Rex to fully develop Oman oil field; Norway well will be drilled in August

OMAN authorities have approved oilfield services firm Rex International's plan to develop the Yunma field, which is part of its Block 50 licence.

In an update on its strategy and operations on Friday, the Catalist-listed firm said the Ministry of Oil and Gas in Oman gave the green light for the field development plan and awarded a declaration of commerciality (DOC).

The DOC allows for Rex's 86.37 per cent-owned subsidiary Masirah Oil to fully develop the oil field while continuing to explore the rest of the Block 50 concession in Oman. Masirah Oil wholly owns the concession.

Rex said the Yunma 1 well has produced more than one million barrels of oil so far, and is producing over 8,000 barrels of oil per day. The first three cargoes of Masirah crude were lifted and sold in April, May and June this year.

Rex executive chairman Dan Broström said that progressing to production will "fundamentally change" Rex's corporate profile.

As for its Norway operations, Rex on Friday noted that amid the coronavirus outbreak, there have been improved Norwegian oil taxation incentives on capital expenditure and depreciation.

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Rex said its 2019 Shrek discovery, under the PL838 licence, is a prime candidate for such tax benefits, with possible production start-up by end-2024.

Rex's 90 per cent-owned subsidiary Lime Petroleum AS, has a 30 per cent interest in the PL838 licence.

The Shrek discovery derisked additional and significant hydrocarbon prospects which can be drilled over the next three years, Rex said. It added that Lime is working with its licence partners to mature these prospects.

In late August 2020, Lime will participate - with a 20 per cent interest - in the drilling of the Appolonia prospect in the PL263 D/E licence, pending governmental approval. The well is operated by Norwegian refiner Equinor, and targets conventional Jurassic sand prospects. A successful well will pave the way for an expedient field development.

During the summer of 2021, Lime will participate - with a 15 per cent interest - in the high-impact Fat Canyon well in PL937. This well is operated by chemicals company INEOS, and will target a significant high-volume prospect with predicted Jurassic and Cretaceous reservoirs.

On its financial position and outlook, Rex said it remains long-term debt-free and has a war chest of US$61.9 million in cash, cash equivalents and quoted investments.

"We expect to maintain our high pace of exploration activities in 2021," Mr Broström said.

Rex shares were trading one Singapore cent or 5.7 per cent higher to 18.6 cents as at 9.18am on Friday following the news.