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LGO Energy awaits decision from Spanish authorities over Ayoluengo field’s future

Published: 07:57 16 Jan 2017 GMT

oil field
A decision is expected before end of January

LGO Energy PLC (LON:LGO) has temporarily suspended operations at the Ayoluengo field, in northern Spain, as it awaits a decision on its application to extend the concession for the project.

Ayoluengo is part of the La Lora Concession which began in 1966 and expires at the end of 2017, following fifty years of continuous production.

The AIM quoted company wants to extend the life of the field, which has produced just 17mln barrels of an estimated 105mln barrels of originally-in-place oil resources.

It intends to further develop the field, potentially drilling between five and ten new sidetrack wells to unlock additional reservoir zones.

LGO highlighted the it applied for a ten year extension back in August 2015, but, the process is complicated by several changes to the Spanish oil laws during La Lora’s 50 year operating life.

The company told investors that the Spanish authorities are presently in the process of preparing a final decision, for ratification by the Spanish Cabinet of Ministers, and LGO anticipates that decision to come by the end of January.

Should the extension not be granted, LGO plans to re-apply for a brand new 30 year production concession covering the Ayoluengo field.

Chief executive Neil Ritson noted that the company’s focus remains on its operations in Trinidad, which represents some 90% of its reserves and 80% of group production.

"LGO has been actively seeking a continuation of the La Lora Concession for several years and regrets that a final decision has yet to be reached by the Spanish administration,” Ritson said.

“Whilst a temporary suspension is unfortunate it has very limited impact on the company's operating finances and we remain positive about the longer term potential of the field and we look forward to being in a position to continue work as soon as possible.

“We have indicated to the ministry that we will be keen to apply for a new concession should an extension not be granted."

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