I’ve been following The Niche Group for quite some time now and feel that it’s time we posted out thoughts on this emerging terrific little company. Niche used to be an investment company until John McKeon (of Circle oil fame) became involved. McKeon then set about transforming Niche into a viable oil and gas play. Niche then invested in Oman Resources currently with assets in Block 4077 which is a huge gas play in Turkey. Independent analysis suggests that the onshore Block 4077 contains 80 billion cubic feet of recoverable gas. There are two more areas of operation and the Arar petrol management team estimate that these 3 areas alone could contain at least 330 billion cubic feet with a potential upside to 750 billion cubic feet. Now at present Niche are directing further funds into OMAN RESOURCES via loans. *** Oman’s principal investment is a 50% interest in exploration licence AR/ARR/4077 (Block 4077), in the Tuz Golu basin in south central Turkey, operated by Arar Petrol ve Gaz AUPAS (the “Operator”). The Operator estimates, following independent analysis, that the central part of the 4077 Block contains 80 billion cubic feet (“bcf”) of recoverable gas in one development project. Two more exploration areas are present to the east and west, which the Operator estimates contain reserves of 330bcf with an upside of 750bcf of recoverable gas. It is the intention of the Operator and Oman to develop Block 4077, which is located just 8 miles from existing pipeline infrastructure***
Now it needs to be remembered that Block 4077 has already flowed gas. The potential for the block is mouth-watering.
The market has witnessed an amazing rise here over the last year or so and by all accounts this looks set to continue as Niche have issued more loans to OR which when converted will realise Niche 26.7% of the OMAN 50% holding in what looks very likely to be one of the biggest gas discoveries in Turkey.
“The board is delighted with the progress that Oman and the Operator have made in such a short space of time on Block 4077. The Block presents an exciting opportunity for near-term gas production and additional upside from further exploration. Niche has a strong cash position, following its recent £11 million fundraising, of which £4 million was used to increase our convertible loan to Oman. The Company is evaluating further opportunities with Oman to farm in to additional licenses currently held by Arar, Turkey’s second largest oil and gas licence holder.”
What McKeon has done here is really quite remarkable he has circumvented and fast tracked Niche as an E+P company. His whole ethos is that of a go getter a man who has a proven track record of gathering industry winners around himself. The Board of Niche are well placed to further progress the company and I see significant upside here in the coming weeks and months as the prospect of a full CPR covering Block 4077 gets the green light.
I can see significant upside here and place a conservative 15p/20p target on Niche as they look to further prove up the discovery via a CPR.
Great little punt here for investors to research.