|Rex International Holding, a new-generation technology-driven oil company, is targeting substantially higher revenue from 2018 from its key discovery assets in Norway and Oman and its proprietary Rex Virtual Drilling (“RVD”) technology.
In Oman, appraisal efforts are also ongoing.
Previously employed only mainly on Rex’s own assets, an improved version of RVD will be marketed as a service for oil exploration companies. A new client in Norway is already onboard.
Mr Dan Broström, Executive Chairman of Rex International Holding, said, “When we were first listed in mid-2013, our original business model was to focus on using the RVD technology on our own assets to increase the chance of success in finding oil and then to sell the oil-in-the-ground upon any discovery. With the collapse of oil prices since mid-2014, we have moderated our drilling plans to focus on getting our key assets to production.
"To concentrate on our core competence in the technology arena, we are seeking operational partners of high professional standard for Oman. In Norway, we are already working with highly experienced partners in the licences, in particular Lundin Petroleum Norway AS who is also the operator of the licence PL338C (Edvard Grieg) discovery.”
Rex expands in Norway
In a press release dated 17 April 2017, Rex had shared that development feasibility studies were being carried out on the Edvard Grieg South (Rolvsnes) (“EGS”) discovery in licence PL338C made in December 2015. An appraisal well is scheduled to be drilled by the end of the second quarter of 2018 to better understand the reservoir. If drill stem tests are positive, the well will be tied back to the Edvard Grieg platform for test production in 2020. Rex’s 87.84% subsidiary Lime Petroleum AS (“LPA”) holds a 30 per cent stake in the licence.
"This window of opportunity to achieve production at an economically viable breakeven price is much better than it has been for the last three years due to the current higher prices for oil and lower costs for services.
"Coupled with marketing efforts for RVD, we are targeting to achieve higher revenue from 2018 and onwards. We have been drastically reducing our own costs for new exploration and for general & administration expenses in the past year. As at 30 September 2017, the Group’s cash, cash equivalents and quoted investments totalled US$46.62 million.”
-- Dan Broström (photo),
REX International “We are optimistic about the gradual turnaround of the oil price and are pleased that at today’s oil price, our assets both in Norway and Oman, when developed, will give a significant contribution to Rex’s value. Our planned activities in Norway and Oman are maturing according to plan with value creation for the Company going forward.
A Gaffney, Cline & Associates (“GCA”) Qualified Persons Report1 (dated 10 March 2017) disclosed GCA’s independent assessment of gross contingent resources attributable to the PL338C licence, on an unrisked basis, of up to 77.9 million barrels of oil (3C resources: high estimate of potentially recoverable oil from the discovery) and up to 78.7 billion standard cubic feet of natural gas (3C resources: high estimate of potentially recoverable gas from the discovery).
Appraisal of GA South#1 discovery in Oman
The evaluation of the development programme for the GA South#1 discovery in Oman is ongoing and will continue until the first quarter of 2018.
Should the evaluation be positive, an appraisal well is targeted to be drilled before the end of 2018.
Should the appraisal well be successful, the Company will target production from GA South#1 as soon as practically possible.
To reduce its holding risks to be in-line with its internally defined exposure levels and to garner financing for the drilling of the appraisal well, Rex is in negotiations to farm out a percentage of the concession.
The Group currently holds indirectly a 92.24% stake in Masirah Oil Ltd, which holds a 100% interest in the more than 16,000 sq km Block 50 Oman concession. The prospective resources (gross mean unrisked) in the concession were estimated to be about 4,700 mmboe by Aker Geo and Pareto Asia (28 February 2012).
New clients for RVD
Market sentiment has started to improve with the increase in oil prices.
The unique RVD software, which analyses conventional seismic data to determine presence of hydrocarbon liquids, has been extensively tested and used in actual well drilling campaigns. The technology has also proven to be highly accurate in predicting dry wells.
By signing on RVD as a service, oil exploration companies can save millions of dollars in futile capital expenditure should the RVD test results indicate negative for liquid hydrocarbons. Research and development efforts on RVD have continued unabated during the past few years.
The latest version, RVD version 3, is even more accurate and faster than previous versions, allowing Rex to scale up on the number of licences to be analysed at any one time.
Development of marketing tools for RVD are underway and sales agents have been appointed to market RVD in the Middle East and Europe from January 2018.
Source: Press release 7 Dec 17