GAS2GRID LIMITED 29th January, 2016
SC 44 currently in 2 Year technical moratorium until 27th January, 2017.
Completed studies to determine the best well drilling and completion technology to maximise oil production at Malolos.
Drilling programs being prepared for deepening Nuevo Malolos-1 and a new well on the mapped crest of the Malolos Oil Field - drilling proposed for 2016.
Proposed drilling program to be funded by farmout.
FranceIn October 2015, the French Government advised the Company of its decision to refuse the first renewal of St. Griede licence.
In November 2015, the Company lodged requests at the tribunal in France for the suspension and annulment of the French Government's decision.
In December 2015, a judge at the French tribunal ruled to suspend the decision made by the French Government and the Ministers are given 2 months to make a decision based on proper legal grounds.
The French Government and the Company were allowed two weeks from formal receipt of the Judge's decision to lodge an appeal. On 28 January 2016, the Company received notice that an appeal has been lodged by the Minister of Energy.
The Company is seeking legal advice on available courses of action.
3 new petroleum exploration licence applications being processed.
The Philippine Department of Energy ("DOE") approved a 2 year technical moratorium in order to provide sufficient time to complete studies and establish the appropriate completion technology for maximising sustainable oil production that if successful will lead to full oil field appraisal/development.
The Company completed technical work with industry experts. That work included analysis of all available technical data to determine a completion technology that will minimize sand and clay production and avert production blockage in order maximize oil production rates. The results of this work recommend that the preferred method to complete the new wells will be with standard industry
Gas2Grid Limited | Level 11, 10 Bridge Street | PO Box R1911 | T +61 2 8298 3688 |
ABN 46 112 138 780 | Sydney NSW 2000 | Royal Exchange NSW 1225 | F +61 2 8298 3699 |
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screens. The installation of screens, as opposed to perforated casing, should maximize and sustain oil production whilst retaining the reservoir sand and producing the clay fines.
Studies have also been completed on the open-hole mud and hydraulic program design in order to minimize formation damage and maintain well-bore stability.
Proposals for the deepening of Nuevo Malolos-1 and drilling of a new Malolos-5 well are being prepared for submission to the Philippine Department of Energy. The Malolos-5 well is to be sited on the crest of the mapped surface anticline.
The Company, subject to availability of funding, is planning on deepening the Nuevo Malolos-1 well to the two known oil bearing reservoirs tested in Malolos-1. The well is programmed to deviate slightly so as to intercept the oil bearing reservoirs slightly up dip from Malolos-1. The new program will incorporate better open hole drilling technologies to avoid formation damage. It is planned to cut a rock core through the upper oil bearing sandstone and run a suite of electrical logs. The well will then be completed with screens and placed into oil production.
Recent surface geological mapping has also been completed and integrated with previous work leading to a more detailed understanding of the surface geological structure. The crest of the Malolos anticline has been confidently located approximately 2.5 to 3 kilometres south-southwest of Malolos-1.
The Company, subject to availability of funding, would like to drill a new well to test the known oil bearing reservoirs in a crestal location on the anticline. Due to structural uplift all known sandstone reservoirs would be intercepted at a significantly shallower depth on the crest of the anticline, relative to Malolos-1.
The Company is also reviewing the benefits that could be achieved by the stimulation of the upper oil bearing sandstone in Malolos-1.
The Company considers the best way to fund the full appraisal and development of the Malolos Oil Field is by securing a farmin partner. The Company is continuing with farmout efforts with terms now reflecting the current lower oil price in order achieve a farmout.
The Malolos Oil Field still represents an attractive investment opportunity despite the recent oil price drop and the immediate effect that it is having on the oil industry Worldwide. The Malolos Oil Field has
a 20.4 million barrel "Best Estimate (P50) Contingent Resource" of good quality, low sulphur crude oil that is located onshore, close to transportation in a country with excellent fiscal terms. This could result in very low development and operating costs which may generate a reasonable profit margin, even at the current low oil price.
Cross-section of Malolos Oil Field showing locations of wells drilledThe St Griede licence (100% working interest) located within the Aquitaine Basin, France was due for its first renewal in May, 2013 after an initial 5 year term. With the terms and conditions of the work and expenditure commitments having been met for the first 5 year term, a renewal application for a second 5 year term was submitted in January 2013 in order to continue the work program towards the drilling of a well. Normally, a first renewal is expected as a matter of course if the initial commitments have been met. That application was processed by French Government officials who recommended renewal and submitted it to the Minister of Energy for signature and issue.
The Company was formally advised by the French Government in October 2015 that it has decided not to grant the renewal. The decision not to renew the licence was based solely on local elected members and risks to public order considerations within the area where the licence is located. That decision is inconsistent with an approval granted last year by local authorities, while the application for renewal was being processed, for Gas2Grid to conduct a seismic acquisition survey with the aim to define a well location in the same area.
In November 2015, the Company lodged requests at the French tribunal for the suspension and annulment of the decision made by the French Government.
On the 29th December, 2015 the judge hearing the matter ruled in the Company's favour and suspended the decision made by the French Government not to renew the St. Griede licence. The judge concluded that the St. Griede licence itself cannot cause risks to public order and that there has been an error of law in the decision of the Ministers. The two relevant Ministers have been given 2 months to make a decision on the St. Griede licence renewal based on proper legal grounds. An appeal by the parties on the judge's ruling is allowed within two weeks from formal receipt of the ruling.
On 28 January 2016, the Company received a notice from the Conseil d'Etat of France that the Minister of Energy has lodged an appeal to annul the 29th December, 2015 ruling of the judge at the tribunal. Further notice is expected later advising whether the Conseil d'Etat will allow the appeal to proceed.
The Company is receiving legal advice on courses of action that is available to protect its rights and assets.
Gas2Grid Limited issued this content on 29 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 29 January 2016 03:56:28 UTC
Original Document: http://www.gas2grid.com/IRM/PDF/1882/December2015QuarterActivitiesandCashFlowReports
