Embargoed: 0700hrs, 27 October 2011
(“Niche” or the “Company”)
New Competent Person’s Report
Shows NPV10 of US$583.4 Million Net to Oman Resources
Niche, the AIM listed investment company with interests in oil and gas exploration and development activities onshore Turkey, is pleased to issue the results of a new Competent Person’s Report (“CPR”) by Senergy (GB) Ltd (“Senergy”) on Blocks AR/ARR/4396, AR/ARR/4395 and AR/ARR/4394 (together the “Hatay Blocks”), in which Oman Resources (“Oman”) has acquired a 50% equity interest. Niche holds loan notes convertible into a 35.7% shareholding in Oman.
· Best estimate Reserves up 269% on Hatay Block 4396 to 46.5 Bcf gas recoverable net to Oman following Senergy’s upgrade of Prospective Resources to Reserves
· Best estimate Prospective Resources across Oman’s Hatay Blocks 4395 mp; 4394 up 59% to 63.4 Bcf gas recoverable net to Oman
· Best estimate Reserves, Contingent and Prospective Resources across Oman’s portfolio now stand at 259.4 Bcf gas recoverable net to Oman (previously 162 Bcf)
· Best estimate NPV10 attributable Reserves, un-risked Contingent Resources and Prospective Resources across Oman’s portfolio now stands at US$583.4 million net to Oman
The new CPR, issued on the Hatay Blocks only at present, identified considerable additional recoverable Reserves and prospective Resources net to Oman resulting from the interpretation and integration of recently purchased vintage 2D seismic data on the Hatay Blocks. Such interpretation has significantly improved the understanding and definition of trap geometries and closures on the Hatay Blocks. This enabled Senergy to upgrade Prospective Resources on Hatay Block 4396 to Reserves. Oman Resources is also expecting a further updated CPR to be issued by Senergy on Konya Block 4077, subject to successful flow testing operations which remain underway.
A full summary of current recoverable Reserves and Prospective Resources across Oman’s Hatay licences is shown below:
Total Recoverable Gas Reserves (Bscf): Hatay Block 4396
Total Recoverable Gas Prospective Resources (Bscf): Hatay Blocks 4394, 4395, 4396
N.b.: Total Gas is the arithmetic sum of the individual reservoirs. Totals may not sum exactly due to rounding to one decimal place
Block 4396 contains the Hamam-1 well, the first well on Oman’s assets to produce gas to an onsite compressed natural gas bottling plant, selling to local gas markets at present in small volumes. The Operator has submitted its application for construction of the 30km pipeline tie-in to the main existing network. BOTAS pipeline pricing for natural gas was US$8.5/mcf. The Hamam-1 well tested earlier this year with a stabilised flow rate of 3.5mmcf/gas per day.
Recoverable Resources and Economics
The technically recoverable volumes presented in the CPR are based on a review of the independent interpretations conducted on the assets.
The preliminary development plans for the Hatay Blocks include additional seismic acquisition and processing, exploration and development drilling and the development of local oil and gas handling facilities, CNG (SNP: ^CNGY – news) bottling facilities and gas pipelines into the transmission network. Owing to the shallowness of the gas reservoirs, the quality of the produced gas and the closeness of the transportation infrastructure, the cost to commercialise the gas is modest and relatively small resources can be produced and marketed commercially. Test production from Hamam-1 has been ongoing since April 2011 and ARAR is offering the produced gas into the local CNG market.
The Turkish gas market has increased substantially in the last decade. The vast majority of gas is imported with local production accounting for only 2% of consumption in 2010. The Turkish oil and gas infrastructure is adequately developed. Turkish wholesale gas prices, petroleum regulation and fiscal regime are attractive for local producers. Oil consumption has been relatively stable in Turkey and local production provides less than 10% of total consumption. The government encourages local exploration and production, for instance by fiscal stimuli. High (Euronext: HCO.NX – news) oil product prices and the fact that refineries are required to buy all local produced crude make Turkey an attractive market for oil producers.
A cash flow analysis has been undertaken in respect of Oman Resources’ net attributable resources (after deduction of royalties and taxes). The Net Present Value (NPV) at 10% discount factor has been calculated on the basis of hypothetical development plans and related production profiles for the Hatay Reserves and, additionally, the NPV for the Konya Block 4077 Contingent Resources is shown below.
Net Attributable NPV (10%) Reserves ($MM)
Net Un-Risked Attributable NPV (10%) Contingent Resources ($MM)
For the quantified Prospective Resources average NPVs per unit ($/Mscf for gas, $/bbl for oil) that are representative for the specific fields have been multiplied with the resource volumes to arrive at un-risked NPVs as per the table below.
Net Un-Risked Attributable NPV (10%) Prospective Resources ($MM)
Commenting on the new CPR, Nigel Little, Chairman of Niche Group, said,
“Niche is delighted to report the considerably upgraded recoverable Reserves net to Oman Resources on Block 4396, together with substantial recoverable Resources upgrades. With a convertible interest in Oman of 35.7% this report strongly underpins the value proposition of Oman. With Reserves currently reported on only one of Oman’s four blocks, and significant progress being made to understand the reservoir potential across the assets and bring wells into production, we are confident of further substantial upgrades in recoverable Reserves, such that Oman Resources with its partner, ARAR, will transform Turkey’s recoverable gas volumes.”
The Niche Group plc
Tel. +44 (0) 20 7399 4371
Patrick d’Ancona / Ben Simons
Tel. +44 (0)20 7920 2340
Daniel Stewart mp; Co. Plc – Nominated Advisor and Joint Broker
Tel. +44 (0)20 7776 6550
Canaccord Genuity – Joint Broker
Charles Berkeley / Henry Fitzgerald-O’Connor
Tel: +44 (0) 20 7050 6500
The above information was approved by Enzo Zappaterra, Chief Geologist of Oman Resources, who is a Fellow of The Geological Society and a Certified Petroleum Geologist of the American Association of Petroleum Geologists, Division of Professional Affairs, with over 35 years experience in petroleum exploration and management.
In compiling this report Senergy has used the definitions and guidelines set out in the 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE) and reviewed and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE). The results of this work have been presented in accordance with the requirements of AIM, a Market operated by the London Stock Exchange (LSE: LSE.L – news) , in particular as described in the “Note for Mining (Euronext: SMI.NX – news) and Oil and Gas Companies – June 2009″.