A LOW RISK STRATEGY TO ADD RESERVES TO OUR BALANCE SHEET.
The acquisition of El Romeral is part of Warrego’s strategy of being a strong upstream player focusing on Australia and Europe. We are excited about the opportunities this acquisition will demonstrate to the market both in Europe and Australia.
In late 2019 Warrego Energy Limited (“Warrego”, ASX: WGO) acquired an indirect interest in El Romeral, an integrated gas production and power station operation located immediately to the east of Seville in Southern Spain.
The acquisition from Petroleum Oil and Gas Espana SA was undertaken through Tarba Energia S.L the corporate joint venture, owned by Warrego (50.1% interest in El Romeral Project) and UK-based Prospex Energy Plc (49.9% interest in El Romeral Project).
El Romeral comprises three production licences, and a 100%-owned 8.1 MW power station supplied by three producing wells. The El Romeral project also includes 13 prospects and multiple low-cost development opportunities with the potential to significantly increase gas production, electricity generation and revenue.
The production licences El Romeral-1, 2 and 3 cover an area of approximately 310km2. The licences were awarded in 1994 and are valid until 2024, with an option to extend for a further two 10-year periods.
Modern era exploration over the area started in earnest in the 1980s when Chevron and Repsol acquired c. 550km of high quality 2D seismic in successive campaigns. This data set and the AVO derived from it have generated 20 prospects. To date, seven have been drilled leading to seven gas discoveries in the area of which five were deemed commercial and put on production. In 2002, four wells were tied to production: El Ciervo-1, Sevilla-1, Sevilla-3, and Santa Clara-1, delivering gas to the El Romeral power station. Rio Corbones-1 became the fifth well to be tied to production in 2008. El Ciervo-1, Santa Clara-1 and Sevilla-1 are still on production.
The project includes its own 25km local gas pipeline connecting the producing wells to the El Romeral power station. This will provide the infrastructure back bone for future well tie-ins, with an average, as the crow flies, less than 3.5km from infrastructure.
At the core of the power station are three Jenbacher gas engine generators. The power station operates today at c. 20% of nameplate capacity requiring only one engine at a time to be run. Of the three engines in place two are used regularly, the third would require some remedial work to return it to service.
Today the primary limitation on electricity production is the volume of gas from the three wells currently producing. The national gas pipeline operated by ENAGAS crosses through the permits and provides the option to create an interconnector between systems allowing the purchase from or the sale of gas to the grid, if deemed beneficial in the future.
The licence area has excellent prospectivity. There are 11 prospects identified of 90 Bcf gross best estimate unrisked prospective resources and two undeveloped discoveries, Romeral-4S and Tarazona, with 5 Bcf gross 2C contingent resources. The El Romeral project includes the licences, the power station and local infrastructure.
At the time of acquisition Warrego Energy Limited Group CEO and Managing Director Dennis Donald was quoted as saying, “El Romeral represents a low risk strategy to add reserves to our balance sheet and at the same time generate near-term cash flows to support future growth and complement the company’s exploration and appraisal activities at Tesorillo.”
“Our Board and management team have considerable previous experience of these types of operation and we expect the knowledge gained from operating El Romeral will also provide substantial benefits as we progress appraisal and development planning and gas marketing for the West Erregulla field, in Western Australia,” he concluded.
1 Information taken from 2019 independent reserves and resources report from Netherland Sewell and Associates, Inc to Tarba Energia S.L. as the acquiring company.
For more information on the El Romeral acquisition view the ASX announcement.
The production licences El Romeral-1, 2 and 3 cover an area of approximately 310km2. The licences were awarded in 1994 and are valid until 2024, with an option to extend for a further two 10-year periods.
Modern era exploration over the area started in earnest in the 1980s when Chevron and Repsol acquired c. 550km of high quality 2D seismic in successive campaigns. This data set and the AVO derived from it have generated 20 prospects. To date, seven have been drilled leading to seven gas discoveries in the area of which five were deemed commercial and put on production. In 2002, four wells were tied to production: El Ciervo-1, Sevilla-1, Sevilla-3, and Santa Clara-1, delivering gas to the El Romeral power station. Rio Corbones-1 became the fifth well to be tied to production in 2008. El Ciervo-1, Santa Clara-1 and Sevilla-1 are still on production.
The project includes its own 25km local gas pipeline connecting the producing wells to the El Romeral power station. This will provide the infrastructure back bone for future well tie-ins, with an average, as the crow flies, less than 3.5km from infrastructure.
At the core of the power station are three Jenbacher gas engine generators. The power station operates today at c. 20% of nameplate capacity requiring only one engine at a time to be run. Of the three engines in place two are used regularly, the third would require some remedial work to return it to service.
Today the primary limitation on electricity production is the volume of gas from the three wells currently producing. The national gas pipeline operated by ENAGAS crosses through the permits and provides the option to create an interconnector between systems allowing the purchase from or the sale of gas to the grid, if deemed beneficial in the future.
The licence area has excellent prospectivity. There are 11 prospects identified of 90 Bcf gross best estimate unrisked prospective resources and two undeveloped discoveries, Romeral-4S and Tarazona, with 5 Bcf gross 2C contingent resources. The El Romeral project includes the licences, the power station and local infrastructure.
At the time of acquisition Warrego Energy Limited Group CEO and Managing Director Dennis Donald was quoted as saying, “El Romeral represents a low risk strategy to add reserves to our balance sheet and at the same time generate near-term cash flows to support future growth and complement the company’s exploration and appraisal activities at Tesorillo.”
“Our Board and management team have considerable previous experience of these types of operation and we expect the knowledge gained from operating El Romeral will also provide substantial benefits as we progress appraisal and development planning and gas marketing for the West Erregulla field, in Western Australia,” he concluded.
El Romeral asset overview
- Eleven wells drilled since 1950s including seven post-1983 which discovered gas
- Three wells currently producing 150 mscfd net
- Two shut-in gas wells with low cost workover potential
- Two discoveries and 13 nearfield prospects identified on c. 550 km of 2D seismic supported by AVO analysis
- Two undeveloped discoveries with a best estimate of 5 Bcf of gross contingent resources1
- Eleven prospects with 90 Bcf gross best estimate unrisked prospective resources1
- El Romeral power station operating 16h/d provides immediate revenues and low-cost route to commercialisation for future gas discoveries, generates monthly and cash-flow positive revenues via sales to the Spanish electricity grid.
1 Information taken from 2019 independent reserves and resources report from Netherland Sewell and Associates, Inc to Tarba Energia S.L. as the acquiring company.
For more information on the El Romeral acquisition view the ASX announcement.