Plenty of momentum in Leni Gas and Oil shares as Trinidad hots up

 

Back in January I wrote a detailed piece on Leni Oil and Gas (LGO), “Leni Gas and Oil places its bets on Trinidad” with the shares trading at 0.86p at the time, today they are trading at 1.22p to sell, a 41% rise. See the original article at http://www.financial-spread-betting.com/community/aim/leni-gas-and-oil-places-its-bets-on-trinidad.html

For Leni its not been all plain sailing over the last few months despite plenty of action at its Goudron prospect in Trinidad.  In late March, the Commercial Court in the UK handed down judgment in the legal case brought by Leni Gas & Oil Plc and Leni Gas & Oil Investments Ltd against Mediterranean Oil and Gas’s (MOG) subsidiary Malta Oil Pty Limited. The judgment ruled that LGO’s case “failed at every stage”.

In July 2012 LGO sold its 10% share in the offshore Malta Area 4 to MOG for $1 plus $20,000 for its residual costs arising under the Joint Operating Agreement between the Parties associated with the acquisition of 3D seismic data in 2011. A few weeks later, MOG entered into a farm-in agreement with Genel Energy Plc for a $10 million cash consideration and two well commitment on the offshore Malta Area 4 PSC. LGO took legal action against MOG claiming it was tricked by MOG into selling its 10% share. With the judgement against MOG failing, LGO was left with a hefty legal bill and egg on its face. An unwelcome distraction for shareholders.

On the subject of the disputed Maltese licence, this week Mediterranean Oil & Gas received notice from Phoenicia Energy Company Ltd (a subsidiary of Genel Energy), the operator of Malta Block 7 of Area 4, that the semi-submersible rig ‘Noble Paul Romano’ has been secured on location and that the Hagar Qim 1 well spudded at 08:00 hours on 24 May 2014. The Hagar Qim well is the 11th well to be drilled offshore Malta. The last exploration well that was drilled was the Lampuko well in 2002. Last week Rockhopper Exploration announced its plan to acquire MOG in a cash and shares deal worth around £30 million.

Leni’s share price dived on the litigation news,  but there has been a steady rise in recent weeks after drilling in Trinidad has begun in earnest.

LGO has a 30 well re-development programme designed to access the existing 7 million barrels of proven and probable reserves in Trinidad and to provide data to assist in the design of a secondary recovery scheme (water flood) to access some of the estimated 60 million barrels of contingent resources attributed to the field.  Proven and probable (2P) original oil-in-place is estimated to be 126 million barrels with 2P reserves of 7.2 million barrels and over 60 million barrels of contingent resources associated with future water flood independently assessed  in July 2012 by Challenge Energy Limited.

Today the company announced that the second of its Goudron development wells, GY-665, was successfully spudded at 14:50 hours (Trinidad time) yesterday and is now drilling ahead. Earlier in the week it was announced that the GY-664 well was to be put into production by the end of the week. The next four wells, including GY-665, will be drilled back-to back from the same drill site.

The shares are currently up 4% to 1.28p to buy. Positive news on production from these new Trinidad wells will be the catalyst for a further significant re-rate. An exciting time indeed for LGO shareholders after the court disappointments earlier in the year and good to see an AIM share rise so sharply in the battered oil and gas sector. RNS’s from this company are coming thick and fast at the moment, David Lenigas sure knows how to keep the PR flowing!

Contrarian Investor UK

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