leadf
logo-loader
viewMosman Oil and Gas Ltd

Mosman Oil and Gas to acquire an additional 80.83% working interest of the Cinnabar Lease in East Texas

The acquisition is for a cash consideration of US$62,500 and increases Mosman's working interest in the Cinnabar lease to 97%.

Mosman Oil and Gas Ltd -
The Cinnabar Lease is a 348.83 acre lease 'Held By Production', which forms part of the Challenger Project in which Mosman has a 16.17% working interest

Mosman Oil and Gas Limited (LON:MSMN) said it has executed contracts to acquire an additional 80.83% working interest of the Cinnabar Lease in East Texas for a cash consideration of US$62,500, increasing Mosman's working interest to 97%.

The Cinnabar Lease is a 348.83 acre lease 'Held By Production', which forms part of the Challenger Project in which Mosman has a 16.17% working interest. The Challenger Project is located in East Texas, between Mosman's Stanley and the Champion Projects where drilling has just been completed at the Falcon-1 well.

READ: Mosman Oil and Gas raises funds for next Champion well

The oil exploration, development, and production company acquired 32.33% of the additional working interest from NADSOILCO LLC, another 32.33% from Mr Clendon B. Claire and 16.17% from Baja Oil & Gas LLC.

The remaining 3% working interest is held by a third party and Baja is in the process of acquiring that 3% working interest. Completion of that third party transaction is anticipated to take a few weeks.

There are four development drilling locations on the Cinnabar lease identified using nearby wells and 3D seismic methods. These are the same methods used to identify the targets at Stanley and Falcon.

There are two wells drilled in the Lease which have produced significant quantities of oil but are now shut-in. The current Operator, NADSOILCO, maintains the lease as 'Held By Production' by periodically opening one of these wells to produce a few barrels of oil. As a result, in recent years there has been no material production, profit or revenue from this lease. Mosman will review operations and the possible workover of one or both of the wells to increase production.

Mosman will become the operator of the Cinnabar lease. Contract operator services will be provided by Contour Exploration and Production LLC, a company owned by Howard McLaughlin. Mosman already has an established and good working relationship with McLaughlin and Contour, which provides contract operator services at Falcon-1 and manages the Welch Oil Field.

In exchange for providing these services on the Cinnabar, Contour may earn a 12% working interest in the lease when a well is drilled, carried by Mosman to a cap of US$96,000.

The group said the acquisition will enable Mosman to continue to build the company's production base in Texas. In parallel, the immediate priorities are to bring the Falcon-1 well on production, to proceed with the workover at Duff and to plan and prepare for drilling the Galaxie well.

In a statement, John W Barr, Mosman chairman commented : "This acquisition to increase our working interest in the Cinnabar Lease to 97% paves the way for the next stage of growth for Mosman.  With  the highly encouraging drilling results at the Falcon-1 well on the Champion project, our move to  higher equity in larger prospects accelerates our growth."

In a note to clients, analysts at SPAngel commented: "Mosman continues to build out its enviable portfolio in Texas with another shrewd acquisition in our view.  The Company continues to focus on its production led growth strategy and the additional interest in this mature lease suggests further development upside is possible given recent analogous success.

"With the highly encouraging drilling results at the Falcon-1 well on the Champion project, our move to higher equity in larger prospects accelerates Mosman’s strategy in our view."

In late morning trading, Mosman shares were 1.8% lower at 0.14p.

 -- Adds analyst comment, share price --

Quick facts: Mosman Oil and Gas Ltd

Price: 0.15 GBX

AIM:MSMN
Market: AIM
Market Cap: £3.74 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of Mosman Oil and Gas Ltd named herein, including the promotion by the Company of Mosman Oil and Gas Ltd in any Content on the Site, the Company...

FOR OUR FULL DISCLAIMER CLICK HERE

Mosman Oil & Gas 'very pleased' with test result from Falcon-1 well at Champion

Mosman Oil and Gas Ltd's (LON:MSMN) Andy Carroll speaks to Proactive's Andrew Scott after releasing test results from the Falcon-1 well, at the Champion project, which is now being prepared for production. The well flowed at a rate of 80 barrels of oil and 2.78mln cubic feet of gas per day,...

1 day, 21 hours ago

3 min read