VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 30, 2015) - Mitra Energy Inc. (the "Company" or "Mitra") (TSX VENTURE:MTE) is pleased to provide an update on the status of its key assets and activities, including progress on its gas development project in Vietnam.
Development and appraisal
Vietnam - Further momentum toward 2C to 2P transition
- Reserve Assessment Reports for the Nam Du (Block 46/07 PSC) and U Minh (Block 51 PSC) Fields were submitted to regulator Petrovietnam and written approval of the RARs is expected to follow shortly.
- Outline Development Plans for Nam Du and U Minh are near complete and are planned to be submitted to Petrovietnam for approval by end 2015.
- Memorandum of Understanding ("MOU") signed between Petrovietnam Exploration Production Corporation ("PVEP") and Mitra on August 28, 2015 for joint development of Nam Du and U Minh with existing PVEP gas discoveries in the adjacent Block 46/13 PSC.
- Kuwait Foreign Petroleum Exploration Company ("KUFPEC") has announced its intention to withdraw from Block 51 PSC due to portfolio rationalisation, effective from December 31, 2015. Mitra anticipates assignment of the full 35% working interest from KUFPEC at zero cost, increasing its working interest to 70%. As a consequence, Mitra's net 2C Contingent Resource on Block 51 will increase by 22.5 mmboe to 45.1 mmboe (based on March 2015 Competent Persons Report ("CPR)). Mitra's total net 2C Contingent Resources across its portfolio will rise from 69.5 mmboe to 92.3 mmboe.
- The commitment well planned on the Nam Du Field for Q2, 2016 is now anticipated to be deferred to coincide with further development drilling on the Nam Du Field in 2017-18, for greater operational efficiency, subject to government approval.
- An updated subsurface model for the Tho Chu Field (Block 51 PSC) has been completed and will be used as the basis for future appraisal drilling. A large resource increase is anticipated associated with this work, to be confirmed with a revised CPR refresh due in Q1, 2016.
Philippines - Fully carried exploration well on Halcon expected Q1 2017
- Total operated Halcon prospect in SC 56 now anticipated to be drilled in Q1, 2017.
- A minimum of 1,000 kilometres of new 2D seismic data is to be acquired to evaluate the additional prospectivity in further prospective areas of the block, expected to take place during Q1, 2016.
Vietnam - Large 3D seismic survey completed at 127 PSC ahead of farmout proceedings
- Completed 533 km2 of full-fold 3D seismic data in June 2015 with the goal of identifying potential drilling locations. Following the completion of the interpretation of these new data, a farmout will be initiated in Q1 2016.
Indonesia - Good progress on farmout following seismic survey
- Bone PSC - Processing of 1,200 line kilometres of 2D seismic data is complete, revealing a number of drilling targets in shallow water on trend with onshore fields. A farm-out process has commenced with the goal of securing additional partners to participate in drilling the key prospects.
Paul Ebdale, CEO of Mitra, commented:
"We have made good progress over the last period across our portfolio of assets. In Vietnam we are looking forward to the imminent submission of our Outline Development Plans and we are increasing our stake in the U Minh and Tho Chu Fields in Block 51 following KUFPEC's withdrawal. We anticipate this will double our working interest and share of contingent resources and it also provides us with increased optionality in terms of development funding for the project.
"In the Philippines, the high impact Halcon well, operated by Total will now be drilled in Q1 2017. This presents significant value upside potential through our full carry on the cost of the well and the Pmean resource potential of 6.7 TCF and 169 million barrels of condensates."
Operational update details
Mitra is engaged in exploration, appraisal and pre-development activities in South East Asia (Philippines, Vietnam and Indonesia), with a portfolio of 10 exploration and pre-development assets. The current asset portfolio comprises approximately 12.8 million acres of awarded acreage.
