Nu-Oil and Gas plc announced that it has agreed Heads of Terms with PVF Energy Services Inc., under which the parties will work together to establish commercial production operations on the company's licence PL2002-01(A), which contains the Garden Hill oil discovery, in Western Newfoundland. It is anticipated that the Heads of Terms will lead to the Parties entering into a detailed Definitive Operating Agreement within 120 days. Under the Definitive Operating Agreement, which is subject to certain conditions including PVF completing due diligence to its satisfaction, it is expected that PVF will assume responsibility for the operation of PL2002-01(A) and, inter alia, the associated operating costs, in exchange for a profit sharing arrangement on any production generated whereby PVF will recover its operating costs after which it would be entitled to receive 40% of any subsequent profits, with the company's Canadian subsidiary receiving 60% of any profits generated. The company will remain as the 100% owner of PL2002-01(A) and Operator. PVF will be the focal point of a consortium of local oil and gas engineering service and equipment providers who will come together to pursue the opportunities offered by the Garden Hill Trend part of which is covered by PL2002-01(A). A number of activities are being considered, singularly or in concert, to recommence production from the licence including: Removal and reinstallation of the completion in conjunction with cleaning the well; use of specialised wireline tools to clean and mill out any blockages inhibiting flow into the completion system; use of a coiled tubing unit ('CTU') to clean the completion system and drill out a plug with retention of the CTU on-site to deal with any blockages that might arise on a continuous basis; an operational solution that reanalyses data and focuses on using the latest chemicals and technology to put together a chemical injection system. The Garden Hill Field Trend is a proven hydrocarbon bearing accumulation beneath the Port-au-Port peninsula in Western Newfoundland that is estimated, based upon internal reservoir models, to contain between 83 and 341MMBO in-place, increasing to between 136 and 591MMBO when considering the mapped offshore extent. PL2002-01(A) covers an area of 16km2 and holds between 21 and 97MMBO of this total, for which the P50 recoverable estimate is approximately 10MMBO. Initially discovered in 1994 with the ‘PAP#1’ well, the conventional Lower Ordovician, Aguathuna Formation reservoir has since been penetrated by three appraisal side-tracks, which support the theory that reservoir productivity is linked to hydrothermal alteration. The final operating plan and details of the Consortium members will be confirmed during the period during which the Definitive Operating Agreement is concluded. The Company will only execute the Definitive Operating Agreement should PVF's arrangements satisfy the appropriate level of due diligence. The Definitive Operating Agreement will also provide PVF with the right to acquire an interest in the licence and match the terms of any competing offer to enter the project that might be received. The execution of the proposed transaction will recommence activity at site, provide new investment into the project and reduce the costs of the company and so would be of significant benefit.