LGO has been faced with difficult decisions this past year – the company was even forced to halt salaries to its directors for the past 15 months – but following a recent announcement about the refinancing of its loan facility, the company also said that drilling activity will resume at the Goudron field in Trinidad. The refinancing sees LGO shift lenders, and now that the company is no longer in default, it is now able to pursue a healthy drilling programme in 2017.
According to a press release, LGO, through its local subsidiary, has outlined approval for 45 new wells in the Goudron Field and up to 70 infill wells designed to increase production from the ubiquitously present shallow oil pay in the Mayaro Sandstone (formerly termed the Goudron Sandstone). The first well, currently designated H18 G-11, will be drilled vertically to a total depth of 1,250 feet, is expected to intersect oil pay between 650 and 1,050 feet, will cost less than US$500,000, and is expected to take approximately 12 days to drill and complete.
The Trinidad and Tobago subsidiary, Goudron E&P Limited (GEPL), submitted a formal request for the authority to drill the first of its planned Mayaro Sandstone infill wells. The applications were made to the Petroleum Company of Trinidad and Tobago Limited (Petrotrin) and the Ministry of Energy and Energy Industries (MEEI).
According to Fergus Jenkins, LGO's Chief Operating Officer (COO), "GEPL is looking to take advantage of the current lower rig rates and rig availability to recommence the drilling programme at Goudron at the earliest opportunity.” He added, “We anticipate having the approvals in place before January and will then start the drilling as soon as is practical. With the current oil price and expected cost of drilling, the economic payback on the incremental production from Mayaro Sandstone wells is expected to be less than 12 months ."
During the 2014 and 2015 C-sand drilling campaign, 15 wells were drilled through the Mayaro Sandstone reservoir interval, and electric logs showed an average net oil pay of approximately 200 feet per well. Funding for the first well in the programme is now available from GEPL bank accounts, and the drilling campaign can be advanced over time on the basis of Free Cash Flows (FCFs) from Trinidad production.
GEPL has retendered the drilling programme and is in the final stages of negotiating a contract for a rig, which, according to Neil Ritson, Chief Executive Officer (CEO) of LGO Energy, was recently signed. The new contracted rig is a small footprint rig, which is cheaper, and the company has been able to secure a turnkey rate, which is the lowest risk at this time. The contract, for two wells with a number of options, has been signed with Sadhna Petroleum Services, a Trinidad-based specialist drilling contractor. However, LGO has engaged UK-based specialist Bedrock Drilling to provide drilling engineering supervisory support to the drilling programme.