Mitra has discovered resources in three gas fields in Vietnam and two gas fields in the Philippines, along with a portfolio of exploration assets. The fields contain gross 2C Contingent Resources of 197 million barrels of oil equivalent (consisting of 1087 billion cubic feet ("Bscf") of gas and 16 million barrels of associated liquids), representing net to Mitra 2C Contingent Resources of 69 million barrels of oil equivalent (consisting of 382 Bscf of gas and 6 million barrels of associated liquids).
Mitra's Strategy Themes
Mitra plans to build a significant E&P player in the SE Asia region, focussing largely on the strong gas market demand in the countries within which it operates. Mitra's strategies are to (i) move its existing discoveries towards production into the energy-short markets of its host countries; (ii) collaborate with current and future farm-in partners to deliver carried high impact exploration drilling and; (iii) capture material production assets in the SE Asia region.
Vietnam Gas Assets
Mitra operates three PSCs (Blocks 51, 46/07 and 45 PSCs) and has three gas and condensate discoveries in the area known as the Malay-Tho Chu Basin. Mitra currently operates these assets on behalf of joint venture partners PVEP and KUFPEC, with the working interests as shown in Table 1. Mitra's strategy is to assist PVEP and the Vietnamese government regulator ("Petrovietnam") in accelerating the delivery of its gas resources to Vietnamese demand centres. Mitra is working closely with its partners to deliver Development Plans and bring the existing gas discoveries towards production, with a view to selling the gas resources into Vietnam via the existing PM3CAA-Ca Mau pipeline infrastructure from as early as 2018. The Company anticipates making further announcements regarding progress with these assets in the near future.
Table 1: Vietnam Malay-Tho Chu Basin Assets and Working Interests
|Block 45 PSC
|Block 46/07 PSC
|Block 51 PSC
|(1) PVEP interest is carried until a Declaration of Commerciality is made under the PSC, anticipated during Q1 2016
|(2) On November 10, 2015 KUFPEC informed the Joint Venture of their intention to withdraw from the PSC, subject to government approval.
On November 10, 2015, KUFPEC announced its intention to withdraw from the Block 51 PSC, which represents a non-core part of their portfolio and is KUFPEC's only upstream asset in Vietnam. The withdrawal will be effective from December 31, 2015. Under the terms of the Block 51 PSC Joint Operating Agreement, the KUFPEC working interest share will be allocated on a proportional basis between remaining Joint Venture partners unless otherwise agreed. This allocation is yet to be agreed, although Mitra anticipates assignment of the full 35% working interest from KUFPEC, increasing the working interest to 70%, and resulting in an on-block increase in net 2C Contingent Resource of 22.5 mmboe to 45.1 mmboe (based on March 2015 CPR). Net 3C resources will rise by 64.2 mmboe to 128.4 mmboe. The withdrawal and assignment of working interests are subject to the approval of the Government of Vietnam.
Vietnamese government technical audits (Reserve Assessment Reports or RARs) for both the U Minh (Block 51 PSC) and Nam Du (Block 46/07 PSC) Fields were presented to the Petrovietnam Reserves Committee on November 11, 2015. Formal Petrovietnam written approval of the RARs is expected to follow shortly.
Outline Development Plans (ODPs) for the two fields are currently in an advanced stage of preparation, with a planned submission to Petrovietnam by end 2015.
An appraisal well is planned on the Nam Du Field in Q2, 2016 to facilitate the transition of 3C to 2C resources. The well is being designed to be suspended as a potential future production well. Mitra is currently in discussions with Petrovietnam regarding deferring the well to coincide with further development drilling on the Nam Du Field in 2017-18.
A MOU was signed between PVEP and Mitra on August 28, 2015 in order to facilitate the joint development of U Minh and Nam Du with existing PVEP gas discoveries in the adjacent Block 46/13 PSC.
An update to the subsurface model for the Tho Chu Field (Block 51 PSC) was completed in Q3, 2015 and will be used as the basis for future appraisal drilling. A significant Contingent Resource increase is anticipated when this updated subsurface model is included in the next revision of a Mitra independent technical audit, scheduled for Q1 2016. A further 6-month extension to Exploration Phase Two of the Block 51 PSC has been requested in order to study the optimal timing for further appraisal drilling.
