Anglo African Oil & Gas plc (LON:AAOG) told investors that drilling has now resumed at the TLP-103C well site, at the Tilapia project in the Republic of the Congo, following necessary repairs to the contracted drill rig.
The repair work followed an unscheduled inspection by AAOG staff. The temporary suspension of operations has now ended, with repaired and reconditioned parts now installed back onto the rig.
Drilling resumed at a depth of 660 metres which is above the well’s target horizons (R1/R2, Mengo and Djeno) and the company said it now expects the well will reach target depth by mid-December.
The company added that drilling contractor has accepted that the delay was “entirely their fault” and has agreed to pay compensation to AAOG for the substantial amount of the company’s additional costs incurred due to the delay – this will be effectively paid via a significantly reduced day rate for the rig over the remainder of the programme.
AAOG executive chairman said: “This delay has been extremely frustrating not only for the company but, more importantly, for its shareholders.
“However, it was clearly the right decision for AAOG to insist on a suspension of drilling pending these repairs rather than risk a serious incident should those parts have failed when intersecting a target horizon.
“We have had open and frank discussions with SMP and we are assured by them that we should not expect any further issues with the rig and look forward to announcing our results in due course.”
Shares issued as AAOG discovers Sandabel short position
In a separate statement, AAOG noted that over the weekend it became aware of a ‘short position’ in the company’s shares at Sandabel L.P. which has previously provided an unsecured convertible loan to the company.
AAOG said it subsequently negotiated with Sandabel to convert £750,000 of unsecured loan notes, at a conversion price of 6.3p, and, accordingly, it has issued 11.9mln new shares to the financier.
The company added that Sandabel has now agreed it will not adopt any net short position in AAOG shares in the future.
Some £250,000 worth of convertible loan notes remain outstanding, held by Sandabel.
“The company is also reviewing alternative sources of capital financing available to it in order to ensure that the capital required by the company is secured on the best terms and takes fully into account the interest of shareholders,” AAOG said in the statement.