The Smallcap Oil & Gas round up.

It’s been another bad week in the Smallcaps Oil & Gas sector. Monday began with hope as the Greeks voted pro Euro but the week just went downhill as rumblings of Spanish, Portuguese & Italian bail-outs began to gather pace. The knife in the back came earlier this morning as sixteen global banks had their credit ratings slashed by Moody’s as part of a worldwide review of bank credit ratings.  Can it get any worse? You bet your last dollar Dan’s sources are indicating cataclysmic financial Armageddon. The only bright spot is the European Championship quarter-final this Sunday when England will prove once again how clever Mrs T was by refusing to join the European single currency. A good thrashing for our Italian friends (El Divers) at the hands or feet should do the trick to restore some much-needed “told you it wouldn’t work” swagger! 2 nil for England! Viva Mrs T

3Legs Resources: 3LEG

Announced a corporate and operational update. The key points being Further testing of both Lebien LE-2H and Warblino LE-1H wells confirmed; lifting operations are due to commence at Warblino LE-1H during July 2012, to be followed immediately afterwards by operations at Lebien LE-2H…A contract has been signed with MND Drilling & Services for the drilling of a vertical well on the Lebork concession, with drilling expected to commence by October 2012…Phase I of PolandSPAN geological and geophysical research project is continuing… Seismic data acquired on the Company’s southern Poland concessions have been processed and are now in the interpretation phase…Personnel changes…Consultant geologist Mike Lewis continues in a part-time role…The Company has appointed Christie Schultz, with a background in unconventional well engineering and completions, as Engineering Manager.

Aminex: AEX

Released an update this week on plans for testing the gas discovery made in the Ntorya-1 well in the Ruvuma Basin onshore in southern Tanzania. The gas discovery (27th February 2012) has been made in a 25 metre gross Cretaceous sandstone interval between 2,663 metres and 2,688 metres.  This interval will be tested to establish the level of production that can be obtained. The testing equipment has been set up on site and the upper 3.5 metres of net pay sand has been perforated. After an initial clean-up flow, during which gas was flowed to surface in order to clean the well, the well has been shut-in to install pressure gauges. The main flow test is expected to commence tomorrow and to take approximately four days to complete. Results will be announced following completion of the flow test. Participants in the Ruvuma PSA are: Ndovu Resources Ltd (Aminex) 75% (operator) Solo Oil Plc 25%.

Cadogan Petroleum: CAD

Signed a Share Purchase Agreement with Nadra Ukrayny and Eni for the exploration and development of Unconventional Gas in Ukraine this week. Cadogan also announced Ian Baron’s departure Baron isn’t seeking re-election as a director, accordingly he has with immediate effect resigned as a director of the Company. Good Riddance!

Egdon Resources: EDR

Increased its stake in two UK licences by acquiring Dorset Exploration Ltd for £100,000. Dorset Exploration is a private company which holds 10% interests in Production Licence PL090 and Petroleum Exploration and Production Licence PEDL237, both located in the county of Dorset. Egdon is operator for both these Licences with a 45% interest in each. The transaction is subject to approval of the change of control by DECC. Dorset Exploration is owned and controlled by John Rix and his family members. Mr Rix was a non-executive Director of Egdon until his retirement from the Board in late 2011.

Forum Energy: FEP

Released an RNS this week that can only add ammunition to the Plain English campaign. After several re-reads I managed to decipher it. God knows how. Basically what the company should have said was thus; Forum Energy has made a fresh settlement with Basic Energy to finally wind up the six-year long dispute over cost recovery relating to an offshore assets sale in 2006. Under the new settlement, UK-registered, Phillippine-focused Forum Energy will pay a total of $12 million to Basic Energy to settle all outstanding claims over the sale and purchase deal for assets in the NW Palawan area. The total includes $10 million awarded by the Arbitral Tribunal and $2 million in an additional compensation settlement over production-based payments. Forum Energy has already paid $7.6 million of the first $10 million and will pay $2.4 million once the agreement has been executed. A further $1 million will be paid within six months and the final $1 million within 18 months to settle the matter of production-based payments. What the company actually said can be viewed by clicking the link Be warned it’s not pretty.

