Mosman Oil And Gas Ltd (LON:MSMN) has raised £750,000 of new capital and has agreed to drill two wells at the Champion project, in Texas. The new wells follow the capture of 3D seismic data and the company expects they will provide an increase in production and revenues.
Last week, Mosman struck a farm-out deal to bring new partner Xstate Resources into the Champion project. Now the new partners have agreed to advance Champion with the drilling of two prospects, Falcon and Galaxie.
Mosman’s financial contribution to each well is expected to be around £235,000. This commitment is supported by the new share placing announced today – which sees 250mln new shares sold to investors at 0.3p - around a 31% discount to Monday's closing price.
Elsewhere, at the Stanley project, the company has recently upgraded facilities and infrastructure to handle higher volumes of oil production.
The Stanley-1 well continues to flow oil and its output is being constrained to enhance long term performance of the well. In recent days, between 28 April to 12 May 2019, the well produced 135 barrels of oil per day.
Since the recompletion of the well it has produced a total of 2,436 barrels of oil, which was sold at a price of around US$67 per barrel.
Recently drilled Stanley-2, meanwhile, continues to produce mainly gas and is constrained by infrastructure capacity. The well may be recompleted in the future to open it up for oil production.
Two additional Stanley wells could potentially be drilled in the future, though Mosman noted that neither will occur until Stanley-2 is in steady state production.
“The Stanley wells flow naturally and have a low operating cost,” said John Barr, Mosman chairman.
“At current oil price and flow rates, the well costs are recovered quickly, and production is anticipated to continue for years. Additional proposed development drilling at Stanley will be considered by the joint owners once steady state production is achieved at Stanley-2."
Barr added: “Drilling at Champion is now a priority and it is essential that this is properly funded. The decision is fundamental to Mosman's medium term objective of becoming profitable at a corporate level.”
“Mosman remains fully supportive of its other projects in the portfolio, however, the low cost and strong economics of investing in these wells was a significant factor in prioritising the next step for the company."