Goldcrest Resources plc (AQSE:GCRP) has agreed a “transformational” deal which could see it acquire up to a 100% interest in the producing Norio onshore oil field in the Republic of Georgia.
NEX-listed Goldcrest has paid US$380,000 and issued US$300,000 worth of shares to Georgia Oil and Gas to acquire an initial 38% interst in the Norio block.
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There is also the option for the explorer to pay an additional US$620,000 and issue a further US$250,000 worth of shares in order to acquire the remaining 62%.
As part of the deal, Goldcrest can also form a farm-in agreement to acquire a 70% in the Block VIII production sharing agreement that hosts the East Khavtiskhevi onshore field, also in Georgia.
“Transformational”
“This is a transformational deal for the company and provides us with exposure to two highly prospective blocks, one of which has existing production,” said director Paul Haywood.
“We believe a low cost work programme will increase production significantly and allow us to achieve cash flow positivity within the year.
“Additionally, with further investment we believe we can work with our partners to maximise the significant exploration upside that the Norio and East Khavtiskhevi blocks have.”
Highly prospective
Norio is a 22.5 square kilometre (sq km) field drilled in the Soviet era which has produced 1.9mln barrels of oil (MMbbl) to date. Schlumberger has previously estimated that it contains 118.7MMbbl stock tank oil-in-place (STOOIP).
Current production is 25 barrels a day (bopd) of light sweet oil from three wells drilled in the 1970s which generates enough revenue to cover operational costs. Goldcrrest is looking to bump this production up to 250bopd.
Block VIII is substantially bigger at 4,700 sq km and is the largest oil and gas block in Georgia. An independent estimate of 36.9MMbbl risked resources was calculated by Gustavson Associates and Goldcrest reckons it has the potential to produce 4,00bopd with further investment.
With its focus now firmly on its new Georgian assets, Goldcrest told investors it intends to dispose of its existing gold assets in Ghana.