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Bounty Oil & Gas provides update on Kiliwani North development licence in Tanzania

Bounty Oil & Gas announce the following update on gas production from its Kiliwani North Development Licence in Tanzania.


– Commissioning of the power generation system and other auxiliary facilities has been completed.

– Commissioning of the gas plant and sub-sea pipeline commenced on 1 June 2016

– On 2 June the first Kiliwani North-1 (“KN-1”) gas was processed and entered the pipeline system connecting the Songo Songo plant with the national pipeline.

– During the commissioning, gas rates are planned to ramp up to 30 mmscfd while pressuring up the plant and pipeline.

– The operator Ndovu and its partners including Bounty have invoiced TPDC for both April and May gas production in accordance with the terms of the signed Gas Sales Agreement.

As previously advised, all gas produced during the build-up to full production rates will be paid for under the terms of a recently signed Gas Sales Agreement signed with the sole buyer, Tanzania Petroleum Development Corporation (“TPDC”). Bounty will receive US$3.00 per mmbtu (approximately US$3.07 per mcf).

Bounty will receive all revenue in United States Dollars and the contractual gas price of US$3.00 per mmbtu will be adjusted annually by applying an agreed United States Consumer Price Index. The gas price is not linked to any commodity price so importantly is unaffected by current commodity market conditions. The gas delivery point is at the outlet flange of the Kiliwani North wellhead and, by selling the gas at the wellhead, the joint venture partners will not be liable for pipeline transportation and processing fees.

Initial production rates remain carefully managed to allow for testing and commissioning of the gas processing plant and pipeline, while recording critical pressure and flow rate measurements to determine the optimal flow rate to maximize the life of the reservoir. Together with TPDC the opeator plans to conduct a well test during the production build up to determine the optimal flow rate. It is this optimal flow rate that will become the Commercial Production Rate and the Company intends to flow gas at this rate for as long as possible prior to a natural decline in production. Based off initial pressure response from the Kiliwani North 1 well it is expected that the well will be tested closer 30mmcfd (approximately 4-5,000 barrels of oil equivalent per day gross)

KN-1 has booked contingent resources (2C) of 28 billion cubic feet gross. Bounty expects to book reserves for Kiliwani North later this year.
Philip Kelso, CEO commented:

“We are pleased with the progress made so far at Kiliwani. The well has been performing very well and commissioning is so far on schedule. Bounty continues to focus on delivering production growth through Kiliwani and will examine other Tanzania gas opportunities.”

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