SmallCapNews | Oil & Gas Round-Up: 13 February

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Oil & Gas Round-Up: 13 February

13 February 2009

Aurelian Oil & Gas (AUL) has discovered dry gas with the Lilieci-1 well, situated in the EIII-4 Bacau Concession, onshore Romania.

Aurelian has a 41% interest in the well and Europa Oil & Gas (EOG) has a 19% interest, however, as part of a farm-out agreement, Europa now has 60 days to elect whether to participate in the appraisal and development of the Lilieci discovery or to assign its interest in the discovery to Aurelian. If it elects to participate, Europa will pay Aurelian around €4.5 million for the aggregate of its unpaid share of the well costs and an agreed premium.

PetroNeft Resources (PTR) has commenced winter oil production from the L-1, L-6 and L-7 wells in the Lineynoye and West Lineynoye oil fields in Licence 61, Tomsk Oblast, Russian Federation. Current production is approximately 660 bopd of high quality 40°API crude oil with no water. Crude oil sales agreements have been negotiated with two refineries at Parabel in the Tomsk Region. Recent changes by the government in the methodology of calculating the Mineral Extraction Tax has improved PetroNeft's return from these domestic sales.

GeoPark Holdings (GPK) reported year-end exit production from its fields in Chile and Argentina, of over 6,500 barrels of oil equivalent per day and average annual oil and gas production of 3,390 boepd during 2008. Geopark has a 2009 target exit production rate of 8,000 boepd representing new capital expenditures in the range of US$25-35 million.

Tower Resources (TRP) has received Ugandan Ministerial consent to farm-out 50% of Exploration Area 5 in Uganda to Global Petroleum (GBP). The consent allows Tower Resources to finalise rig negotiations for a two well drilling programe to commence in the next two months.

Desire Petroleum (DES) is seeing the first sign of rigs becoming available on the open market and the first indications that rates are reducing, albeit slowly. Several discussions are ongoing.

EnCore Oil (EO.) reported a small loss of £176,693 for the six months ended 31 December 2008 after taking into account gains realised on the sale of its Dutch asset. EnCore ended the period debt free with a cash balance of £12 million.

Looking to the future EnCore said it had a number of drillable exploration prospects but would not commit to further drilling until drilling costs reduced.

Caspian Holdings (CSH) said the Kazakhstan Minister of Energy and Mineral Resources action to revoke the Zhengeldy sub soil use contract held by Caspian's subsidiary, Taraz LLP, has been put into effect. Caspian will appeal the judgement to the Kazakhstan Supreme Court in a process that is estimated to take a year.

Caspian Holdings added that it is not currently generating revenue and can not continue to support its projects without generating cash from one or more of them, or by raising new capital, by March 2009.

Hallin Marine Subsea International's (HMS) new subsea operations vessel, the Ullswater, has won its first order and will commence the US$20 million contract immediately. The Ullswater will operate as an accommodation support vessel for Shell Philippines as part of the Malampaya shallow water platform maintenance programme.

CSEM specialist, Offshore Hydrocarbon Mapping (OHM) has renegotiated its long term vessel charter commitments to a "pay as used" deal for the next 12 months. Together with staff reductions and other cost cutting measures, the group believes the actions will stabilise the business and preserve its full service offering to clients. The Executive Directors bought shares following the announcement.

Gasol (GAS) and Teekay Corporation have signed a Memorandum of Understanding centred on the development of a Near-Shore LNG Production System with a view to applying this concept to gas monetization projects in Nigeria and elsewhere in the Gulf of Guinea region.

Afren (AFR) has increased its stake in Gasol (GAS) to 21.3% after subscribing for the full amount of a £1 million placing at 0.5 pence per share. The proceeds will allow Gasol to continue its business development activities. Osman Shahenshah, a Non-Executive Director of Gasol, is Chief Executive of Afren.

Egdon Resources (EDR) is increasing its stake in the onshore Avington oil field, located in the Weald Basin of Southern England, from 20% to 36.667%.

Roxi Petroleum (RXP) announced that Canamens has exercised its option to fund the Ravninnoe work programme in Kazakhstan and has paid $8.5 million into an escrow account. The operational funding secured through the Ravninnoe farm out transaction will be used, to run detailed exploration programmes through 2009.

Iofina (IOF) the gas and iodine production and development company, has raised £5 million through a placing of new shares at 55p per share. The proceeds will be primarily applied to pursue several new opportunities in the iodine derivatives market that have recently emerged.

Iofina will have approximately £17m of net cash on the balance sheet on completion of the placing and says it will be fully funded both to progress the Altantis prospect through to full development and positive cash flow generation, while at the same time move Iofina Chemical into the iodine derivatives market.

Range Resources (RRL) had a 42% take up of its $1.6 million rights issue.

Trading on AIM in the shares of TomCo (TOM) has been suspended pending clarification of its financial position. Contractual difficulties in relation to the Company's investment in Israel has resulted in an immediate funding requirement to enable the Company to service its debt and to enable it to continue operating.