Not much happening in the smallcaps underverse this week. Gkp upset institutional holders, Afren had to admit a dodgy deal while Matra’s lips remained firmly shut. The Budget gave a boost for investment in the North Sea, including a £3bn new field allowance for large and deep fields to open up West of Shetland.
Good news for Providence/Lansdowne, Empyrean & tiny Nostra Terra. Bad news for everyone else as the markets continued to gyrate
Had to release a rather embarrassing bit of news this week. Mr John St. John “inadvertently” dealt in Afren shares during the Company’s close period. Silly Mr St. John sold 8,275 ordinary shares and purchased 8,176 ordinary shares in Afren for transfer into a savings account in connection with CGT planning (the difference in the number of shares sold and purchased was due to dealing costs and the bid-offer spread). This dealing was undertaken without having obtained prior clearance as required under the Model Code, because Mr St. John intended to trade other shares and inadvertently gave the wrong instructions. The Company is satisfied that Mr St. John undertook this transaction in connection with his legitimate CGT planning purposes and considers that it was not for an abusive purpose. What a load of bollocks Mr St John got caught with his trousers down then quickly moved to rectify the damage.
Informed that PetroHungaria, operator of the Penészlek gas production concession in eastern Hungary, had begun work to sidetrack the PEN-105 well.
Aurelian Oil & Gas;
Released an operational update yesterday. Copies of the update can be viewed by clicking this link; http://www.aurelianoil.com/media/62452/operational-update-220312.pdf
Hit the buffers this week as they reported that, after analysis of the results for the Pokroskvoe 1 and Pokroskvoe 2a wells, Eni do not intend to exercise their option to acquire a further 30% of the share capital of Pokroskvoe Petroleum BV. The option formed part of the transaction entered into with Eni in July 2011. As advised in the announcement dated 16 February 2012 the logs acquired during the drilling programme indicated the presence of hydrocarbons in the lower part of the well. A decision had been taken to deepen the Pok 2a well by approximately 350 metres. Whilst pulling out of the hole the running string became stuck and subsequent fishing operations with the limited equipment available in country did not allow the running tool to be recovered. Cadogan management will continue to evaluate the most effective option, amongst those available, to re-enter the well.
Released an operational update this week. Much too long to be on here. Copies of the OP can be viewed by clicking the link; http://www.circleoil.net/.aspx
Said today that the recent Budget changes designed to increase investment and production in the North Sea are anticipated to directly impact DEO, in particular the new small field allowance against the current Supplementary Charge rate of 32%. Deo’s Perth Field Phase 1 recoverable resources will now be below the new and increased minimum threshold set by HMT of approximately 45 million boe, and therefore anticipates that it will benefit from the full amount of its 52.03% share of the increased field allowance of £150 million. This will reduce Doe’s tax payable by approximately £25 million over the life of the field, improving project economics.
Good news came this morning. Empyrean has mandated Macquarie to provide a 3 year term debt facility for up to US$50 million to support its participation in the development of the Sugarloaf Project, an Eagle Ford Shale Condensate and Gas development project in onshore Texas, USA. Under the indicative term sheet, US$10 million would be initially available following acceptance of a committed offer and conditions precedent being met. A further US$5 million would subsequently become available, if necessary, subject to increases in proven reserves that are expected to be gained via the drilling and successful completion of further development wells. The balance of funds would become available, if necessary, subject to further reserve hurdles being agreed upon and met.
Europa Oil & Gas;
The exploration and development company with assets in Europe, has withdrawn its 17.5% working interest from the Block EIII-3 Cuejdiu Concession Agreement in Romania. The move is part of an ongoing review of the company’s assets by the new management team. Europa’s partners Aurelian Petroleum SRL (45%) and SNGN Romgaz SA (37.5%) have also pulled out of the concession.
Falkland Oil & Gas;
Has signed a farm-out option agreement with an unnamed company that should be executed ahead of its first planned well in the region, which is now scheduled for June. FOGL said that if the option was exercised it would give it greater financial flexibility in respect of its current and forward programmes. The company in question is understood to have completed all technical and commercial due diligence but for corporate reasons unconnected to the deal, has yet to sign the contract. It is expected to confirm the agreement within the next two months and prior to the commencement of FOGL’s drilling programme.
Leni Gas & Oil;
Said that it has received a number of strong expressions of interest from international oil companies to either participate in the development of the Company’s Spanish oil assets, or to purchase the assets outright. Leni announced in October 2011 of its intention to seek a partner to assist in the further development of the Ayoluengo oilfield, including a possible Enhanced Oil Recovery project. The time for submissions closed on 21 March 2012. The Company has now formally closed its data room. Leni has decided that divestment could potentially represent the best opportunity for the Company in light of the new development opportunities previously announced in Trinidad. A number of conditional cash bids to buy the assets have been received at a very significant premium to the original €2.6 million paid for these assets.