Gold Oil: GOO

An oil and natural gas exploration and exploitation company focused on South America announced the following: Corporate presentation has been uploaded onto its website a presentation covering the Company’s assets and activities. This can be downloaded or viewed at:   

Lansdowne Oil & Gas: LOGP

Commented on this weeks announcement of the technical update by Providence Resources: PVR on the successful Barryroe appraisal well 48/24-10z in the North Celtic Sea. Lansdowne has a 20% interest in the Barryroe project. “Permeability analysis of side wall cores carried out by Corelab over the basal oil bearing interval in the recent 48/24-10z Barryroe appraisal well has now been completed. These analyses have confirmed average reservoir permeability in the basal oil bearing reservoir sands of c. 600 mD, confirming the high productivity nature of this reservoir interval as observed during well testing operations. In addition, analysis of cores from overlying secondary reservoir sands, which were logged as hydrocarbon bearing in the 48/24-10z well, has demonstrated permeabilities of up to c. 100 mD. These secondary sands are thinly developed at the 10z well location but they thicken significantly to the west, where previous logging by a previous operator shows porosities of up to c. 30% (ref. Esso-operated 48/23-1 Barryroe well.) Third party micro-paleontological studies have now revealed the presence of a significant marine flooding surface within the lower part of the Wealden section, confirming that the environment of deposition had more of a marine influence than previously considered. Log motif analysis also shows that the deposition of the basal oil bearing sand may have been in a distributary channel setting as part of a broad delta plain which would support the evidence of marine influence.

Max Petroleum: MXP

Big problems at Max as the company announced it has experienced further delays drilling its NUR-1 well and as a result does not expect to reach total depth of 7,250 metres before August 2012. The delays largely result from the drill string becoming stuck in the top of salt in April 2012 at a depth of 5,718 metres. After side-tracking the well and setting casing at 5,681 metres, the Company drilled ahead.  However, progress was slow as the Company drilled alongside the stuck drilling tools. After clearing the old wellbore, the well reached the Kungarian Salt on 19 June 2012. Due to encountering anomalously high pressures, the drill pipe has become stuck again at 5,722 metres, despite using the higher density mud specified for penetrating this section.  It gets worse. In order to allow completion of its exploration drilling programme ahead of the expiry of the exploration phase of its Blocks A&E Licence in March 2013, the Company is working with its senior lender, Macquarie Bank Limited, and has initiated discussions with a number of providers of debt and equity financing, regarding the provision of additional capital. These discussions to date have been impacted by market conditions, as well as recent regulatory changes in Kazakhstan that currently prevent the Company from completing a conventional equity offering. The current outstanding balance on the Senior Credit Facility is US$54.2 million out of a total borrowing capacity of US$58 million through to 30 June 2012. The Company and Macquarie Bank Limited will review the borrowing threshold as part of their semi-annual budget review under the Credit Facility, as well as monthly amortization payments beginning in July 2012. **In the absence of additional funding the Company may have to significantly curtail its intended exploration activities.** You have been warned stay well away.

New World Oil & Gas: NEW

Released “Another” positive update this time it was the turn of New World’s Blue Creek interest. New have received a positive update to the Competent Person’s Report from RPS Energy for the Blue Creek Project, located in the productive Petén Basin in Northwest Belize. Key findings of the CPR can be viewed by clicking the link;

Range Resources: RRL

Said it was “pleased” to announce that the Shabeel North well currently being drilled in Puntland, Somalia by the Company’s Joint Venture Operator, Horn Petroleum Corp, is at a current depth of 984m targeting a total depth of 2,400m. Drilling operations have progressed smoothly since spudding and remain on track to reach target depth on time and on budget. Message for Peter Landau…This didn’t “Please” investors the stock dropped 5%. Yours Faithfully BMD

Rialto Energy: RIA

An Australian oil and gas group with operations in Cote d’Ivoire, announced this week that they have reached target depth with its offshore Gazelle-P3 ST2 well, with oil and gas zones encountered as expected. The latest well was a side-track designed to optimise the recently drilled Gazelle-P3 ST well in order to underpin the oil and gas development of the Gazelle field. The ST2 will further appraise the UC-1 and UC-3 reservoirs, with Rialto planning to test and ultimately use the ST2 as a future producer in UC-1.

