TIDMMYN
RNS Number : 3778O
Mayan Energy Limited
29 January 2019
Mayan Energy Ltd / Index: AIM / Epic: MYN/ ISIN: VGG6622A1057 /
Sector: Oil and Gas
29 January 2019
Mayan Energy Ltd ('Mayan' or 'the Company')
Update and Equity Raise
Mayan Energy Ltd (AIM: MYN), the AIM listed oil and gas company,
is pleased to provide an update with regards to its asset
rationalisation programme, corporate reorganisation and a raising
of additional capital to execute its development plans. This is the
result of the now concluded operational review as originally
announced on 9 October 2018.
-- Gross cash proceeds of GBP750,000 raised at a price of 0.12p
per share (the "Placing") and GBP223,069
being 185,890,442 shares issued in settlement of accrued
directors fees, consulting fees, settlement of accrued liabilities
and an amended agreement with Smart Bit LLC;
o Directors participated in the Placing to the extent of
GBP70,000 cash subscription and a further GBP96,640 in accrued
Directors' fees and legal advisor fees settled by the issue of
shares at the Placing Price
-- Independent review of the portfolio has resulted in
consolidation of asset base and focussing of activities where the
Board and advisors believe allocation of cash is optimal
-- Stockdale and Austin Chalk (to be known as the Austin Field)
and Zink Ranch, identified as the core assets with Forest Hills
classed as non-core - Mayan to seek exit (a full table of wells is
provided below)
-- Austin Field, Texas - 7 well package set over 1,368 acres
o Re-negotiated increase in interests (at no additional cost) at
Austin Field as follows:
-- Morris 1 well increased to 100% from 60% working interest
-- Acquired additional well, Montsanko with 100% working
interest
-- Increase in working interest to 100% from 60% on all five
(Austin Chalk) wells with 5-10% gross overriding royalties payable
to Smart Bit LLC
o Austin Field potentially having prospectivity in other zones
and possibly across the Eagle Ford Shale formation, subject to
acquisition of rights, with plans to reinterpret historical
geological data and appraise the additional potential over H1
2019
o Attis Operating I Inc. ('Attis') appointed to operate the
Austin Field with initial re-start of operations and production on
5 of 7 wells commencing during February
-- Zink Ranch, Prue Oilfield, Oklahoma - 50 historic wells, 18
active wells, two tank batteries and one gas sales point:
o Memorandum of Understanding ('MOU') with Red Bensh Fork Energy
LLC ('RBFE') to engage its contract operator Iron Hawk Energy Group
JV ('Iron Hawk') to manage and operate Zink Ranch Field.
o MOU also provides non-binding initial framework for RBFE to
farm into Zink Ranch and Mayan to farm into Red Fork field in
Oklahoma on terms to be agreed following an approximately 90 day
due diligence period.
o Iron Hawk, once approved as operator, will initially seek to
enhance existing Zink Ranch c.6-8 bopd production through basic
field management techniques with limited capital requirements from
Mayan
o Notice of mutual agreement to terminate operator agreement
sent to Derrick Oilfield Services Inc and the previous shares
issued as consideration for operations work of 11.1 million shares
will be returned and cancelled in due course
-- Technical Advisory Committee ('TAC') established to enhance the Company's technical capacity
Paolo Amoruso, Chairman of Mayan, said, "Following the departure
of Mr. Gonzalez in September, the Board committed to a review of
the Company to rationalise Mayan's financial resources, prioritise
investment in those assets which offer the most attractive returns
on a risk / reward basis, re-commence production at the earliest
opportunity, and to build a solid foundation from which to grow
Mayan in 2019. To this end I believe we have made significant
progress.
"Following the asset review conducted by Attis, the Company has
elected to focus operations on two main areas: The Austin Field
(formally Stockdale and Austin Chalk) and Zink Ranch. On the lease
formally known as Stockdale, the working interest in the Morris 1
well was increased to 100% and an additional production well,
Montsanko 1, and Salt Water Disposal, Montgomery SWD, was obtained,
while we have completed the purchase and increased the interest in
the five wells that formerly comprised Austin Chalk - both of the
deals were renegotiated at no additional cost to Mayan.