The AIM US focused oil and gas exploration and production TIDDLER, announced a positive update across its portfolio of interests focused on proven and producing US onshore hydrocarbon formations, including the prolific Bakken / Three Forks Sanish Formations in North Dakota and the Hunton / Woodford and Mississippi Formations in Oklahoma.
Two bits of good news this week came from Nostra. Two days ago the company announced that it has begun drilling work on the first horizontal well on its Warrior prospect in Oklahoma. Nostra has a 10% working interest in the Warrior prospect, which is operated by Crown Energy Company Inc. The well is the first of six potential horizontal well locations on the prospect and drilling is expected to be completed in approximately 30-days, followed by completion and initial production testing. On Monday Nostra also released news on the Bale Creek – Pilot Well telling investors that the drilling and logging had ben completed 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 and all subsequent wells. Hydrocarbons have been confirmed in multiple pay zones, as anticipated, and the most attractive of the several zones has been identified. The first horizontal well will be drilled in this promising formation. (Hooray)
Following 45 days of drilling operations, President announced that the DP-1001 Well, at the Dos Puntitas field on the Puesto Guardian concession, has now penetrated the top of the target reservoir at a preliminary true vertical depth of 2,739m, some 12-15m higher than projected. The well has been successfully cased to the top of the reservoir. A decision has been taken during drilling to obtain core samples, the information from which is valuable to President’s greater understanding of the field, given the extensive production and fraccing work during 2012. The coring has extended the anticipated drilling timetable. The first 6m of core sample have now been taken from the top of the reservoir. Whilst cutting this first core, good oil shows in the mud pits and C1-C5 gas readings were observed in the mud returns. The next core sample is now being taken. Once the second core sample has been taken, the Company will continue drilling in the reservoir until the oil water contact is identified and then the well will be logged, at which time the Company will make a further announcement.
The Irish exploration and production company, said that Repsol has assumed the operatorship of Licensing Option 11/11. This licensing authorisation is located approximately 250km off the south-west coast of Ireland in around 1,000 metres of water. The option was awarded to Providence (40%), Repsol (40%) and Sosina (20%) as part of the 2011 Irish Atlantic Margin Licensing Round in October 2011. Providence also provided a final testing update from its Barryroe well, offshore southern Ireland. Providence (80%) operates SEL 1/11 on behalf of its partner Lansdowne Oil & Gas plc (20%). Following the successful testing of the lower basal 24′ net oil bearing interval, which flowed c. 3,514 BOPD & 2.93 MMSCFGD (c. 4,000 BOEPD, see RNS announcement of March 15th), an additional 17′ thick net gas bearing section was perforated to test the potential of the upper part of the basal Wealden sandstone section. The surface test spread equipment was optimized for the lower oil zone test and was therefore equipment constrained on this gas zone test, which achieved highly productive flow rates of c. 7 MMSCFGD & 1,350 BOPD (c. 2,516 BOEPD) through a restricted 36/64″ choke, with a flowing well head pressure of c. 1,700 psig. The productivity of the gas bearing interval far exceeded expectations and thereby constrained the ability to fully open the well up to its maximum potential. Preliminary modeling of the pressure data indicates that a co-mingled flow rate of c. 17 MMSCFGD & 3,350 BOPD (c. 6,183 BOEPD) at a flowing well head pressure of c. 500 psig is achievable. Well suspension operations are now complete and the rig will be demobilized to the UK imminently.
Released a lenghty epistle this week. The corporate update/Puntland onshore. Copies of which can be viewed by clicking this link. http://www.rangeresources.com.au/
The Central Asian oil and gas company with a focus on Kazakhstan, updated this week. Bakmura LLP, a subsidiary of the Korean National Oil Corporation, has agreed to pay an initial cash consideration of $5 million and to invest a further $25 million in the BNG Contract Area work programme in return for a 35 per cent interest in the BNG Contract Area license.
The Jatayu-1 exploration well commenced drilling at 21:30 local time on 21 March 2012. The well will be drilled to a total measured depth of 8714 ft to target the limestones of the Miocene Parigi Formation. Operations are scheduled to continue for 30 days. The Jatayu prospect has been independently assessed by Fugro Robertson Limited to have gross P90-P50-P10 prospective gas resources of 140-290-530 Bscf (P50 58 Bscf net to Sound Oil with an NPV10 of US$30.3 million).
Have agreed a deal that will see Valiant buy stakes in substantially all of the Norwegian company Rocksource ASA licenses on the Norwegian Continental Shelf. The post-tax effect consideration of £11.5 million will boost Valiant’s existing acreage position in Norway, including interests in an additional 12 NCS licences in the Norwegian North Sea, Mid Norway and the Barents Sea. The acquisition comes as drilling gets under way on Valiant’s UK North Sea exploration prospect, Cladhan South, which is the company’s second exploration well in rapid succession.