NU-Oil & Gas says G2 Energy has successfully completed its due diligence on EL1070, offshore western Newfoundland.
G2 Energy has an exclusive option to earn 100% of the Nu-Oil's working interest in the EL1070 deep rights, with the company's subsidiary, Enegi Oil, retaining a 5% gross overriding royalty if the option was exercised.
"G2 Energy is now proceeding with the work required to submit an application for a Significant Discovery Licence (SDL) on EL1070," said NU-Oil.
"In this respect, prior to the end of the option period of 24 months from 16 December 2016, G2 Energy must achieve a flow test for hydrocarbons on one or more of the wells on EL1070, a requirement under the regulations for the submission of an application for a SDL."
The deep rights within EL1070 were currently held by Enegi Oil. G2 Energy has undertaken further analysis of data on existing wells, and has identified a potential bypassed oil pay zone behind casing in one of the wells on the licence, within the Carbonate Platform section.
Its initial work programme, subject to regulatory approval, would plan to flow test this prospective zone. This section is interpreted to have a dense natural fracture network in brittle carbonate rocks, which may have natural flow capability.