Additionally, it was also decided that the Forest Hills wells do
not complement our current operations and we're now evaluating our
options going forward.
"Operationally, all employees of Mayan were terminated and day
to day field operations have or will be transferred to Attis and
Iron Hawk, both qualified, experienced oil and gas contract
operators. An independent Technical Advisory Committee ('TAC')
reporting to the Board staffed by the respective CEOs of the new
operators and an experienced landman in Texas has also been
established. The enhancement of Mayan's technical capabilities
cannot be understated, and it is important to the Board that the
Company's future is characterised by rigorous financial controls
and adherence to transparent codes of governance.
"On the corporate side, Sarah Cope was brought in as a
Non-Executive Director in the UK to chair the corporate governance
committee and it has been decided that the composition of the
Board, as well as the review of Mr. Wood's position as CEO, will be
reviewed once the operational and financial steps outlined herein
are implemented.
"On a financial level, we settled numerous claims against the
Company and the Company is currently in the process of filing past
tax returns and will be looking to settle amounts due with the US
Internal Revenue Service shortly. We are obviously delighted to
have raised additional capital and we thank shareholders for their
support. We hope the contribution by the directors is a positive
signal to the market.
"It has been a challenging period for Mayan, but in less than 4
months, we have made great strides in identifying, isolating and
streamlining operations while reducing our monthly cash burn
significantly. Once our current operations are restarted, we will
look to develop and grow from a sound asset base, characterised by
rigorous financial controls, governance, and clear development
plans for existing and future projects."
Portfolio reorganisation - Focusing operations on two core
assets: Austin Field and Zink Ranch:
Following the recent completion of the independent operational
and corporate review conducted by Attis Operating Inc. ('Attis'),
the Company is pleased to provide an update on the ongoing
reorganisation of its US onshore oil and gas asset base.
Austin Field, Texas (previously known as Stockdale and Austin
Chalk) - 8 well package in South East Texas
Given the proximity of the two fields, the Board has decided
that the Stockdale and Austin Chalk interests will be forthwith
considered as a single field known as the "Austin Field". To
consolidate its interests, the Company has increased its working
interest ('WI') in the Morris #1 well to 100% from 60% and has
acquired a 100% WI in an additional production well (Montsanko #1),
and salt water disposal well (Montgomery SWD) and tank battery as
part of the new Austin Field well package. Additionally, it has
increased its WI to 100% from 60% in Edwards, Neubauer Stanush,
Kosub, Ritchie-Talley and Garrison wells (formally the Austin Chalk
5 well package), achieved via a revised sale & purchase
agreement with Smart Bit LLC., the original vendor of the Austin
Chalk wells.
Mayan has entered into a Contract Operating Agreement and Joint
Operating Agreement with associated accounting provisions in
accordance with the Association of Petroleum Landmen Model JOA with
Attis Operating I Inc ('Attis') to operate the Austin Field and
undertake a seven-well development package. As mentioned
previously, Attis is an experienced US oil & gas operator based
in Texas and the UK. It has successfully developed a dedicated and
dynamic on ground team and currently owns and operates 100 oil and
gas wells as well as managing compliance, testing and accounting
for a further 500 wells in Texas.
In February 2019, Attis will mobilise equipment and personnel to
the Austin Field in order to begin to test fluid flow and origin,
service and/or replace downhole equipment, service topside
equipment, and, revitalise production at the Montsanko #1 and
Morris #1 wells.
The newly acquired Montsanko #1 well is understood to be a high
fluid volume production well. Our plan is to conduct a production
test, analyse the oil/water entry ratio and replace the existing
electric pump with a pump-jack. Its our belief that this should
increase production efficiency whilst still allowing the
integration of existing infrastructure.
