Oil & Gas

In view of the supply chain issues caused by the Ukraine-Russia war resulting in extended out lead times for key well equipment and materials, the Company made advance payments for long lead well inventory for MOU-3. To ensure rapid implementation and scaling up of a  gas development, pending the results of MOU-2, and to avail of currently projected attractive forward gas prices in Europe, an additional gas delivery well needs to be accelerated to demonstrate the ability to fast-track development drilling. Industry interest in any future participation in the Guercif gas project has referenced an export option to Europe should Guercif gas resources be proved up more quickly by additional drilling. The Company believes that a target gas production profile of 150 to 250 mm cfgpd will be required in order to create the potential for winter-focussed gas sales of surplus Moroccan gas into the European market. The MOU-1 and MOU-2 structure is in close proximity to the Mahgreb gas pipeline (less than 5 kilometres away) creating the infrastructure link to a potential European gas market. As a licence operator the Company has rights of access to the Maghreb Gas Pipeline subject to regulatory approval. A potential tie-in access point is within the Company’s licence area.

To address this additional export option the MOU-1 and MOU-2 testing programmes are being expanded to include all potential gas reservoirs in the wells to maximise gas deliverabilities. This involves some additional costs in equipment and for extra operational days. The costs are justified by creating an opportunity to demonstrate the ability to quickly scale up gas production to embrace both a domestic market and a larger export gas markets. This is an incremental near-term strategic objective that is not in competition  with the current commitment  to develop initial gas production for the Moroccan industrial market using a trucked Compressed Natural Gas option.

The total additional costs to fulfil the Company’s near-term strategic objective are forecast to be approximately of £900,000.