Roxi Petroleum: RXP

Spun out an operational update with respect to its Galaz asset. Well NK7 was spudded on 25 April 2012 and reached a total depth of 1360 m on 15 May 2012. On 23 May 2012 it was announced that oil-bearing intervals had been encountered at depths of 1288 and at 1307 m and that partners LGI would conduct further testing. The well was perforated at levels between 1309 and 1314.5 m and that oil flowed following swabbing, at rates which have yet to stabilise, but most recently have been equivalent to some 180 bopd. A further period of testing over the next few days is required using different choke size to calculate the optimal flow. Following this, towards the end of the month, it is expected that a second interval will be perforated and tested and that in July a 90 day test will commence on the well. Hooray! NK-13, which was spudded on 28 May 2012 and reached its total depth of 1363 m on 13 June 2013 and since then wireline logging has been conducted. Logging interpretation indicated that there are no intervals of interest for further testing and therefore this well has been plugged and abandoned. The rig used for NK-13 will be moved to its next location NK-14, which is expected to be spudded within 2 weeks. Boo!

Salamander Energy: SMDR

Has begun drilling the Bualuang Far East-1 exploration well in Block B8/38, Gulf of Thailand. The Bualuang Far East prospect lies approximately 7km to the northeast and up-dip of the Bualuang oil field. The FE-1 well will be drilled to a total vertical depth of 1,452 metres subsea. The primary target is the T5 Miocene sandstones with secondary targets comprising an underlying Permian-age Ratburi carbonate and a T4 Miocene sandstone stratigraphic trap. The main T5 objective has potential mean recoverable resources of 20 million barrels of oil.

Serica Energy: SQZ

Released a grandly titled “Namibian seismic update” this week. Serica was formally awarded the rights to a 17,400 square kilometre licence in the Central Luderitz Basin on 19 December 2011. In March the Company announced that it had reached agreement with BP who would earn a 30% interest in the licence by meeting the full cost of a 4,150 square kilometre 3D seismic acquisition programme. Serica retains a 55% interest in the licence and is Operator of the licence. Operations have made rapid progress. The 3D acquisition commenced on 10 May with the 10 streamer vessel Polarcus Nadia. On 17 June the Company passed the 1,500 square kilometre mark and, as a result, has now met the licence obligations for seismic acquisition in full.Data acquisition continues with the survey expected to last through the summer. Data acquired to-date has been of good quality and is expected to fully delineate a number of significant prospects which have already been identified on the licence. In addition to paying the full cost of the survey BP has an option to acquire a further 37.5% of the licence by drilling and testing a well.

Xcite Energy: XEL

Announced today that it has signed a US$155 million secured reserves based loan facility agreement for the Bentley field with a leading group of lending institutions. (Which is some feat bearing in mind the state of the lending markets.) The Facility, with a term of five years, will be used to provide a substantial part of the funding required for the Phase 1B development of the Bentley heavy oil field in the UK North Sea. The Facility has been arranged with Royal Bank of Scotland plc, Societe Generale Corporate & Investment Bank, GE unit GE Energy Financial Services, Nedbank Limited and Britannic Strategies Limited (a subsidiary of BP plc). Royal Bank of Scotland is acting as the Facility agent and security trustee, with Societe Generale acting as technical and modelling bank. The draw down under the Facility is subject to conditions precedent, including the achievement of certain principal objectives in the Bentley Phase 1A work programme announced on 19 April 2012.

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