A prospect evaluation update has been completed for the Block 45 PSC within which some satellite gas potential has been identified. The timing of any prospective drilling within the PSC will be determined by the phasing of development of existing discoveries in neighbouring blocks and resulting available capacity in the gas pipeline and export system. In line with this strategy, a further 6-month extension to Exploration Phase One has been requested in order to study and better understand the commercialization potential.
Key Exploration Activities
Service Contract 56
Mitra holds a 25% interest in Service Contract 56 ("SC 56") in partnership with operator Total E&P Philippines B.V. ("Total"). Four wells have previously been drilled on SC 56, resulting in discovery of the Dabakan and Palendag Fields, with combined gross Contingent Resources of 577 Bscf and 6.5 million barrels of condensates (2C) to 2,504 Bscf and 28.8 million barrels of condensates (3C).
In September 2012, Total farmed into SC 56 and assumed a 75% interest, with Mitra remaining as operator. On August 28, 2014, Total formally confirmed its intention to drill an exploration well on the Halcon prospect and operatorship was transferred to Total effective October 25, 2014. This well is currently expected to be drilled during Q1, 2017. Total will carry Mitra's 25% interest in the well up to a gross well cost of US$75 million. The gross Prospective Resources in the CPR associated with the Halcon Prospect are 6,736 Bscf and 169 million barrels of condensates. The discovered and future gas resources are expected to be either sold via pipeline to Sabah (Malaysia) or via a floating liquefied natural gas ("LNG") facility to be operated by Total.
In October 2014, the Philippines Department of Energy approved an exploration period extension of five years from August 31, 2015, resulting in a continuing exploration period until September 1, 2020. An additional exploration area of 1,920 km² has also been returned to SC 56 from areas previously relinquished, resulting in a revised total block area of 6,220 km². A minimum of 1,000 kilometres of 2D seismic data and 2,000 km² of high resolution seabed data will be acquired in this re-awarded area to evaluate the additional prospectivity. The 2D seismic acquisition programme is expected to take place during Q1, 2016.
Block 127 PSC
Mitra operates Block 127 PSC with 100% working interest. The block covers an area of over 9,000 km² and is located at the southern end of the Phu Khanh Basin, off the east coast of Vietnam. This deepwater frontier basin contains several minor discoveries of oil and gas that confirm the potential for hydrocarbon generation. Nearby acreage within the Phu Khanh Basin has been licenced by ENI, Murphy Oil, Repsol, ONGC, Santos and Origin Energy. Mitra completed the acquisition of 533 sq. km of full-fold 3D seismic data in June 2015 over key prospects recognised on earlier 2D seismic data, with the goal of identifying potential drilling locations. These data are currently being processed. Following the completion of the initial interpretation of these data, the Company plans to commence a farm-out process in Q1, 2016, with the aim of securing additional joint venture partners to fund the drilling of exploration wells.
Block MVHN/12KS PSC
Mitra operates onshore Block MVHN/12KS PSC with 100% working interest. The block covers an onshore extension of the producing Song Hong Basin and was signed as a shale gas PSC in 2013. The initial work program consists of seismic reprocessing and geological studies focused on characterizing the shale potential of the block.
As a result of the evaluation undertaken to date, Mitra has negotiated and secured an amendment to include rights to conventional hydrocarbon resources within the PSC, effective February 5, 2015. As such, Mitra is exploring both conventional and unconventional reservoir targets in parallel in the forward work program for this block. Mitra expects to complete ongoing resource evaluation work for the identified shale and tight gas resource plays by end 2015, prior to commencing a farm-out process in Q1, 2016.
