Members Only Post. NOT For General Release
At long last, and about time too, could it all be about to change for the better for Leni Gas & Oil? (LON: LGO) Do the coming months herald a new dawn?
As most on the BMD site & twitter feed already know, we’ve managed to track down the mercurial David Lenigas & in the process get right up his Aussie nose. A gauntlet was thrown down. (More of which later) No I didn’t speak about the Ashes victory or the forth-coming 2013 series where we will kick their back-sides back to War-ran, Weé-rong, Warrane, Warrang (Work it out).
Joking aside, I did push him on points where I felt he had lost focus. One of them being that old chestnut ‘fingers in too many company pies’. Lenigas has been widely criticised in the past for being on far too many boards. Last year he was on 145, but what most people failed to understand was that 95% of these positions were Lonrho (LON: LONR) related subsidiary Companies. The current scores on the Directorship doors are thus; David is now on 20 boards, 10 are Fastjet (LON: FJET) Directorships for which he has the privilege of Chairing for the princely sum £1 a pop per year.
The seven years spent rebuilding Lonrho from one lonely hotel in Mozambique to a much bigger leaner meaner organisation has certainly taken time but this stint is now over. “it’s high time to focus on businesses where I have much more skin in the game” says the man himself.
Now this is a very important point not least because Lenigas is a man who can, when he has the time, get things done. LGO is now one of his main focuses going forward so that, as he says “I can shrink the gap between what it is trading at now and what I think it’s really worth”. There are not a lot of oil companies on AIM that produce as much oil as LGO. Focusing on Trinidad should bare significant fruit this year on the production front. The Company is on a production charge. They’re determined to increase the bopd. Ergo the sp.
The last stated oil production in Trinidad put LGO at 200 bopd. I expect this
to grow significantly in 2013. LGO are bringing on 30 new wells at Goudron in the next three months while planned ‘further’ re-works, open significant untapped reservoirs with new well drills for the rest of 2013. Trinidad is getting busy. David says “recoverable reserves are something that LGO has been lacking since I started the Company some 6 years ago, but Goudron significantly changes this. With an independently signed off 7.2 million barrels of P2 reserves and P3 reserves of 30.5 million barrels from a total Oil In Place number of 350 million barrels, we see there is a lot of new production to chase.”
LGO’s second full time work-over rig arrived last week, so they now have the tools available to execute the plan. They will also shortly complete on the farm-in at Moruga North in Trinidad, providing a further boost to oil production. Two wells sit waiting and ready for production once Government permissions are granted. The oil from these is just a matter of “Opening the tap and watching the Oil flow freely to surface”
I bowled the great man himself a bouncer; “It’s all very well and good releasing news about plans with production increases but what investors want are results. They want to see it happening in real time” As quick as a flash David Lenigas threw down the gauntlet. “Once we get a few more wells on line I’ll personally escort you around all of our Trinidadian drills and licences. Full access. You’ll then see why we’re genuinely
excited about what is happening in Trinidad. The oil is shallow, new wells are cheap by global standards to drill. In some areas of our oilfields, oil production starts from as shallow as a few hundred feet from surface. You come and see it for real” I can’t argue with this.
On LGO’s Spanish producing assets, the Company is working on a potential sale so that they can focus all of the attention on Trinidad. This process is on-going, but the fact that LGO now has independent reserves to book for the first time means that commercial debt facilities are potentially also available to the Company.
David concludes, “We expect a great deal from Trinidad this year and hopefully a market re-rating. The management of the Company are all working in the same direction on achieving this.”
Great things could be happening here at LGO now that Lenigas can focus on the company.
As ever watchlist and research they could be a multi-bagger. (This morning I received an email formally inviting me to Trinidad.)