• MOG announces acquisition of 100% of JKX Italia Ltd (“JIL”) from JKX Oil & Gas Plc for €2 million
• JIL owns interests in a production concession application, three exploration permits and one exploration permit application onshore Italy with a focus on natural gas plays
• MOG estimates 2P reserves of 1.3 Bcf in the d’Aglavizza production concession application with a start-up of gas production in 2009. The mature prospects in the two exploration permits have best estimate resources of 10 Bcf
• Significant synergies identified with MOG’s current asset and resource base, with minimal incremental operational costs
• Acquisition financed from existing cash reserves with no effect on current work programme. In addition, JIL has a net receivables of over US$600,000.
Acquisition
The Board of Mediterranean Oil & Gas Plc (AIM:MOG) has exchanged contracts on the acquisition from JKX Oil & Gas Plc of 100% of JIL for €2 million.
JKX Italia Ltd , which will be renamed Medoilgas Civita Ltd (“MOG Civita”), owns and operates JKX’s Italian E&P Business.
Through this 100% acquisition MOG has acquired interests in a production concession application, three exploration permits and an exploration permit application all onshore Italy.
Sergio Morandi, MOG’s CEO, commenting on the acquisition, said “The acquisition of MOG Civita represents an attractive opportunity to increase our gas production in the short term and pursue attractive additional gas resources from a mature lead and a prospect. This acquisition creates value for the Company as we leverage our operational base and expertise and secure attractive growth opportunities in our core Italian market.”
Production Concession Application: D’Aglavizza: (MOG Civita 100%; Operator MOG Civita)
D’Aglavizza is an application for a 7 square kilometre production concession. The Civita 1 well discovered gas bearing tertiary sands at a depth of about 1200 metres with proved and probable reserves of 1.3 Bcf with additional possible resources of 1.0Bcf (best estimate case). MOG can profitably develop this field and believes there is potential for additional resources to add to the present reserves. The award of the concession is expected in 2009 with production anticipated to commence from a suspended well shortly afterwards.
The D’Aglavizza field is expected to produce approximately 14,500 scm/d. (512Mcf/d).
Exploration Permit: Civita: (MOG Civita 100%; Operator MOG Civita)
Civita is an exploration permit located near d’Aglavizza application which contains the Civita 1 field. Civita North is a mature prospect and is ready to drill. The prospect is supported by 3D seismic and presents a significant DHI AVO anomaly, calibrated to the Civita 1 gas discovery. The best estimate prospective resources for the prospect are 5.0 Bcf. The permit is mostly covered by 3D seismic and other exploration leads have been identified.
Exploration Permit: Montalbano: (MOG Civita 40%; Operator: Vega Oil)
This exploration permit is operated by Vega Oil, and is located on the main Bradano Trough gas productive trend.
The primary exploration play is biogenic gas in shallow Pliocene clastic sequence. The commitment well objective is the appraisal of Montesano-1 directional well that tested 25,100scm/d to 47,600 scm/d (886Mcf/d to 1,680Mcf/d). The best estimate prospective resources are 5 Bcf.
Exploration Permit: Fiume Arrone: (MOG Civita 10%: Operator: Ascent)
In this exploration permit the commitment well was drilled in 2007 and was dry. In the Company’s view the residual exploration potential is limited and no value has been ascribed to JIL’s interest.
Exploration Permit Application: Corropoli (MOG Civita 100%: Operator: MOG Civita)
This exploration application covers an area previously relinquished by ENI. ENI recorded an 80 square kilometre 3D seismic survey identifying several leads and prospects. ENI also drilled one well, Fonte Armata 1, which found gas shows but was not tested. The primary targets are the clastic layers in the Middle and Lower Pliocene. Several gas fields are located adjacent to the licence area. The permit award is expected in2008 .
About MOG Civita
The Company will acquire MOG Civita for €2 million. On acquisition MOG Civita has net receivables of approximately US$600,000 relating to a VAT refund the Company expects to recover in the ordinary course. MOG Civita has no employees. The Company believes MOG Civita’s portfolio can be managed by the Company’s existing technical personnel in its Rome and Foggia offices without adding to operating costs.
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