We plan to conduct testing and rework on the Morris #1 well,
including integrity testing and likely replacing the downhole pump.
The Morris #1 well has production separation units and fluid
storage tanks available.
Mayan has additionally acquired, at no cost, the recently
reworked Montgomery SWD well and tank battery. Recent review and
appraisal of the infrastructure demonstrated that, subject to minor
service work, it is fit-for-purpose to undertake the testing and
rework scope. Attis intends to integrate fluid storage and water
disposal for both Morris #1 and Montsanko #1 to the Montgomery SWD
and tank battery.
Following completion of the work-overs at Morris #1 and
Montsanko #1 it is proposed that Attis will mobilise equipment to
the Edwards, Garrison and Ritchie-Talley (previously wells within
the Austin Chalk well package). Again, the purpose of the operation
will be to test fluid flow and origin, service and/or replace
downhole equipment, service topside equipment, and, return the
wells to production.
Mayan has agreed to a second amended and restated sale and
purchase Agreement (the 'Agreement') with Smart Bit LLC ('Smart
Bit'). This updated the original agreement with Smart Bit as
announced on 23 August 2018. Under the terms of the Agreement Smart
Bit has agreed to sell Mayan a 100% WI and retain a 10% gross
overriding royalty interest in the following wells at Austin Field:
Edwards, Neubauer Stanush, Kosub, Ritchie Talley and a 5% gross
overriding royalty at the Garrison well.
The consideration for the revised agreement is as follows:
1. US$170,000 cash already paid by Mayan Energy
2. 48,614,725 shares in Mayan Energy Ltd
a. 25,274,725 shares previously issued 0.7p
b. 23,340,000 further shares issued at 0.2p
Total consideration under the revised deal on the effective date
of the transaction is approximately US$375,000.
Following the Agreement Mayan will hold the following Working
Interests and Net Revenue Interest in each of the five wells.
Well MYN WI NRI Smart Bit MYN NRI
ORRI
Ritchie-Talley 100% 71.90% 10% 61.90%
------- -------- ---------- --------
Garrison Unit 100% *80.00% 5% *50.00%
------- -------- ---------- --------
Kosub Unit 100% 81.33% 10% 71.33%
------- -------- ---------- --------
Neubauer Stanush 100% 79.26% 10% 69.26%
------- -------- ---------- --------
Edwards 2H 100% 78.79% 10% 68.79%
------- -------- ---------- --------
*Smart Bit has encountered difficulties in tracking all of the
historic owners of the Garrison Unit and the Board is
conservatively estimating a NRI of 50% after the ORRI to Smart Bit,
but will continue the due diligence going forward.
Zink Ranch, Prue Oilfield, Oklahoma - 50 historic wells, 18
active wells, two tank batteries and one gas sales point
Independent reviews of Zink Ranch, undertaken by Attis,
highlighted the excellent condition of the property and its
potential for expanded production beyond its current levels of
circa 6-8 bopd.
To maximise this potential, a Memorandum of Understanding has
been signed with Red Bensh Fork Energy LLC ('RBFE') to use its
contract operator Iron Hawk Energy Group JV ('Iron Hawk') to manage
and operate Zink Ranch for Mayan. Iron Hawk currently operates
approximately 60 producing wells on 40,000 acres in Oklahoma and is
owned by a successful oil and gas operating team with substantial
experience in the area including Rob Bensh who has agreed to sit on
the Company's Technical Advisory Committee. RBFE's asset base and
operational knowledge of the geology and the area, create the
potential for a future development/farm-out partner and has opened
the door for exploring additional joint venture opportunities in
Oklahoma. Indeed, the MOU with Iron Hawk states that the companies
are to explore opportunities in good faith regarding a farmout of
Mayan's interest in Zink Ranch to Iron Hawk and for Mayan to farm
into the Red Fork field, subject to the agreement of terms and
customary due diligence. Once operations have resumed, the Company
will provide an update on its development plans for Zink Ranch.
