Predator Oil & Gas today announced a business development update for Morocco and Ireland.

Guercif Scoping Development and Operating Costs for Pilot Compressed Natural Gas ("CNG") Project

Map source: Predator Oil & Gas

In accordance with the Company's strategy to fast-track monetisation of an initial potential gas discovery at MOU-1 for the Moroccan industrial market, SLR Consulting Ltd, petroleum engineers and oil and gas advisors, were commissioned to develop a high level scheme for the transport of dry gas from the Guercif well site to existing reception facilities via a CNG "virtual pipeline".

Capital and operating cost estimates have been generated together with a consideration of different trailer options for road transport. Diesel versus CNG fuel options for haulage trucks were evaluated for the impact on capital and operating costs and carbon footprint.

Initial well head pressures were assumed to be 2100 psi declining to 500 psi over 5 years.

Road distance to market point was calculated to be 340 kilometres.

An initial Pilot CNG project assumed a production profile of 10 mm cfgpd and a project life of 10 years.

The results of the scoping cost estimates based on actual CNG industry data are summarised below.

• Gross capital development costs for start-up production of US$15.185 to 15.833 million, depending on haulage fuel choice and steel components used. Net to the Company's 75% working interest £8.2 - 8.6 million using an exchange rate of US$1.39 to £1.00.
• Total amortised capital and operating costs over the 10-year life of the pilot project of US$2.79 to 4.24/mcf, with the lower estimate based on using greener CNG and not diesel as haulage fuel.

Undiscounted net-back, excluding the drilling of an additional development well assuming MOU-1 is potentially completed as a production well, uses published gas prices for the Moroccan industrial gas market of between US$10 and 12 /mcf. These are underpinned by strengthening oil prices.  Scoping net-back for example is  US$7.21/mcf at US$ 10/mcf gas sales price and using the greener CNG fuel haulage option.

Scoping annual gross undiscounted potential revenues of US$26.3 million (US$19.7 million net the Company's 75% working interest) for 3.65 BCF of gross annual gas production would support a potential commercial development in an MOU-1 success case and provide multiples of the development capital requirements necessary to attract reserves-based lending. For a 10 year pilot project life, total gross gas resources required are  36.5 BCF. For the first 10.6 BCF of net gas production no government royalties are payable and there is no liability for corporation tax until 10 years have elapsed.

The pilot CNG project concept is designed to have flexibility to facilitate upscaling to supply the growing industrial market. It requires low levels of capital investment and therefore market penetration and increased market share has the ability to be fast-tracked via a transparent and uncomplicated, de-risked, development option.

In the medium and longer term the ability to monetise larger volumes of gas from the considerable inventory of gas prospects and potential gas resources in the Company's Guercif licence for gas-to-power in Morocco, and potentially for export, remains  an attractive commercial proposition for business growth.

Offshore Ireland - Floating Storage and Regasification Unit  ("FSRU") and LNG

In the context of the Company's Floating Storage and Regasification Unit  ("FSRU") and LNG project offshore Ireland, designated "Project Rainbow" by the Company, the Company is making a submission to the Public Consultation on the expert advisory group report entitled "Expanding Ireland's Marine Protected Area Network", published by the Department of Housing, Local Government and Heritage. Deadline for submissions is 30 July 2021. This will be in conjunction with the Company applying for Marine Area Consent for Project Rainbow as part of conforming to new regulations put in place to replace some of the existing regulations.

The purpose of the submissions and applications is to demonstrate that the Floating Storage and Regasification Unit  ("FSRU") and LNG project is in the public interest, as it is the only viable  near-term  solution actively being worked on to address diversity and security of gas supply and gas storage options. Security of energy supply is accepted by regulators as being of public interest."

Paul Griffiths, CEO of Predator Oil & Gas Holdings Plc commented:
"The eagerly awaited receipt of the CNG scoping development design and capital and operating costs has demonstrated a simple path to early monetisation of gas from the Guercif area. It provides the input data necessary to help expedite a Plan of Development submission based on a potential gas discovery and required for the Environmental Impact Assessment. The development option is simple, easily managed and requires very low levels of capital to generate near-term gas revenues. Importing specialist haulage vehicles and trailers and storage capacity are the only significant long-lead items. The potential for early and material revenue generation and profits is very exciting. Successfully executing a  pilot CNG project will de-risk scalability and drive the potential to add large numbers of new industrial customers where no realistic alternatives to imported fuel oil currently exist.

Project Rainbow is being accelerated in Ireland as the regulatory process becomes clearer and more focussed on the public interest element of the project, which is driven by the developing security of energy supply and capacity near-term emergency."

KeyFacts Energy: Predator Oil & Gas Morocco country profile