Mitra holds a 60% operating interest in the Bone PSC Block, offshore Sulawesi, in partnership with Azimuth Indonesia Limited. ("Azimuth"). The Bone PSC Block is undrilled, but is immediately adjacent to and on trend with proven gas accumulations on production in the onshore Sengkang PSC. The operator of Sengkang PSC, Energy World Corporation is currently building a LNG liquefaction export facility on the coastline immediately adjacent to Bone PSC Block.
Azimuth farmed into the licence during 2014 in exchange for a carry on geophysical activities. During Q1 2015, Mitra acquired around 1,200 line kilometres of 2D seismic data. Processing of the data has been completed and has revealed a number of attractive drilling targets in shallow water, on trend with onshore fields. A farm-out process has commenced, with the aim of securing additional partners to fund the drilling of exploration wells from 2016 onwards.
Mitra holds a 100% operated interest in the Sibaru PSC Block, offshore Java Sea. Following the completion of the review of the remaining prospectivity of this block a notice of relinquishment was submitted to SKKMIGAS (Government of Indonesia) on April 24, 2015. The relinquishment process remains in progress and is expected to be completed by end 2016.
Mitra holds a 25% non-operated interest in the Titan PSC Block, offshore Java Sea. AWE Limited, the Operator of the Titan PSC, commenced the relinquishment process for the Titan PSC in 2014. On October 23, 2015 Mitra (Indonesia - Titan) Ltd. and co-venture partner Baruna Oil & Gas Ltd. ("Baruna") both signed an agreement with AWE (Titan) NZ Limited that releases Mitra and Baruna from any future liabilities under the PSC up to the point of final relinquishment.
North Madura PSC
In December 2014, Mitra signed a farm-out agreement with Azipac North Madura Ltd ("Azipac", an affiliate of Azimuth), whereby Mitra would assign its working interest in North Madura PSC to Azipac. The farm-in was approved by SKKMIGAS and the Government of Indonesia on October 12, 2015. Consequently, Mitra no longer has an interest in the North Madura PSC.
Mitra held a 47.5% operated interest in the Biliton PSC Block, offshore Java Sea. The Biliton PSC expired on December 29, 2013. The relinquishment process commenced immediately thereafter and is expected to be completed by year end 2016.
NE Natuna PSC
Mitra held a 90% operated interest in the NE Natuna PSC Block, offshore Natuna Sea. The commitment well Durian Besar Deep-1 (DBD-1) was drilled in September / October 2012 but had to be abandoned some distance above the primary objectives due to operational concerns. The PSC terms required the partners to re-enter DBD-1 and also drill another well in the block before the expiry of the PSC on July 14, 2015, or relinquish the block. Efforts to farm-out the block have not been successful and accordingly, a notice of relinquishment was submitted to SKKMIGAS (Government of Indonesia) on May 29, 2015. The relinquishment process remains in progress and is expected to be completed by mid-2017.
Resources and Valuation
A CPR, prepared in accordance with National Instrument 51-101, was conducted for the Company by LR-Senergy and issued in March 2015. It identified Contingent Resources net to Mitra as provided in the Company's Filing Statement dated April 10, 2015 filed under the Company's profile on SEDAR at www.sedar.com. An update revision of the CPR has been commissioned and is scheduled to be completed in Q1, 2016.
This press release may contain forward-looking information and statements ("forward-looking information") within the meaning of applicable securities laws. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The statements in this press release are made as of the date of this release. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results or (as applicable). Although the Company believes that the expectations reflected in our forward-looking information is reasonable, our forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including without limitation: volatility in the market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital acquisitions; geological, technical, drilling and processing problems; fluctuations in foreign exchange or interest rates; health safety and environmental risks; stock market volatility; global economic events or conditions; and other factors, many of which are beyond the control of the Company. We caution that the forgoing list of risks and uncertainties is not exhaustive.
A barrel of oil equivalent ("BOE") is determined by converting a volume of natural gas to barrels using the ratios of 6 thousand cubic feet ("Mcf") to one barrel. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
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