PL Communists SOLD 100% Oil Rights In Seychelles!"
Tue 8:13 pm
Limited (
ASX: WHN)
has transformed itself into a growing international oil and gas
explorer since the acquisition of its flagship Seychelles offshore oil
and gas permits in October 2010.
The company’s market
capitalisation has mirrored this transformation, soaring from A$6
million when it made the Seychelles acquisition, to the current A$66
million.
More recently has
garnered institutional support for the development of its Seychelles
assets that has matched the continuing growth in global interest in East
Africa’s petroleum prospectivity.
In addition, the company has
grown its portfolio through the acquisition of quality Australian assets
in the offshore Carnarvon and Otway basins.
Share Price: A$0.047
Issued Shares: 1.4 billion
Market Cap: A$65.8 million
Cash: A$9 million
EV: A$54.19 million
ANALYSIS
Interest in East Africa’s oil and gas prospectivity exploded following
Anadarko Petroleum’s (NYSE: APC)Windjammer
gas discovery in February 2011. Subsequent successful exploration and
appraisal wells in the Rovuma Offshore Area 1 off Mozambique have
resulted in the identification of a resource of more than 30 trillion
cubic feet (tcf) of recoverable gas.
Further discoveries have since been made by Eni with a potential 10 tcf find off Mozambique;
Statoil making a 5 tcf find off Mozambique’s northern neighbour Tanzania;
BG and
() looking seriously at liquefied natural gas options after increasing their Tanzanian reserves to 7 tcf of gas; and
Tullow Oil (LON: TLW)and
Corporation (CVE: AOI) making the first ever oil discovery in Kenya.
Little wonder then that East Africa focused
Cove Energy’s (LON:COV) decision to put itself up for sale has drawn bidders such as Thailand national upstream oil and gas company
PTTEP and
- which are each offering more than US$1.8 billion for Cove, drawn no doubt by Cove’s 8.5% stake in Rovuma Offshore Area 1.
Since then, Cove's directors have unanimously recommended PTTEP's offer.
At the beginning of 2010, Cove’s market capitalisation was just under US$100 million, not dissimilar to ’s.
Corporation’s market capitalisation has also grown from C$413.3 million
in January 2011 to its current C$1.09 billion, while Ophir has seen its
market capitalisation grow from £914.8 million on 8 July 2011 to £1.99
billion.
All this interest has drawn institutional investors to ,
with its Seychelles permits having independently assessed, unrisked,
prospective resources of about 3.5 billion barrels of oil equivalent
(boe) spread out over 21 leads.
is
also in talks with 3 very large companies interested in taking up
interests in its Seychelles permits, which cover 21,426 square
kilometres, in return for funding a drilling program that is expected to
start in 2013.
Success in this this farm-out is expected to significantly re-rate and its Seychelles acreage and could be cause for an uptick in ’s valuation.
MANAGEMENT
John
Chandler serves as Chairman and was originally appointed as a non
executive director in 2011. John brings key oil and gas management and
corporate experience to the Chairman’s position. He is an attorney with
over 30 years of commercial and legal experience, and is also a non
executive director of Holdings Ltd.
Steve Noske was appointed as Managing Director at a key time in ’s
emergence as an up-and-coming international oil and gas company. He is
mechanical engineer with 28 years of upstream oil and gas experience
with Woodside, Shell, and .
He has worked internationally in Brunei, Indonesia and Malaysia, and
was most recently involved for 7 years in gas business management and
general business development with Mitsui.
David Rowbottam serves as Executive Director of Finance, and was previously the founding managing director of Limited. He also held roles as a senior financial executive with international and Australian experience with Ltd, Alinta Group, and .
The
Company maintains a highly experienced technical team that is led by
Matt Fittall as Exploration Manager. Matt is a geologist with 27 years
of technical, commercial and management experience in oil and gas
exploration, field development and production with major operators such
as Petroleum,
Delhi Petroleum, Mitsui and Total. He has been involved in many
commercial discoveries and successful field development projects in his
career.
Kim Morrison is ’s
Business Development and Exploration Advisor with over 25 years of
senior technical and managerial experience with energy majors such as
Woodside, Shell and ,
and with smaller explorers and developers such as Fletcher Challenge
and Hartogen. He has been involved in numerous discoveries in
Australasia, Asia, Gulf of Mexico and North Africa.
