payable
Given Mayan's decision to not proceed with the purchase of 7 Stockdale Wells, Mayan will pay the balance of the consideration due under the SPA in respect of the 5 Austin Chalk wells only of US$460,000, payable 50% in cash and 50% in Mayan shares at 0.7p per share.   The shares issued to Smart Bit are subject to a 6-month lock-up. 
The Company will issue 25,274,725 Ordinary shares as settlement for 50% of purchase price of US$460,000 (the "Settlement Shares").
Total Voting Rights ("TVR")
In total 25,274,725 Ordinary shares which will rank pari passu with existing Ordinary Shares will be issued at the 0.7p per share, and it is expected that Admission will become effective and dealings in the Placing and Settlement Shares will commence on or around 30 August 2018. 
Following the issue of 25,274,725 Settlement Shares, the Company's issued share capital will consist of  1,427,098,141 Ordinary Shares with voting rights.  No Ordinary Shares are held in treasury at the date of this announcement and therefore following the Admission, the total number of Ordinary Shares in the Company with voting right will be 1,427,098,141.
The above total voting rights figure may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in the Company.
Special note concerning the Market Abuse Regulation
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 ("MAR"). 

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