Thursday 12 May 2016

LGO is pleased to announce that production has now started from a new interval in well GY-50 at the Goudron Field in Trinidad. A total of 197 feet of perforations were added to the Goudron Sandstone, also known as the Mayaro ‎Sandstone, at a depth between 1,134 and 1,616 feet, in an interval that has previously not been completed for production in this well that was originally drilled in 1930.

Recompletion Program

Well GY-50 was logged through casing with modern electric logs and intervals of clean oil sand in the Mayaro section were selected for perforating. The well was completed using tubing conveyed perforating ("TCP") guns on 11 May 2016 and will now remain on test production to establish initial conditions before being equipped with a downhole pump. Pumped oil rate is expected to be in the order of 50-100 barrels per day ("bopd") and will support the ongoing effort to bring on low cost new production. Historic initial oil rates from wells in similar Mayaro Sandstone intervals have averaged approximately 65 bopd, however, no modern completion using TCP guns of a Mayaro interval has been undertaken in recent years.

Well GY-671, which was recompleted in the Upper C-sand in late April, continues to produce dry 39 API oil. The well has recently been converted to pumped production to determine if lower pressure drawdown will lead to better long term production characteristics in some C-sand wells. Current production rate is being built up gradually and once stable rates are established those will be reported in a later operational update.

A further five target wells have been selected including legacy wells GY-240, GY-282 and GY-288 and wells GY-673 and GY-675 from the 2014 drilling program which are considered to have additional production intervals that have so far not been completed.

Group First Quarter 2016 Production

The LGO Group production in first quarter 2016 averaged 574 bopd. A total of 52,250 barrels were produced, 39,383 barrels in Trinidad and the balance in Spain. Oil stocks at the Company's Ayoluengo Field in Spain have been built up over the recent low oil price period and an estimated 6,000- 7,000 barrels of oil will now be marketed as a bulk cargo since Brent prices have now recovered and have stabilized at approximately US$45 per barrel.

Neil Ritson, LGO's Chief Executive, commented:

"A program of low cost well interventions is being pursued at Goudron Field to raise production levels gradually after a period of enforced low activity whilst the Company's finances were put in order following the loss of well GY-678 in late 2015. Once capital becomes available the Company anticipates the drilling of infill wells in the shallow Mayaro Sandstone where there are a large number of low cost new wells that can be added to the field using the Company-owned heavy work-over rig."

Qualified Person's Statement:

The information contained in this announcement has been reviewed and approved by Neil Ritson, Chief Executive Officer and Director for LGO Energy plc, who has over 38 years of relevant experience in the oil industry. Mr. Ritson is a member of the Society of Petroleum Engineers (SPE), an Active Member of the American Association of Petroleum Geologists (AAPG) and is a Fellow of the Geological Society of London.