Additionally, Mayan agreed to settle its differences with its
prior operator, Glenn Supply, and is in the process of transferring
the interest to Mayan's Oklahoma operating subsidiary and
operatorship to Iron Hawk. Iron Hawk and Mayan have agreed to
execute a Joint Operating Agreement pursuant to the AAPL Model JOA
and Accounting Procedures. The Board believes that as soon as the
Bureau of Indian Affairs ("BIA") is completed, operations on the
assets will be ready to resume. Subject to the absence of
unexpected delays, the Company anticipates development of Zink
Ranch to commence in H1 2019.
In regard to the Derick Oilfield Services Inc. ('Derick')
services agreement, a termination of services notice for
non-performance was sent to Derick and they agreed to the return to
the Company and cancelling of all previously issued shares (11.1
million ordinary shares).
Forest Hill, Texas
The Rail Road Commission (RRC) hearing was held before a
district court Judge in November 2018 with a follow up hearing set
for February 2019. The Judge encouraged the parties to seek a
negotiated settlement, with negotiations currently ongoing between
Mayan's joint venture partner and the third-party group bringing
the claim. The assets are considered non-complementary to Mayan's
current assets and negotiations are underway to sell them.
Aminex Settlement
The Company has agreed a full and final settlement of Current
Obligations to Aminex Plc Arising from the Purchase of Shoats Creek
Properties from Aminex USA Inc.
1. Cash payment of $US50,000.00 .
2. Issue of US$100,000 (GBP76,046) in Mayan ordinary shares
(part of the 'Settlement Shares") issued at placing the price of
0.12p
a. 31,685,678 tradable immediately
b. 31,685,678 Mayan subject to 3 months lockup from 29 January 2019
Advisor Agreement Settlement
Furthermore, the Company has agreed to pay agreed fees in shares
to a consultant on the following basis.
1. 10,000,000 (issued at 0.166p) shares on completion of the placing.
2. 10,000,000 share 15 March 2019.
3. 10,000,000 shares on 15 May 2019.
Asset Summary:
The Company has determined to concentrate on the assets which it
considers will represent the best opportunities for return value to
Shareholders, being:
Well Asset W.I. NRI Status
Austin Field
--------------------------------------------------
Austin (formally
Morris #1 Stockdale) 100% 75% Shut in
------------------------ ------ ---- ----------
Montsanko Austin (formally
#1 Stockdale) 100% 75% Shut in
------------------------ ------ ---- ----------
Montgomery, Austin (formally
E F. SWD** Stockdale) 100% 75% Shut in
------------------------ ------ ---- ----------
Edwards Unit Austin 100% 69% Shut in
------------------------ ------ ---- ----------
Neubauer
Stanush Austin 100% 69% Shut in
------------------------ ------ ---- ----------
Kosub Austin 100% 71% Shut in
------------------------ ------ ---- ----------
Ritchie-Talley
Unit Austin 100% 62% Shut in
------------------------ ------ ---- ----------
Garrison Austin 100% 50% Shut in
------------------------ ------ ---- ----------
Zink Ranch
--------------------------------------------------
Osage Contract Well name
------------------------ ------ ---- ----------
G06-11567 26-1 100%* 75% Operating
------------------------ ------ ---- ----------
26-4 100%* 75% Operating
------------------------ ------ ---- ----------
G06-11566 26-2 100%* 75% Operating
------------------------ ------ ---- ----------
G06-16937 1-26 100%* 75% Operating
------------------------ ------ ---- ----------
G06-16937 1,2,3,4,5,6,7,8,9,10,11 100%* 75% Operating
,12,13,14,15,16
------------------------ ------ ---- ----------
G06-47621 7 100%* 75% Operating
------------------------ ------ ---- ----------
IND-252201 1,2,3,4,6 100%* 75% Operating
------------------------ ------ ---- ----------
G06-16801 3 100%* 75% Operating
------------------------ ------ ---- ----------
2 100%* 75% Operating
------------------------ ------ ---- ----------
4 100%* 75% Operating
------------------------ ------ ---- ----------
G06-16802 B-1 100%* 75% Shut in
------------------------ ------ ---- ----------
2 100%* 75% Shut in
------------------------ ------ ---- ----------
3 100%* 75% Shut in
------------------------ ------ ---- ----------
1 100%* 75% Shut in
------------------------ ------ ---- ----------
G06-16803 5 100%* 75% Operating
------------------------ ------ ---- ----------
7 100%* 75% Operating
------------------------ ------ ---- ----------
6 100%* 75% Operating
------------------------ ------ ---- ----------
G06-10142 1A 100%* 75% Operating
------------------------ ------ ---- ----------
*Subject to BIA process the transfer 100% interest across to
Mayan Energy subsidiary (currently 85% held on behalf of Mayan with
balance 15% held by Glenn Supply).
