Byron Energy Limited (ASX: BYE) is an Australian based company which is engaged in the exploration, development and production of energy blocks. The company owns the portfolio of several energy blocks. These energy blocks are highly favoured by the company due to their lucrative geological characteristics. All of the energy blocks contain 100% ownership by the company except for VR232 and SMI 71 where it has a 50% working interest.
On 18th March 2019, the company disclosed further details of its successfully completed acquisition of South Marsh Island Block 58 and associated SM69 assets (E Platform and Flowlines) for US$4.25 million, the effective date of the transaction being 1st January 2019.
The funding of the acquisition has been done through the utilisation of the internal cash reserves. Apart from this, the company has also arranged an unsecured $US4.2 million loan facility at an exchange rate of $A1=$US0.71 which will be repayable by 30th November 2019 and will bear an interest of 10% per annum from the time of drawdown. This loan facility will cover any short-term contingencies and enable the company to carry on with its short-term activities including drilling operations at SM 74.
The company’s South Marsh Island Block 58 (SM58) acquisition includes;
The company has acquired all of the operator’s rights, interest and title in the SM58 Lease Block to a depth of 13,639 ft. subsea with 83.33% net revenue interest (NRI) and 100% working interest in the block. A 53% working interest (44.165% NRI) is being acquired in the associated non-operated producing assets being the SM69 E Platform, the E1 wellbore, and the E platform to B platform pipelines located within SM69; all are part of the greater SM73 Field. Below 13,639 ft. subsea, Byron has a 50% working interest (41.67% NRI) under a pre-existing exploration agreement.
Significant Exploration & Development Opportunity
SM58 is located immediately between Byron’s SM57 and SM59 leases which gives the company contiguous exploration acreage across the northern half of the SM73 Field when combined. The SM58 lease has produced 36 million barrels of oil (to date) and 265 billion cubic feet of gas from 65 wellbores. This acquisition provides access to additional exploration and development opportunities. The company has also identified seven additional well locations on SM58 in the shallow section above 13,639 ft. subsea. Four of the seven locations will test development prospects in reservoirs which have been productive in down dip locations.
The CEO of Byron Energy also stated the closing of this acquisition demonstrates how the company can leverage its experience and relationships to add value to the business. It also reflects upon the ability to identify and pursue opportunities. This block was a rare block acquisition, producing assets with both significant exploration and development potential on the Gulf of Mexico Shelf.
On 7th March 2019, The company announced the Successful closure of the SM58 block acquisition.
On the technical front, the stock rose by more than 6% on ASX and closed at A$0.33 (as of 18th March 2019) compared to the previous closing of A$0.31. The stock has given a sharp rally in the last three months, giving a return of more than 40% with YTD return standing at 47.62%.
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