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Mayan Energy establishes plan to unlock substantial oil reserves at Zinc Ranch

Gasoil News - Published on Thu, 21 Jun 2018

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Mayan, the AIM listed oil and gas company, announced an update on its proposed low-cost development programme at the 1,520 net acre Zink Ranch Field (‘Zink Ranch’), Osage County, Oklahoma in which the Company has a 100% working interest (‘WI’) and 75% net revenue interest (‘NRI’). As announced on 15 May 2018, the multi-phase work programme, consisting of workover, new drill and pressure maintenance operations, is focused on increasing production and proving up substantial reserves at Zink Ranch that are believed by the Company to be economically recoverable.

Turnkey contract entered into with a third-party oilfield service company (the “Contractor”) to initiate a well workover programme, for a total of five wells at Zink Ranch targeting 100 net barrels of oil per day in the mid-term
Following the approval of Mayan as the Operator at Zink Ranch, intention for four wells to be worked over as producers from the Pennsylvanian Sands formation – initial baseline level of production for each well to be established over a 30 day period
A fifth well will be worked over as an injection well as part of a pilot pressure maintenance test project focused on enhancing production levels
Nitrogen will be injected in three phases with the amount injected increasing with each phase - the performance of the wells will be closely monitored after each phase to evaluate the impact of the test project
Subject to positive results, the Company intends to implement a field wide pressure maintenance programme in 2019 to enhance production on the remaining 12 wells in the field.
As part of the turnkey contract an environmental impact study, permitting and site selection for the drilling of possible future new wells, beyond the initial five referenced above, will be undertaken
The total cost of the programme is US$255,000 which includes the following payments to the Contractor:
Initial payment of US$125,000 (£94,700) payable in Mayan shares based on £0.0085 per share equivalent to 11,141,176 Ordinary Shares.
Additional payment of US$100,000 upon completion of the five well workovers prior to the nitrogen injection. Mayan can elect to pay in cash or Ordinary Shares at the time of completion.
Payment of US$5,000 per month in cash for six months for pumping and regulatory reporting services
The Contractor indicated a preference to receive the initial US$125,000 payment in shares of Mayan which the Directors believe highlights the Contractor’s confidence in the success of not only the programme at Zink Ranch but also ongoing activity across Mayan’s Texan assets
The Contract anticipates initiation and completion of the five workovers within 30 days of Mayan assuming operatorship at Zink Ranch - the Company has engaged counsel to complete this process and anticipates a timely resolution of this matter
Eddie Gonzalez, Managing Director, said: “Zink Ranch represents untapped value for Mayan. With the signing of this contract we have now taken the first tangible step towards unlocking what could become a significant asset for the Company. Together, with the success we are having at the Forest Hill and Stockdale Fields in Texas, we believe that Zink Ranch can make a substantial contribution towards achieving our production goal of 300 to 500 net barrels of oil per day. Furthermore, oil production from the Pennsylvanian Sands tends to be longer-lived than production elsewhere and as a result, the implied value of a barrel of oil in the ground from this horizon has historically realised a premium to other formations. We are therefore keen to commence this programme which, subject to positive results, could confirm our view that Zink Ranch is a high quality and valuable asset. As development milestones and nitrogen test results become available, Zink Ranch will generate much news flow in the coming weeks and months.

“I am further encouraged that seasoned oil field professionals are interested in receiving shares as payment for their services in lieu of cash. This serves as a testimony to the hard work the Board and our employees have done not only in restoring the reputation of the Company with both investors and industry partners but also in delivering on our strategy to build a highly cash flow generative oil and gas company.”

Issues of equity and Total Voting Rights ("TVR")
Issue of Shares to Service provider
As per the terms of the agreement with the Contractor set out above, Mayan has issued 11,141,176 Ordinary Shares at a Price of £0.0085 in settlement of £94,700 for the initiation of the work-over programme at the Zink Ranch property (the 'Settlement Shares'). The Settlement Shares will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.

Application has been made and it is expected that Admission will become effective and dealings in the Settlement Shares will commence on or around 25 June 2018.

Share Capital and Total Voting Rights ("TVR")
Following the issue of the 11,141,176 Settlement Shares, Mayan's issued share capital consists of 1,234,077,106 Shares of no par value with voting rights. No Ordinary Shares are held in treasury at the date of this announcement and therefore following the Admission, the total number of Ordinary Shares in Mayan with voting right will be 1,234,077,106.

The above total voting rights figure may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in the Company.

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Posted By : Nanda Koijam on Thu, 21 Jun 2018
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