Predator Oil and Gas places offer to acquire FRAM

According to Predator Oil and Gas (Predator), the company served written notice on July 14th 2020 of its intent to exercise its option to enter into a share purchase agreement to acquire the entire outstanding issued share capital of FRAM Exploration Trinidad Ltd (FRAM) assuming zero net debt at the time of completion, and subject to contract, technical, legal and commercial due diligence.

Predator has been engaged with Columbus Energy for an enhanced oil recovery project at Innis- Trinity in Trinidad. Columbus Energy is the parent company of FRAM.

Columbus Energy is currently in a proposed merger that, under the scheme document, prevents the disposal of any material asset. Accordingly, Predator will progress discussions further with Columbus Energy when facilitated by conclusion of the Columbus Energy proposed merger and before the expiry of the period under the well participation agreement (WPA) relating to Predator's rights upon a change of control of FRAM, insofar as it may or may not impact Predator's forward planning for expansion of carbon dioxide (CO2) enhanced oil recovery (EOR) activities in the Inniss-Trinity field.

Predator is recommending to carry out an oil rate test for Well AT-5X within the next two weeks, to assess the impact of significant CO2 injection to date, on the potential for oil to flow from the injected reservoirs in Inniss-Trinity at enhanced rates, and to assess changes in the properties of the oil with which to recalibrate the CO2 injection parameters if required. Effectiveness and retention of CO2 sequestration capacity can also be assessed.

The cash consideration for an acquisition of FRAM would be financed by a local Trinidadian company in return for it being assigned operatorship and certain rights as defined in the incremental production services contract for the Inniss-Trinity field, subject to consent from the Ministry of Energy and Energy Industries (MEEI) and Heritage for any proposed change of control of FRAM. Predator would retain the tax losses in FRAM and the profits from its pilot EOR in the AT-4 Block using injected CO2 (‘Pilot CO2 EOR’) on terms similar to those defined in the current WPA, except that in addition, on completion of an offer to acquire FRAM, Predator shall be entitled to the profits from all future CO2 EOR operations anywhere within the confines of the Inniss-Trinity field on the same commercial terms as currently exist for the AT-4 Block.

According to Predator, separate to an offer to acquire FRAM, the local Trinidadian company has agreed to look at evaluating together two new CO2 EOR opportunities in existing fields onshore Trinidad, together with a potential collaboration onshore Guyana, whereby Predator can provide its technology, experience and skills to, at Predator's sole discretion, have the option to participate in any new joint venture arising from our joint evaluation of the opportunities.

Paul Griffiths, Chief Executive of Predator said: ‘We are looking to begin to execute our merger and acquisition (M&A) strategy by building on the businesses we have initiated and developed in three separate jurisdictions. New opportunities in Trinidad and potentially Guyana, combined with our exclusivity over Trinidad's surplus liquid CO2 supply and our successful implementation of CO2 sequestration, creates the catalyst for valueenhancing M&A transactions. However, these will not be executed at unrealistic prices as management believes that specific assets can be enhanced in value only through the application of its particular skill sets and proven track record in the countries where it operates. Naturally, we welcome ConocoPhillips as our new neighbour as we progress to drilling material gas prospects adjacent to the Maghreb gas pipeline. It is reassuring to know that the potential for gas in this specific part of Morocco has now also been recognised by a multinational exploration and production (E&P) company, validating our decision last year to move quickly to secure the Guercif opportunity for early drilling. Previously unrecognised, material gas potential has recently been identified in the area selected for drilling, which is an addition to the 320 BCF of gas resources attributed to our net interest. Further information will be included in an updated corporate presentation to be made available on our website in the next week or two.’

The term of the Inniss-Trinity incremental production service contract (IPSC) has been extended to allow for the implementation of Pilot CO2 EOR. The first tranche of CO2 has now been injected into well AT5X in the Inniss-Trinity field and will over time contribute to the determination of any impact on enhancement of production in offset wells to AT5X. Predator and Columbus Energy, its joint venture partner, will inject further tranches of CO2 as is required to fully evaluate the potential of CO2 injection to increase oil production from the offsetting wells in the AT-4 Block, which is the site of the initial Pilot CO2 EOR.

Predator benefits from a WPA with FRAM, a wholly owned subsidiary of Columbus Energy, whereby Predator will help plan and fund the Pilot CO2 EOR in return for 100% recovery of its project costs from Pilot CO2 EOR profits from oil sales, and thereafter 50% of all profits attributable to the Pilot CO2 EOR. As part of the agreement with FRAM, Predator has the right (until September 30th 2020) to acquire FRAM's 100% interest (the Interest) in the Inniss-Trinity field IPSC.