Maurel & Prom Strengthens Market Position with New Asset Deal

Maurel & Prom Secures Strategic Asset in Colombia

Maurel & Prom (Paris:MAU), a prominent player in the energy sector, has officially entered into a definitive agreement with NG Energy International Corp. This agreement allows Maurel & Prom to acquire a 40% operating working interest in the Sinu-9 gas licence located in Colombia.

Details of the Acquisition

This strategic move was formalized following a letter of intent initiated earlier, positioning Maurel & Prom to bolster its operational growth in the region. The agreed transaction price stands at $150 million, showcasing the Group's confidence in this valuable asset. Funding for this acquisition will be sourced from the company’s robust cash reserves and extensive credit facilities, amounting to $260 million as of the end of the previous year.

A deposit of $20 million is required upfront, with the remaining amount payable upon closing of the transaction, which is subject to standard regulatory approvals and conditions. The effective date for this deal is set to be the first of February in the upcoming fiscal year.

Future Opportunities at Sinu-9

As part of the agreement, Maurel & Prom has been granted a 12-month option to purchase an additional 5% working interest in the Sinu-9 licence, maintaining the same financial terms. This strategic foresight indicates the company's intention to expand its footprint further in this promising area.

Olivier de Langavant, the Chief Executive Officer of Maurel & Prom, expressed satisfaction with the quick finalization of the agreement, recognizing the Sinu-9 asset's substantial potential. He noted that the collaboration with NG Energy is already underway, with both teams working together to enhance the development and exploration efforts associated with this asset.

Understanding the Sinu-9 Gas Block

The Sinu-9 gas block is strategically situated in the prolific Lower Magdalena Valley, approximately 75 kilometers from the Caribbean coast. Covering around 1,260 square kilometers in Córdoba, this block is adjacent to various producing gas fields operated by industry leaders Canacol and Hocol.

Currently, NG Energy is operating within the Sinu-9 block, holding a sizable 72% interest. Other partners in the venture include Desarrolladora Oleum with 15%, Clean Energy Resources with 7.8%, and FG Oil & Gas Inc. with 5.2%. This collaboration aims to harness the full potential of the block effectively.

Production Capabilities and Future Prospects

Notably, Sinu-9 achieved its first gas production in late last year during a prolonged testing phase involving the Magico-1X and Brujo-1X wells. The infrastructure in place supports a gross production capacity of up to 40 million cubic feet per day, translating to 16 million cubic feet net to Maurel & Prom's acquired interest, with significant potential for increased output in the future.

The gas block has already been granted an environmental licence, permitting the drilling of up to 22 wells from 11 designated locations. This step reflects the locality's commitment to balancing energy production with environmental responsibilities.

Significant Reserves Await Exploration

According to the latest evaluations, the Sinu-9 block possesses substantial estimated reserves, categorized into proven plus probable (2P) and proven plus probable plus possible (3P). As of the year-end reporting period, the block boasts impressive metrics: 158.8 billion cubic feet (bcf) in 2P reserves and a staggering 340.8 bcf in 3P reserves. This estimation highlights the strategic significance of the asset for Maurel & Prom's portfolio.

Exploration Upsides

This gas basin has not only proven to be prolific but also offers considerable exploration and appraisal opportunities. Over the next year and a half, numerous prospects are poised to be drilled, which could lead to a considerable boost in the resource base and the reliability of energy production in the region.

Frequently Asked Questions

What is the significance of the Sinu-9 gas block?

The Sinu-9 gas block represents a crucial asset for Maurel & Prom, with significant reserve estimates and production potential, contributing to the company's growth strategy.

How will the acquisition be funded?

The acquisition will be funded through Maurel & Prom's existing cash reserves and credit facilities, ensuring financial stability and flexibility for the company's ongoing operations.

What are the future growth opportunities?

With the option to acquire additional shares and ongoing collaboration with NG Energy, Maurel & Prom is well-positioned to enhance its operational footprint and explore more production capabilities.

What regulatory approvals are necessary for the deal?

The closing of the agreement is contingent upon receiving necessary regulatory approvals, including from the Colombian National Hydrocarbons Agency.

Why is the collaboration with NG Energy important?

This partnership allows Maurel & Prom to leverage local expertise and resources, facilitating a smoother development and exploration process at Sinu-9 while enhancing energy production efforts in Colombia.

About The Author

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