Is it getting ‘serious’ at Sirius Petroleum (LON: AIM) ? I’ve been looking into Sirius for the last four weeks as a close confidant of mine suggested I take a look. When I asked why I was told that there’s a potential farm in on the cards, any funding of the OLM drill offshore Nigeria, which is I believe an appraisal well, that means the oil/gas is already there, could send the sp on a charge. Now my source pointed Sirius out for their own ulterior motives, they hold significant lumps and have tried to bring pressure to bear on the Company to reveal who the potential farm-in partners are. Nothing from the Company who believe that any leak could jeopardise talks. Many hands make light work. What Sirius should do is this: If they are indeed close to a deal re’ farm in then they should announce it asap. If they’re not then they should also announce it asap. Prevarication either way makes for speculation. Hence why I’m being used to try to force the pace. There’s no flies on BMD. I know exactly what sources are up to here. They want an announcement either way! Whisper is it may come in 4-8 weeks.
I also know that there’s a lot of clever PI’s in this one and sentiment is building as the news on funding seems to be going well. Of course some of this has already been trumpeted out months ago on the super information highway (Internet), which does lend credence to what sources are saying. But it doesn’t definitively prove it up. But make no mistake Sirius Petroleum are in talks with potential farm-in partners.
A brief rundown on the company reveals some interesting facts. I’ve gone all out on this one, as I see it this matches the criteria I use for trading/investing. If you want to know what that is then watch this and join this
Sirius are a company that are in a quandary. They have potential oil/gas in shallow waters but do not have the funds to drill. They are close to a good revenue stream. The fact that they’re partnered with well known leading oil field services providers such as Schlumberger does take away some of the risk. But make no mistake there are risks here. The main one I see isn’t finding the oil it’s a sneaky placing should the SP charge up to 3p. So be warned there is risk. As with all oil/gas minnows the board will raise cash if they can. As far as ‘Bobo’ their CEO is concerned, he’d be failing in his duty if he failed to raise cash when their SP was 3p etc. Never trust a broker or a CEO they’ll pick you clean and come back for your dry bones to make soup! That’s not to say that the management are shite. Far from it, Sirius have performed very well for their share-holders and Mr Bobo must be given credit. He’s also very well connected in Nigeria and probably the best person to bring Sirius’s assets to full producing potential.
When you have International oil service providers offering turn-key services, equipment and personnel, then the risk becomes less as they see it as a ‘low-risk development project’.
The Competent Person’s Report (CPR) on the Ororo Field, by Rockflow Resources, gave a Mid Case Net Present Value (NPV10) of the asset of circa $50M, based on a $50 per barrel flat oil price for the life of the field. This would give peak oil production of 6,000 stb/d and peak gas production at 25 MMScfd, which equates to combined peak production at 10,310 barrels of oil equivalent per day (boepd). That is a pointer that Sirius have a real asset and not a clutch of piss poor dried up stripper wells. The Ororo field is real. It’s in a world class oil bearing region. The field lies in shallow waters offshore Ondo State in water depths ranging between 23ft and 27 ft and it is adjacent to Mina, West Isan, Ewan, Eko and Parabe fields – all of which are operated by Chevron. Ororo is located in a world class petroleum system.
As I understand it all of the backhand, oops sorry it’s Nigeria, backend costs will come back to Sirius should the field reach production. The netback to them is about $25 per barrel plus the backend costs. Then they revert to a 40% share of the production. There’s probably millions of barrels of oil and mucho gas. But it’s all down to funding. That in a nutshell is Sirius. I’d urge anyone interested to read their CPR. Try to get a feel for the Company/assets and remember fundamentals here aren’t great. Funding is the key.
Turning to Sources and Info’
My sources are telling me that Sirius could be in negotiation’s with 5/6 potential funding partners. One of them is rumoured to be a UK Major Oil/Gas producer and a footsie one hundred company. The theory is that they believe that there’s potentially significantly more oil/gas in the Ororo field. This makes sense only if and it is an ‘if’ the whispers are true. It’s rumoured that funding partners may think that there’s a potential 20,000 barrels of oil or equivalent, potential per day in Ororo on full field development. Now again be aware that some times sources try to talk the talk. But again My sources are good. That doesn’t mean to say that there is 20,000 boepd in Ororo only that potential partners may think this. Proof is in the drilling etc. Now if you take a position before researching them then remember there’s risk here. However I don’t believe; I know they are 100% in partner discussions. Nothing is certain other than death and Manchester City winning the 2017/18 premier league…
Get researching them and good luck.
NB. I really am milking the ADVFN International finance blogger of the year award….. If ya got it flaunt it…. 🙂