LGO Energy to re-apply for extension of Spain oil concession

30th Jan 2017 13:25

(ShareCast News) - LGO Energy is "disappointed" on learning the Spanish government has not approved the extension of its concession in the country and the oil and gas firm is looking to reapply. The AIM-listed company maintained that the pending the extension decision, and along with present oil prices, it would have a "minimal impact" on its finances as LGO Energy focusses its operations in Trinidad.The La Lora concession, which has a carried value of £7m and is owned by the the company's subsidiary, Compañía Petrolífera de Sedano (CPS), was not granted an extension by the Spanish government and will close on Tuesday at midnight.Executive chairman Neil Ritson said: "Naturally we are disappointed with the decision and it will inevitably cause some hardship to our employees and their communities in the Burgos area, where Ayoluengo has been a significant source of employment for the last 50 years. We will be working with the Spanish authorities to seek a new concession as soon as possible."The company said that the decision appeared to have been made on purely legal, and not technical or commercial, grounds and despite the advice that LGO received from lawyers in the country on the strength of the legal case.It also said that the Spanish Ministry of Industry, Energy and Tourism has indicated that it will offer the Ayoluengo field to CPS for a new concession as soon as possible.LGO will make a new application for a 30-year concession on the same overall technical basis as the extension and believes that its experience at the field and its technical and commercial knowledge puts it in a competitive position.CPS is in the final stages of a process to temporarily suspend all field operations and to complete the sale of all oil stocks from the Ayoluengo field by the end of the concession. Employment contracts for CPS's 17 staff will also be suspended for up to one year.The company said that it has actively sought an extension to the concession over the past four years and has carried out legal, technical and commercial evaluation work that was submitted to the Ministry in August 2015 in support of a formal request for a 20-year extension.Shares in LGO Energy Were down 8.69% to 0.113p at 1257 GMT.