G2 Energy moves forward with Newfoundland license takeover
G2 Energy has started work on submitting a Significant Discovery License for the EL1070 license offshore Newfoundland, Canada, to earn 100 percent of NU-Oil and Gas’ (NUOG) working interest in its deep rights.
To remind, the two entered negotiations for the transfer of working interest to G2 Energy at the end of last year.
NUOG said on Monday that G2 completed its due diligence regarding the license and to earn full ownership of the EL1070 license, it must submit an application for a Significant Discovery License (SDL) before the expiration of the 24-month option period which began on December 16 of last year.
According to the company, G2 began work required to submit an application for an SDL. Before the end of the option period, G2 must achieve a flow test for hydrocarbons on one or more wells on the license as required by regulations.
The rights are currently held by the NUOG’s Canadian subsidiary, Enegi Oil Inc. (EOI), and in the case of rights transfer to G2, EOI will own 5 percent of any revenue generated from the development of the license.
Although EOI is a registered holder of 33 percent of the license through a 2009 agreement with Shoal Point Energy, the company now holds a 100 percent interest in the Deep Rights, with Shoal Point Energy holding 100 percent interest in the Shallow Rights on the license.
Deep rights on EL1070 are defined as all petroleum substances and associated rights within and stratigraphically below the Ordovician Carbonate Platform (excluding Cape Cormorant and Table Cove Formations).
G2 Energy has undertaken further analysis of data on existing wells and has identified a potential oil pay zone behind casing in one of the wells on the license, within the Carbonate Platform section, and its initial work program will plan to flow test this prospective zone. This section is interpreted to have a dense natural fracture network in brittle carbonate rocks, which may have natural flow capability.
Nigel Burton, CEO of NU-Oil, said: “The directors are pleased that G2 Energy has successfully concluded its due diligence on EL1070 and is now proceeding to the work required to submit a SDL application. This should allow for new investment into EL1070 and has the additional benefit of removing on-going costs.”