The Smallcap Oil & Gas Round up

It’s been a busy week in the smallcaps underverse as takeover whispers circulated on aplenty through-out the market. Some came to fruition others continue to circulate.

Afren Energy;

Strange one this. Afren released an Information update In connection with the proposed offering of Senior Secured Notes, Afren provided the following information update comprising the unaudited financial statements of the Company for the ten months ended 31 October 2011, and independent reserve and resource estimates by Netherland, Sewell & Associates and RPS Energy at 31 December 2011.  The independent reserve and resource estimates published have been issued in advance of the publication of Afren’s 2011 Full-year Results, when the Company anticipates that ongoing assessment of its recently acquired assets onshore Nigeria and the Kurdistan region of Iraq will be completed and further updated independent estimates will be available. (Some thing going on in the back-ground here!)

Ascent Resources;

Reported a 22% increase in P50 gas-in-place (GIP) volumes at its Petišovci project. The increase takes the volumes to 504 billion cubic feet (Bcf) from 412 Bcf previously. The upgrade forms part of an audit prepared by RPS Energy that included the analysis of data from the Pg-10, Pg-11 and Pg-11A wells in Slovenia, which were drilled and successfully tested during 2011. The Petišovci project is a 75/25 joint venture between Ascent Slovenia and Geoenergo, which is redeveloping the Middle Miocene tight gas reservoirs of the Petišovci area of eastern Slovenia. The results of Pg-10 and Pg-11A wells provided proof-of-concept for the project and were fracture stimulated and tested at rates of over 8 million standard cubic feet per day (MMscfd) and 2 MMscfd respectively. These two wells will be re-completed as the first production wells of the redevelopment project.

Aurelian Oil & Gas;

The European focused E&P company, has been granted an extension to its Block 208 licence by the Ministry of Environment in Poland. Block 208 lies on the Poznan East licence and has now been extended to February 12, 2015, in line with the adjacent Block 207, which holds the Siekierki gas field and the recent Krzesinki-1 gas discovery. Under the terms of the geological work programme for the period, Aurelian is committed to carrying out 150km of 2D seismic. Aurelian said that Block 208 is prospective for Rotliegendes and Zechstein opportunities and is also adjacent to the PGNiG-operated “Fences” concessions. In 2011 the company acquired 200km of 2D seismic on Block 208, which is currently being interpreted.

Cove Energy;

It’s good buy to Cove & hello to a 195p per share cash deal from Shell that would value the AIM listed company at £992.4 million. The announcement comes six weeks after Cove said that a formal sale of the whole company could be on the cards after a data room was opened on its prized asset, an 8.5% stake in Mozambique Offshore Area 1 block, a gas LNG project which is moving towards development. Shell’s opening offer  represents a 28.5% premium on the value of the shares held on Tuesday of this week. Cove said it would be minded to recommend a bid of 195p to shareholders. Any deal is subject to the receipt of written consent of the Mozambique government. * A late surge came this afternoon as Cove announced another offer had been tabled. A Proposed Offer of 220 pence in cash for each Cove share came from PTTEP. Thailand’s national petroleum exploration and production company.* The Proposed Offer values the entire issued and to be issued share capital of Cove at approximately £1,119.6 million. A bidding war could now ensue.

Desire Petroleum;

Announced the final processed 3D seismic volume covering licences PL003, PL004 and the majority of PL005 has now been received.  These data will be used for a re-assessment of the prospect inventory and the results of this work are expected later in the year. Desire is also updating the Competent Persons Report that was prepared in October 2011, incorporating the 14/15-4a well results.  The results from this re-evaluation of the discovery area will be published in the near future.

Egdon Resources;

Has farmed-out a 12.5% interest in its PEDL201 licence in Nottinghamshire and Leicestershire to Terrain Energy Ltd and Corfe Energy Ltd. Under the terms of the deal, Terrain and Corfe will each pay 12.5% of the cost of the planned Burton on the Wolds-1 exploration well to earn a 6.25% interest. The move takes Egdon’s exposure to the well from 50% to 25% up to an agreed well cost. Terrain and Corfe have also agreed the same terms with the other partner on the licence, Celtique Energie Petroleum Ltd. As a result, the licence interests in PEDL201 will be Egdon Resources with 37.5% (operator), Celtique with 37.5% and Terrain and Corfe each with 12.5%.

Gold Oil;

Went on a charge this week as the company released a Colombia Update. The operator of the Azar Block located in the Putumayo Basin in Colombia has informed Gold Oil that the drilling of the La Vega Este -1 well on the block is due to commence in April, once the civil works have been finalised and the rig becomes available from its current drilling commitment.  The La Vega Este -1 well will target primarily the Villetta formation with the Caballos as a secondary objective.  Gold Oil is currently producing from the Villetta formation in its Nancy Burdine field. Gold Oil has a 20% interest in the block (subject to ANH approval) but under a prior commercial agreement will only contribute 10% to the costs of the well.  The well is expected to take 35 days excluding testing and completion.

Independent Resources;

Informed the market that both the Ministry of Environment and Ministry of Cultural Assets and Activities have executed by decree the environmental compatibility authorisation for the next phase of the Company’s Rivara underground gas storage project in Northern Italy. (About time too). The decree formalizes the recent decision by the Ministry of Environment’s “VIA Commission” to sanction the project’s appraisal phase, which is designed to definitively confirm the project’s technical characteristics and therefore both its safety and feasibility.

