NG Energy Expects Production To Begin By Month End At Maria Conchita
It looks like production is finally set to begin for NG Energy (TSXV: GASX). The firm this morning indicated that it anticipates production of natural gas to begin this month at the Maria Conchita block in Colombia.
As part of the commencement of production, the company has reached a prepayment arrangement with Energy Transition S.A.S. E.S.P. for the purchase of certain production capacity. Energy Transition is to purchase at least 80% of the gas produced at the field through to the end of the year under an interruptible gas supply agreement.
A five year gas trading contract is then expected to be entered into in December with Energy Transitions.
A prepayment contract is expected to be entered into for a period of four months, which is to occur at the commencement of production. That prepayment is to occur at a price of US$5.08 per MMBtu at a rate of 4 MMSCFD for the first fifteen days of production. After those first fifteen days, production will be ramped up to 16 MMSCFD of production.
Elsewhere, the company this morning confirmed that the spudding of the first well at its flagship Sinu-9 property, the Magico 1 well, is expected to occur within the next ten days. Pad construction is now completed, with assembly of the drill rig nearing completion.
The Magico 1 well is expected to be drilled to a total depth of 8,000 feet within a total of three phases of drilling. The company is currently focused on three separate intervals for the production of gas, with a previous estimate pointing to the Magico, Mago and Hechicero regions of the property having 193 BCF of unrisked best estimate prospective resources in the prospects category.
The company has previously stated that four gas wells are to be drilled under the current program.
Lastly, NG Energy has reportedly seen commitments from insiders and associates for nearly half of its $20.0 million convertible debenture unit offering. Each debenture is to have a term of five years at a rate of 8%, with each US$1,000 debenture having 400 warrants attached to it. Warrants are valid for a period of five years and contain an exercise price of $2.00 per share.
NG Energy last traded at $1.22 on the TSX Venture.
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