Michael
Wilson is the Chief Geophysicist with over 30 years of exploration
experience with Esso/Exxon, Woodside Petroleum and Premier Oil, and has
covered Australia, the Gulf of Mexico, the Vietnamese offshore basins
and Libya.
FUNDING AND SHAREHOLDINGS
The
Company has just raised A$7.94 million through an issue of 180.45
million shares at $0.044 to Australian and International institutions
along with sophisticated and professional investors.
The funds
will be used to underpin its 2012 Seychelles exploration program, which
includes shooting 2D infill seismic to firm up a number of selected high
grade prospects that will in turn pave the way for the planned 2013
drilling program and also support the farm-in negotiations.
held cash reserves of A$9 million as at the end of the April 2012 quarter.
The company has 169.8 million listed options exercisable at A$0.075 cents that will expire on 30 June 2012.
An
additional unlisted 306.55 million options are exercisable within a
range of $0.001 - $0.085 prior to the end of 2013; with 205 million of
the $0.001 options subject to a farm-in agreement that commits the
venture partner to spending the greater of A$10 million or 50% of the
work commitment, or the share price of the ordinary shares to trade
above A$0.10 for more than 10 days before 31 December 2013 for these
options to be successfully exercised.
The Seychelles Government is a cornerstone and the largest investor in holding
65 million shares via the Seychelles Petroleum Company; R.A. Healy
holds 58.68 million shares and P Bartter holds 34 million shares.
SEYCHELLES

The company controls a 100% interest in a granted exploration acreage
position of 21,426 square kilometres around the islands of the Republic
of the Seychelles, which is located 1,500 kilometres east of mainland
Africa
The country is well known for maintaining a stable and
effective democratic government that is pro-business, coupled with an
attractive fiscal regime that does not give the Seychelles Government
any back-in rights into successful projects and allows contractors to
recover 100% of their costs from 100% of the production.
Royalty
rates are a flat 5% while revenues incur an Additional Profit Tax that
ranges from 30% to 45% depending on previous production revenues.
The
exploration acreage covers parts of the East Africa Conjugate margins
that host potential as a significant hydrocarbon storehouse. has
expended $12.5 million and acquired the SY10 multi-client 2D seismic
survey of 7,966 line kilometres that was independently assessed by
leading international petroleum consultant Netherland Sewell, &
Associates of Dallas, Texas, as containing developed, unrisked net mean
prospective P50 resources in the 21 most advanced leads and prospects of
3.5 billion barrels of oil equivalent.
An internal analysis completed by estimated
unrisked, net mean P50 prospective resources in over 27 leads and
prospects of 5.5 billion barrels of oil equivalent.
During the
second half of 2011 the company completely updated and rebuilt the
geological model and exploration portfolio that included updating and
developing regional geological concepts, developing petroleum system
models, mapping earlier data and portfolio generation, and developing
new exploration concepts.
The company addressed key technical
risks by mapping a Cretaceous source basin or “kitchen” in the south
east section of the permit area that provides evidence of a recent oil
and gas expulsion that allowed hydrocarbons to flow up into shallower
reservoirs; and is positive evidence that points to the presence of a
significant petroleum system.
Seismic interpretation indicates
the presence of a Karoo reservoir that extends across the main features,
along with a regional Cretaceous and Paleocene seal that has been
mapped and is present over much of the area. Studies continue on the
interpretation of the Cretaceous seal. The presence of the reservoir is
understood and is generally not at risk, and the presence of the
Paleocene is widespread.
An expanded Cretaceous section has been
mapped on the southeastern flank of the Seychelles platform, and is
interpreted to be a Mascarene syn-rift section with potential for thick
marine shale and Cretaceous turbidite. The system is mapped and extends
into deep waters on the south east margin, where Amoco drilled Owen
Bank-1 in 1980 and intersected Cretaceous shales.
The Eastern
Fairway contains leads numbered Junon O, P, W, Z, X, Q, Creole East,
Creole West and Lead Y. Junon Q, which is also known as Junon South,
appears to be a focal point for this interpreted oil migration and is
estimated to contain 212 Million Stock Tank Barrels. Additional seismic
work is required to mature this prospect, along with several others in
the acreage, for drilling - along with a Full Tensor Gravity Feasibility
Study that maps density changes within the target reservoir.