Accordingly, the following assets are considered non-core:
Well Asset Status
Gilbreath 18 Forest Hills Shut-in disputed
-------------- -----------------
Gilbreath 46 Forrest Hills Shut-in disputed
-------------- -----------------
Gilbreath 48 Forest Hills Shut-in disputed
-------------- -----------------
Gilbreath 19 Forest Hills Shut-in disputed
-------------- -----------------
White lease 39 Forest Hills Shut in
-------------- -----------------
White lease 13 Forest Hills Shut in
A
-------------- -----------------
Technical Advisory/ Operational Oversight Committee:
Mayan has established a Technical Advisory Committee reporting
to the Board of Directors to advise on the development and
implementation of upcoming work programmes and budgets, review
acquisitions, divestures and business development opportunities.
The Committee will provide the first level of review prior to
making recommendations to the Board.
The committee currently consists of Mr Thom Board, CEO of Attis
Oil & Gas Inc., the parent of Attis Operating I Inc. that have
been appointed operator at Austin; Robert Bensh, CEO of Iron Hawk
Energy, the operator appointed at Zink Ranch; and, Mr Cutter
Brewer, an experienced Texas based landman.
Petroteq Energy:
Using its patented environmentally friendly heavy oil sands
processing and extraction technology, Petroteq is developing the
Asphalt Ridge heavy oil sands project, Utah, which was successfully
commissioned in Q2 2018. Production at Asphalt Ridge, which holds
contingent resources of 93.4 million barrels, is currently being
ramped up towards an initial rate of 1,000 bopd as part of its
stage one development. Petroteq's patented protected technology
utilises a modular and small footprint/capex, allowing Petroteq to
extract over 99% of all hydrocarbons without the need for high
temperatures or pressures whilst using no water and generating no
greenhouse gases. The Board believes that the depressed price in
Petroteq is not reflective of its value and will continue to
monitor the situation in the future.
The Company currently holds 1,035,233 shares in Petroteq Energy
Inc. with associated 3-year warrants at USD $0.90.
Placing Details:
Additionally, the Company announces that it has raised
GBP750,000 via a placing of 624,999,996 new ordinary shares of no
par value in the capital of the Company (the "Ordinary Shares")
(the "Placing Shares") with certain existing and new investors and
Directors of the Company at a price of 0.12p per share (the
"Placing").
Additionally, 185,890,442 Ordinary Shares will be issued in
relation to the settlement of accrued liabilities, legal advisor
fees, revised deal completion payments, and outstanding Director
fees ("the Settlement Shares").
The Placing is conditional on Admission and application will be
made for the Placing Shares, which will rank pari passu with the
existing Ordinary Shares, to be admitted to trading on AIM (the
"Admission"). It is expected that Admission will become effective
and dealings in the Placing & Settlement Shares will commence
on or around 13 February 2019.
The funds raised by the Placing will be used for the settlement
of the anticipated IRS liabilities, operational creditors and the
upcoming development of Austin & Zink Ranch and general working
capital.
