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LGO says it can sustain low oil prices

Published: 
Wednesday, January 7, 2015
A board above the floor of the New York Stock Exchange shows the intraday price of oil, top, yesterday. AP Photo

LGO Energy plc’s oil sales have increased, its production has quintupled, its share price has grown more than 400 per cent, and it is able to sustain low oil prices thanks to its low operating costs.

Giving the London Stock Exchange (LSE) an update on its production and Goudron field yesterday, Neil Ritson, LGO CEO said: “The 2014 work programme, and especially the GY-670 well, has been truly transformational for LGO with a five-fold increase in sustainable daily group production.  

As we move into the 2015 drilling programme we have high hopes of continuing the success we have seen in the past year. The low cost of our operations ensures they are sustainable at low oil prices and we have no plans to decrease the extent of our work programme at Goudron.

“We have received excellent co-operation and support from both Petrotrin and the Ministry of Energy and Energy Affairs in the last two years. The recent success of GY-670, which the Ministry has cited as the most significant new onshore production well for two-decades, is a demonstration of how our investment and their support is paying dividends.”

The company’s share price has quadrupled in one year on the recurring news of oil finds. LGO was trading on the LSE for 0.8050—a fraction of a pence—on January 6, 2014. Yesterday, it was trading well above its new 2.4 pence floor, at 3.285 pence per share.

“Since LGO’s announcement on December 15, well GY-670 has continued to produce at a consistently high rate and at a high well-head flowing pressure. The well has averaged 1,045 barrels oil per day (bopd) of 37 degree API oil since being placed on production on a highly restricted basis at an average wellhead flowing pressure of 1,225 psi. 

“The well is on a restricted flow rate using a 10/32-inch choke to ensure that its long term production potential is optimised; the well has a calculated open-hole flow rate in excess of 6,000 bopd,” the LSE was told. LGO’s 10-day average production rate has exceeded 2,000 bopd, since December 23,  the company said.  Average group production for December was 1,685 bopd.

Well GY-671, the company’s seventh newly drilled well, was perforated over a 171-foot interval of oil bearing C-sands on December 17 and has flowed at restricted rates up to 216 bopd and well-head flowing pressures of up to 900 psi with a 12/32-inch choke. Well GY-669, the eighth and last well drilled at Goudron in 2014, is currently being prepared for completion in the C-sands and is expected to be on production over the next week, the company said. 

LGO said it has formally lodged applications for the clearing of the next two drill sites, Pad-4 and Pad-5, and site preparation work is expected to begin shortly. Once Pad-4 is ready to receive a drilling rig, Well Services Rig-70, which is under contract to LGO for this work, will be mobilised to the field. 

“The rate of oil sales has been substantially increased with the active co-operation of Petrotrin and there are no anticipated bottlenecks in oil sales throughout 2015 as we increase production with the addition of new wells.”

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