The
diversity in the portfolio extends to deep water that contains Lead Y.
This is located to the south of Junon Q and exhibits a potential target
zone within the Cretaceous at a depth of 5000 metres that has a width of
at least 2 kilometres and length of 10 kilometres.
Other
significant targets include Beau Vallon, which is a large regional
structure that covers an area of 250 square kilometres and is located in
the western end of the Seychelles project area. Beau Vallon is
surrounded by numerous follow up features to the east and north, along
with a Jurassic charge from the south and east.
is
completing additional seismic work and ongoing geological studies that
will complement the infill seismic so that additional key prospects and
leads can be firmed up as drilling targets. The Company is aiming to
complete a farm-out agreement with a major oil company with the
intention of drilling Junon Q4 in 2013.
WA-460-P, WESTERN AUSTRALIA
announced
in October 2011 that it had secured a 33.33% interest in this offshore
Carnarvon Basin permit, which is located 70 kilometres west of , and lies adjacent to Shell’s wholly-owned WA 384-P.
Of special interest is the Palta structure that is interpreted to hold up to 13.3 tcf of gas. believes that 20% of the structure is located in WA-460-P.
This could expose to
significant near term leverage as Shell is planning to test the
structure with the high impact Palta-1 exploration well this year.
VIC/P67, OFFSHORE OTWAY BASIN, VICTORIA

was
recently awarded a 100% interest in the 2011 Australian Acreage Release
block V11-2 now titled VIC/P67 by the Commonwealth – Victoria Offshore
Petroleum Joint Authority. VIC/P67 is located 200 kilometres west, south
west of Melbourne, and is located close to existing infrastructure
including the operated Casino gas development, ’s Otway gas project, the operated Minerva development, and TRU Energy’s Iona gas plant.
The
company will immediately book 2C contingent resources of 158 petajoules
(149 billion cubic feet) of gas and 1.2 million barrels (MMbbl) of
condensate for La Bella. In addition to La Bella, further upside lies
in the exploration potential of surrounding structures which totals some
510 petajoules of gas and 3.7MMbbls of condensate of unrisked mean/ mid
case prospective resources.
plans
to shoot high resolution 3D seismic over La Bella and other high impact
leads within the permit in 2013, and is in discussions with potential
farm-in partners.
The development of large scale gas resources
in Queensland for the export LNG market is expected to lead to a 50%
increase in pricing for natural gas along the entire East Coast of
Australia as local gas supplies will be influenced by export pricing.
The
company believes that the demand growth for gas supplies from the Otway
Basin will lead to commercialisation and production from La Bella and
surrounding structures in 2016, and that such development will benefit
from the very significant amount of infrastructure that is already in
place.
U.S. OIL AND GAS INTERESTS, KENTUCKY
has
appointed an independent sales agent to dispose of a small number of
operational assets that remain in the United States, and will then wind
up the local subsidiary, and completely cease operations in that
country.
U.K. WIND FARM PROJECT
has
elected that it will not pursue its UK Renewable Energy Project, known
as the Wings Law Wind Farm, and has relinquished all of its
obligations.
ANALYSIS
With East Africa now one of the petroleum “hot spots” thanks to the number of large gas discoveries in recent years, ’s Seychelles permits have drawn considerable interest from institutional investors and potential partners.
This,
together with the company’s skilled and experienced management and a
technical team that is working to develop prospects and manage farm-out
negotiations, make it likely that an attractive deal can be reached that
would accelerate exploration and development of its Seychelles assets.
This
would be a major driver in improving the company’s valuation and could
act as a springboard for the company to take up additional East African
opportunities.
is
undertaking discussions with a number of multi-billion dollar companies
interested in taking up interests in its Seychelles permits. Success in
negotiating a farm-out is expected to significantly re-rate and its Seychelles acreage and could be cause for a sizeable increase in ’s valuation.
also
manages a highly prospective Australian portfolio that includes the
WA-460-P permit that exposes shareholders to a near term drilling
opportunity in Western Australian waters, and V11-2 – which presents an
early opportunity for commercialisation and partnering of significant
gas assets in offshore Victoria.
A success by Shell at Palta would add to the value of WA-460-P and , while V11-2 provides a low risk option for production and cash flow for the Company.
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