Predator Oil & Gas (PRD) , a Jersey-based hydrocarbon explorer, announced that its wholly-owned Trinidad subsidiary T-Rex Resources has acquired majority shareholding (51%) in Caribbean Rex Limited (CRL).
Caribbean Rex's sole asset is 100% interest in and operatorship of the Bonasse Field in SW Peninsular, Trinidad. Bonasse is directly licenced for production by the Ministry of Energy and Energy Industries until 2039, with no remaining work commitments. Predator's executive team previously evaluated the asset for acquisition in 2015, announcing its majority stake today.
The Bonasse field contains 7 producing wells, currently shut in for 3rd-party contractual reasons. The structure of the field is analogous to Predator's Cory Moruga and Moruga West fields in Trinidad. Predator believes it can substantially enhance recovery rates from the wells by using its patented SGN Technology chemical wax treatment.
The consideration for the majority shareholding is US$170k. Caribbean Rex comes with substantial US$5.3m in tax losses, which can be amalgamated and consolidated in the future with tax losses in T-Rex.
Paul Griffiths, CEO of Predator, commenting: "The transaction that we have announced today represents another step towards building a robust production portfolio suitable for the application of a new patented chemical wax treatment and rigorous management oversight of field operating and administrative costs to maximise profit margins and avail of substantive inherited tax losses through economies of scale and establishing operational synergies.
If the new chemical wax treatment proves to be a "game changer" in the context of improving and maintaining oil flow rates, then further field development by reinvesting production income will be warranted.
Growing an income in US dollars will provide some protection against the weakness of the UK currency at this time."
View from Vox
Predator announces the acquisition of 51% shareholding in Caribbean Rex Limited (CRL) via its wholly-owned Trinidad subsidiary T-Rex. The strategic investment comes with full interest in the Bonasse field, Trinidad (licenced until 2039) and its 7 existing wells, currently shut in for non-operational reasons and being restored to full production. The asset is suitable for deployment of Predator's proprietary SGN Technology chemical wax treatment, not previously used in Trinidad. PRD calls the new technology a "game changer" for improving and maintaining flowrates.
The investment will give Predator and T-Rex ownership of the Bonasse field facilities, including oil storage tanks, which can be used for workovers and field development at Cory Moruga - Predator's other licence in Trindad. The cash consideration for CRL's assets can therefore be offset against costs that would have been incurred in purchasing production facilities for the Jacobin-1 and Snowcap-1 workovers at Cory Moruga. These costs have already been factored into Predator's working capital requirements.
Legacy analysis of the well drainage areas at Bonasse indicate a typical area of 4.5 acres per well and a STOIIP volume of 382,500 barrels of 22.8 API oil. The historical primary recovery factor is as low as 4.18% - it is this low primary recovery factor that creates an excellent opportunity for application of Predator's patented SGN Technology, presently being prepared for the Jacobin-1 workover at Cory Moruga.
In terms of cashflow, optimising the costs of shallow drilling and applying the chemical wax treatment can generate a payback on the investment in 6 months, followed by reinvestment of production income into developing the undrained areas of the field.
Overall, the move reinforces Predator's production portfolio while providing a highly suitable candidate for its proprietary SGN Technology. Additionally, the investment will boost Predator's margins through significant inherited tax losses of US$5.3m, which can roll over to future tax losses in T-Rex.
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