LONDON (Alliance News) - LGO Energy PLC Thursday said it has progressed the licensing and the technical work on its Cedros Peninsula interests in the south west of Trinidad after amending its agreement with Beach Oilfield Ltd.
In 2013, LGO signed an agreement with Beach Oilfield to pay USD2.5 million for the company's rights below 7,000 feet in any leases owned by Beach Oilfield or obtained by the company in the future within the Cedros Peninsula. In November 2014, LGO paid USD400,000 of the total sum to Beach Oilfield.
The agreement was aimed at progressing and consolidating licenses whilst the companies try to secure the Deep Rights Petroleum Licence in order to drill them.
LGO said it has agreed to pay a further USD200,000 of the remaining USD2.1 million outstanding balance, leaving the balance at USD1.9 million as of Thursday.
Under the original agreement in 2013, the two companies agreed to work together to cross-assign their various interests to explore the deep horizons below 7,000 feet. The USD200,000 payment on Thursday was made to progress licensing matters, and was paid in the form of 3.9 million LGO shares at 3.3 pence each.
As a result of that payment, LGO's exclusivity has been extended to September 30, 2016. The funds will be used to close various transactions with lease owners that are necessary for the formal award of the Deep Rights Petroleum Licence which LGO will own outright and operate.
The remaining USD1.9 million outstanding will be paid in a combination of cash and LGO shares once the Deep Rights Petroleum Licence has been awarded.
LGO will also issue Beach Oilfield with a 5% royalty on the gross production of petroleum from the Deep Rights.
Following the transaction envisaged in the agreements with Beach Oilfield, which covers approximately 5,450 acres, LGO will hold rights to approximately 10,900 gross acres of petroleum leases in the Cedros Peninsula.
""We are now making excellent progress in bringing together the licensing and the technical work in the Cedros so that we can begin drilling in 2016 and beyond. Early indications from our geochemistry and airborne gravity surveys completed recently are that we may well have multiple prospects from which to choose the first well target," said Chief Executive Neil Ritson.
LGO shares were up 2.7% to 2.98 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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