Bengal Energy Ltd. has entered into an amendment to its secured credit facility with the Australian based Westpac Institutional Bank, which includes a 14 month deferral of all principal payments on the Credit Facility.  Pursuant to the Amendment, the Credit Facility has a new maturity date of February 15, 2020 (the “New Maturity Date”) and provides the continuance of the borrowing base of US$12.5 million, of which the full amount is currently drawn.

The Company will now be required to make a single principal repayment of US$12.5MM on the New Maturity Date, with no principal payments being required until such date. There were no changes to the covenants and cash sharing requirements under the Credit Facility.

The Company is now planning to undertake the following development activities in calendar 2019, to be funded from the Company’s cash balance and cash flows:

• A six well drilling program on the Barta Permit, ATP 752, including one exploration well; and
• A water injection pilot project deployed within the Cuisinier oil field on the Barta Permit.

Bengal will continue to hedge approximately 50% of its crude oil production as required under the Credit Facility.

“This extension demonstrates the strong support from our lenders at Westpac and delivers additional value to our shareholders,” said Chayan Chakrabarty, Bengal’s President and CEO. “The financial flexibility afforded by the extension provides additional liquidity to move forward with our aggressive development drilling program in 2019 targeted at growing our production, cash flow and reserves base, which in turn positions us well for continuing further development of the Cuisinier oil field.”

CALENDAR 2019 DEVELOPMENT PROGRAM:

• Hydraulic Stimulation Program – In December 2018, the Company and its joint venture partners will hydraulically stimulate the Cuisinier-19 well and are expected to connect it for production by the end of 2018.  This well encountered a 12.5 m thick, oil-bearing section of Murta sandstone and is in a portion of the oil field anticipated to have virgin reservoir pressure. Additional locations potentially suitable for stimulation continue to be identified by Bengal for upcoming programs.
• 2019 Drilling Program – Bengal and its joint venture partners on the ATP 752 Barta Block (Bengal’s working interest is 30.357%.) will participate in a six-well drilling program commencing in Q2 2019. Five of the six wells in this drilling program will be located in the Cuisinier oil field aimed at high graded targets for productivity, reserves growth and pool expansion.  The sixth well will be an exploration well on the Barta permit, proximal to the Cuisinier pool. Two of the five wells will be directly offsetting the planned water injection pilot, bringing the total number of wells expected to be impacted by injection to five, thus complementing the goals of the water injection pilot to enhance reservoir performance in that area of the pool. Another two wells are located in the northwest portion of the pool where thick Murta reservoir has been established in existing wells (Cuisinier-1 & -4). These wells are targeting increased production while extending this mapped trend, potentially increasing reserves while providing a site for potential water injection expansion in future phases. The fifth well is located west of the Cuisinier-19 well, in an area where seismic attribute mapping highlights the potential for significant reservoir sand development. A successful outcome at this location could provide a new development platform for subsequent years’ drilling. The location of the exploration well is yet to be confirmed among the joint venture partners. There are a number of dual target features inside the Cuisinier PL 303 and immediately adjacent to Cuisinier.
• Water Injection Pilot – A water injection pilot project is expected to commence at Cuisinier in Q2 2019. This program is designed to begin increasing pressure in the Cuisinier pool and thereby increase the expected oil recovery and enhance productivity and reserves. The location of the water injection pilot was based on the well to well correlation of both reservoir sand and reservoir pressure, suggesting a high degree of continuity. Bengal expects the response to injection at Cuisinier-24 to be recognized early through close monitoring of all the wells offsetting injection.

“The 2019 development program represents $5.0 million of net capital expenditures and is expected to bring with it an exciting step change in production and cash flow for the company,” said Chayan Chakrabarty, Bengal’s President and CEO. “The program is a well balanced portfolio expected to significantly expand the Cuisinier platform supporting the Company’s growth beyond 2019.”