Ithaca Energy;

Noted the recent movement in the Company’s share price on the Toronto Stock Exchange and confirms that it has received a confidential, non-binding proposal to acquire all of the outstanding shares of the Company. The proposal is conditional upon, among other things, due diligence, negotiation of all definitive documentation, receipt of all necessary approvals by the interested party and approval of the Board of the Company. The Board of the Company, which is being advised by CIBC World Markets Inc., wishes to stress that discussions are at a preliminary stage and there can be no certainty that the approach will lead to an offer being made for the Company

Lansdowne Oil & Gas;

Announces an update & the Opening of Data Room for the interpretation of the recently processed 3D seismic surveys acquired in the summer of 2011, over its prospects in the North Celtic Sea, offshore Ireland.

Madagascar Oil;

Successfully raised US$26.5 million in a placing of shares priced at 28 pence each. The cash has been earmarked to strengthen the company’s balance sheet and to help fund the development of its assets, including the Tsimiroro oil field.

Magnolia Petroleum;

Said this week that they will be participating with oil and gas company Chesapeake Exploration in four horizontal wells targeting the Mississippi Formation in Oklahoma. Magnolia has received confirmation from the operator that drilling has now begun on the Zenyatta 2-6 well targeting the Hunton Formation, also in Oklahoma. Earlier this month, Magnolia acquired 284 net acres in the Mississippi Formation with an average of 3.4% interest. On one of the 33 sections, Chesapeake, as operator, has proposed the drilling of a horizontal well in which Magnolia holds a 2.3% working interest. The completed well costs are estimated at US$3,719,505 and Magnolia estimates that its cost for participating will be approximately US$85,548. Meanwhile, Chesapeake has also notified Magnolia that it is planning to drill three horizontal increased density wells to test the Mississippi Formation within the same spacing unit as the successful Sundance well, in Woods County, Oklahoma.

Nostra Terra;

Said drilling has begun on its initial vertical pilot well in the Bale Creek prospect, located in Oklahoma.  Nostra Terra has a 30% working interest in the Bale Creek prospect. Following the completion of the seismic interpretation, final selection of the drill sites was made, and site work began.  The vertical pilot hole will be drilled and logged to determine the most promising of all the potential productive zones.  Drilling of the well is expected to be completed in approximately 30-days, depending on logging and possible formation tests. Nostra Terra will make further announcements as the operations progress.

Range Resources;

Continued to yoyo this week as the company released another long epistle. Puntland; The Shabeel-1 exploration well spudded on January 17, 2012 and is currently at a depth of 1,230 meters. Casing has been set in the well to a depth of 1,139m and drilling of the 12 ¼ inch section continues as planned. Drilling of the Shabeel-1 well is expected to be completed before the end of March and testing equipment is currently being mobilized to the site. Assuming successful drilling results,  it is anticipated that testing results will be available early in the second quarter of 2012. Upon completion of drilling the Shabeel-1 well, the rig will move to the Shabeel North-1 well, where 30 inch conductor pipe is in place and a 50 meter pilot hole has already been drilled. Georgia; Poor weather experienced since site preparations first began has impeded adequate ground and road preparations to permit the safe movement of heavy equipment to the site. It was therefore decided to delay mobilisation until conditions at the site are satisfactory. Whilst mobilisation has been delayed, site preparation has continued, albeit, constrained in part by the weather conditions. The Company anticipates that spudding will now take place in early / mid April 2012. USA/Texas; Two additional appraisal wells on North Chapman Ranch, the Smith #2 and the Albrecht wells. Both wells have been successful drilled and logged with the Smith #2 having been completed and fracture stimulated with testing imminent. The Albrecht well has been logged with early indications suggesting a 100+ ft gross pay zone, with casing now being prepared to be run prior to fracture stimulation and completion. Together, these two wells are expected to move significant reserves into the proved category, paving the way for future development.

Salamander Energy;

Announces the successful appraisal of the Dong Mun discovery with the Dong Mun-3 side-track (“DM-3ST”) in Block L27/43, onshore Northeast Thailand. The Group has a 27.2% non-operated interest in Block L27/43.

Tower Resources;

Painful memories were re-visited today by myself as Tower failed to find oil in the Mvule-1 exploration well in Uganda Licence EA5. (I’m glad I stayed away from the company for the last 2 & a half years). No significant hydrocarbon shows were encountered over the zone of interest and electric wire-line logging and fluid sampling confirmed that the well was water bearing. The well is now being plugged and abandoned. Enough said! Lets move quickly on!

Victoria Oil & Gas;

Announced the successful installation and commissioning of production facilities and a gas pipeline network in Douala. Rodeo Development Limited, the Company’s wholly owned Cameroon subsidiary, made its first delivery of gas to customers on the Magzi Industrial Estate on the 17 December 2011. VOG’s Executive Chairman Kevin Foo commented, “This is a very significant milestone for the Company. We have now moved from an exploration and development company into a producer. The development of Logbaba is also important news for the city of Douala. The commissioning of two wells, production facilities and the first stage of the pipeline was successful and without incident. This achievement is the culmination of three years of tireless effort by the team and strong support from shareholders and the Government of the Republic of Cameroon. I am very pleased that we have met our promised target of first production in Q4 2011.”

Xcite Energy;

Released the results of an updated independent reserves and resources audit for its Bentley oil field in the North Sea. The company said that 1P, 2P and 3P oil reserves for the core area were approximately 96 millions stock tank barrels (MMstb), 116 MMstb and 140 MMstb, respectively. The report was audited by consultancy firm TRACS. Xcite holds a 100% working interest in Block 9/3b, which contains the Bentley field, and a 100% working interest in Blocks 9/3c and 9/3d, which lie adjacent to Bentley. The company said the NPV10 (after tax) -the current monetary value of the core area – is $1.076 billion, $1.464 billion and $1.921 billion on a 1P, 2P and 3P basis, respectively.

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