LGO Energy: Refinancing Required
Edison | Apr 08, 2016 08:47AM ET
LGO Energy (LGO) is an E&P company specialising in the reactivation of mature oil fields in Trinidad and Spain. Its main field in Trinidad, Goudron, has both low lifting costs and longer-term potential through enhanced oil recovery (EOR). However, LGO needs to find a refinancing solution to alleviate current funding constraints in Trinidad, allowing it to progress low-cost workover solutions and ultimately develop 2P reserves.
Trinidad short-term focus on workovers
In Trinidad, LGO has a 100% interest in the Goudron field. This field has booked gross 2P reserves of 11.4mmboe along with the potential for further recovery through EOR (most likely water-flood); however, we note that well results during 2014/15 may adjust these numbers once an updated CPR is prepared. While the development of the full 2P reserves requires a larger exploitation programme than is currently funded, the near-term focus for LGO is development of the shallow Goudron and upper C-sand horizons.
Low-cost development, improving terms
The Goudron field benefits from low operating costs, with LGO reporting incremental barrels being cash flow positive even at oil prices lower than $20/bbl. Furthermore, royalties to state partner Petrotrin have been further reduced, with the majority of barrels produced incurring royalty rates of less than 10%. Funding constraints dictate that only workovers are possible at present on the Goudron and upper C-sand horizons, but the company is confident it can increase production by 100bopd (a likely 25% increase in overall production for the group) through a modest $150k programme on two wells producing from these. A second rig has recently been mobilised to site to accelerate this workover programme.
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LGO Energy - Refinancing Required To Accelerate Progress
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