Welcome to Exploration News. If you’re new, please subscribe to this newsletter below. If you’re a subscriber (past or present) to Oilman Jim’s Letter/Sunday Blog, please also subscribe to this newsletter, which will continue the weekly oil news coverage.
On with today’s commentary, Molecular Energies (MEN) announced a corporate update. Regarding its upcoming Paraguay exploration well, long distance mobilisation of the rig to site continues as planned with presently no material issues or alteration to timescales. Spudding is targeted to occur at or around the end of this month or beginning of September. The well, in which MEN holds a 50% interest, will take 40 days from the date of spud to reach total depth, targeting the Delray complex of prospects which are estimated by the company to contain in aggregate over 260 million barrels of oil. The company has farmed-out a 50% interest in the prospect to CPC Corporation, the state owned energy company of Taiwan, which is paying 60% of the costs of the $10-15 million exploration well, plus a cash payment of $4 million. Capitalised at around £12 million, MEN also holds a 20.5% interest in Atome Energy (ATOM) worth around £8 million and will be spinning out its Green House Capital Group subsidiary. In addition, there’s an oil and gas production business in Argentina, which reported turnover in excess of US$8.6 million and EBITDA of US$2 million just for the first three months of 2023.
Predator Oil & Gas (PRD) announced publication of its prospectus to enable the admission to trading of 90,909,090 placing shares issued at 11p per share to raise £10 million, plus the issue of 45,189,580 replacement shares to Paul Griffiths and Lonny Baumgardner, who previously lent out their shares to enable earlier placings. Net proceeds will be used for outstanding MOU-4 well costs, rigless well testing of MOU-1, MOU-3 and MOU-4 and a compressed natural gas proof of concept study. The total number of shares in issue now is 562,502,088, capitalising PRD at around £70 million. I covered PRD several times previously in the private blog and it performed well on each occasion (MOU-1 from a 4p placing to a high of 22.5p prior to the spud, MOU-2 from a 5.5p placing to a high of 12.3p prior to the spud, MOU-3 from a 5.5p placing to a high of 9.89p prior to the spud and MOU-4 from a 10.5p placing to a high of 21.3p), but now, for the first time, Predator and its shareholders are up against the cold, hard reality: is the project actually commercial?
Longboat Energy (LBE) announced the Velocette well spud. The prospect is estimated to contain gross unrisked mean resources of 177 million barrels of oil equivalent (35 million barrels of oil equivalent net to LBE’s 51% owned subsidiary, Longboat JAPEX Norge AS) and has a geological chance of success of 30%. A number of follow on opportunities exist within the license with aggregate gross unrisked mean resources of around 200 million barrels of oil equivalent, which would be significantly de-risked by success in the Velocette well. Longboat is capitalised at around £15 million and the value of its 51% interest in the Norwegian subsidiary could be said to be worth just over US$16 million based upon Japan Petroleum Exploration Co., Ltd.’s US$16 million investment into the subsidiary for its 49% stake. A further tranche of up to US$30 million will be transferred to the subsidiary by JAPEX upon a successful discovery on the Velocette well, based on a sliding scale applied to the gross resources approved for development by the Norwegian Ministry of Petroleum and Energy. JAPEX is also providing the subsidiary with a US$100 million Acquisition Financing Facility to finance acquisitions and associated development costs. It all makes for a nicely geared play.
Eco (Atlantic) Oil & Gas (ECO) announced the acquisition from Tullow of an additional 60% interest in the Orinduik block, Guyana. ECO is paying US$700,000 cash upon transfer plus contingent consideration of US$4 million in the event of a commercial discovery, US$10 million upon the issuance of a production licence from the Government of Guyana and royalty payments on future production of 1.75% on the 60% interest entitlement revenue. Eco, which now has a 75% interest in the block and becomes operator says it intends to drive the exploration process and focus on its strategy to attract new partners to join the licence and proactively engage in drilling. The other current project is Block 3B/4B, offshore South Africa in which ECO now has a 20% stake. A new CPR released by the operator earlier this year confirmed that the block contains estimated P50 prospective resources of approximately four billion barrels of oil equivalent and an application has been made to drill one well and one contingent well in the north of the block. Like Orinduik, funding for the drilling again relies on a farm-out. Current market capitalisation is around £60 million.
For those not familiar with me, I focus exclusively on small cap oil and gas exploration companies and know this sector inside out. I have been involved in the stock markets (UK and US) since the early 1980s and understand exactly how the finance and promotion game works. I also have many years' operational and corporate experience in the oil business, which enables me to see very quickly whether or not managements are telling the truth. I share my take on companies and as those who follow me know, I'm rarely wrong about them.
Next, news from the more immediately exciting companies in which I’m investing.