Just a quick note from Edison for general informative purposes.
EDISON UPDATE 29/Oct/2010
On all measures Nautical has had a stellar last six months. An oil discovery at
Catcher, a successful £28.8m fund-raising (after expenses), the restructuring of the
shareholder register, the successful appraisal and exploration well at Kraken and the
crystallisation of value through the sale of a 20.7% stake in Mariner to Statoil for
£85.5m have all led to the sixfold increase in share price. Further upside potential
may come from a) a successful drilling campaign in the Greater Catcher area, b) a
resources update at Kraken and c) developing further exploration upside from
existing and new blocks. The award of blocks 9/1 (100% WI) to the west of Kraken
and blocks 8/15 and 9/11d (6% WI) to the west and north of the Mariner discovery in
the 26th Licensing Round are valuable additions to areas Nautical understands well
and has the potential to capitalise on quickly.
New licence awards
Of the three blocks awarded to Nautical in the 26th Licensing Round, block 9/1 to
the West of Kraken is potentially the most interesting. The 100% working interest
provides significant upside potential and the presence of seismic amplitudes indicate
the presence of high quality oil sands adjacent to the Kraken oil discovery. The next
steps would be for NPE to undertake further seismic work to evaluate the block.
Bad weather holding up drilling at Catcher
The Transocean GSF Galaxy II jack up rig is currently in the harbour at Dundee. Bad
weather has held up the spudding of Varedero. The rig is on a two firm and two
contingent well contract and, while the rig remains in the harbour, Nautical incurs no
costs. Success at Varedero would lead to Burgman being targeted, while a dry hole
would move the rig to North Catcher. Success at Burgman would lead to Carnaby
Valuation: Waiting for news on Catcher and Kraken
To see further significant share price appreciation, we would look in the near term for
two events. The first would be further drilling success in the Greater Catcher area and
the subsequent resources upgrade. The other would be an update on the resources
at Kraken following the successful appraisal and exploration well. Both events have
the potential to crystalise within the next three months.
You’ll notice that what they’re basically saying tallies with what this blog has been telling investors for months.
Nautical are going to be a MAJOR PLAYER in the UKCS oil plays.