Broker Warrants
In connection with the Placing, Mayan has issued 42,124,997
broker warrants to subscribe for new shares in Mayan , and these
are exercisable at the Placing Price within three years from
admission of the Placing Shares.
Director Participation
Certain of the Directors are participating in the Placing by way
of a subscription for a total of 58,333,332 Placing Shares and are
also being issued with 80,533,253 Settlement Shares in lieu of
accrued Director's salaries and legal advisor fees. Details of
these subscriptions and subsequent beneficial holdings as a result
of the Placing are shown below:
Director Ordinary Placing Settlement Ordinary % of Enlarged
shares held shares Shares shares following Share capital
at today's placing
date
Paolo Amoruso 41,666,666 43,526,311 85,192,977 3.75%
------------- ----------- ----------- ------------------ ---------------
Charles
Wood 2,623,701 16,666,666 11,658,400 30,948,767 1.36%
------------- ----------- ----------- ------------------ ---------------
JD McGraw 2,564,102 - 25,348,542 27,912,644 1.23%
------------- ----------- ----------- ------------------ ---------------
Sarah Cope - - - - 0%
------------- ----------- ----------- ------------------ ---------------
Total 5,187,803 58,333,332 80,533,253 144,054,388 6.34%
------------- ----------- ----------- ------------------ ---------------
The subscription by certain of the Directors for Placing Shares
pursuant to the Placing along with the issue to them of certain of
the Settlement Shares (as set out above), constitutes a related
party transaction under the AIM Rules for Companies (the
"Transaction"). The independent Director for the purposes of the
Transaction, being Sarah Cope, having consulted with Beaumont
Cornish (the Company's nominated adviser), considers that the terms
of the Transaction are fair and reasonable in so far as the
Company's existing shareholders are concerned.
Total Voting Rights ("TVR"):
Following the issue of the Ordinary Shares (being Placing Shares
and Settlement Shares), the Company's issued share capital will
consist of 2,273,837,381 Ordinary Shares 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 the Company with voting rights will be
2,273,837,381.
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.
Special note concerning the Market Abuse Regulation:
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014
("MAR"). Market soundings, as defined in MAR, were taken in respect
of the Subscription, with the result that certain persons became
aware of inside information, as permitted by MAR. That inside
information is set out in this announcement. Therefore, those
persons that received inside information in a market sounding are
no longer in possession of inside information relating to the
Company and its securities.
**ENDS**
For further information visit www.mayanenergy.co.uk or contact
the following:
Charlie Wood Mayan Energy Ltd +44 20 7236 1177
Roland Cornish Beaumont Cornish Ltd +44 20 7628 3396
---------------------------- -----------------
James Biddle Beaumont Cornish Ltd +44 20 7628 3396
---------------------------- -----------------
Frank Buhagiar St Brides Partners Limited +44 20 7236 1177
---------------------------- -----------------
Gaby Jenner St Brides Partners Limited +44 20 7236 1177
---------------------------- -----------------
Colin Rowbury Novum Securities Limited +44 20 7399 9400
---------------------------- -----------------
Notes:
Mayan Energy Limited is an AIM listed (London Stock Exchange)
North American based energy company. It is actively pursuing a
primary recovery oil strategy focused on re-stimulating wells
within mature producing basins with immediate cash flow leveraging
commercially available technologies and projects that are shallow,
low risk with low levels of capex and infrastructure already in
place. It also remains interested in creating shareholder value by
strategic investments in similar projects with high cash generative
potential and by forming beneficial development partnerships that
enable the use of pioneering and leading extraction
technologies.
Technical sign off
All of the technical information, including information in
relation to reserves and resources that is contained in this
announcement has been reviewed by, Mr Thom Board. Mr Board is a
member of the Society of Petroleum Engineers who is a suitably
qualified person with over 24 years' experience operating and
developing oil and gas assets. Mr Board has reviewed the release
and consents to the inclusion of the technical information.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCLIFIDLDIAFIA
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