The audacious oil exploration company, Petrel Resources (LON:PET) recently announced half year interim results to end June 30th 2010, and explained the latest 'high risk' location they will operate in.The audacity comes from the focus of Petrel remaining firmly on Iraq. Petrel was active in Iraq prior to the invasion, so has not been smeared with the WMD ruse, as far back as 1999. Since entry they have dealt with "5 governments, survived a war, faced down many threats and risks, all in pursuit of oil", at least they don't mix their words!
Petrel won rights to an exploration block under Saddam Hussein’s government in 2002 but decided against developing it because of international sanctions leading up to the March 2003 war. Since 2005 the company has won contracts to service oilfields for Iraq’s oil ministry. It has had an eye on getting priority access – to those and other more prolific fields – once the central government has passed a hydrocarbons law.Management explained how the parameters of operating in the country are changing, albeit slowly. The steady disengagement of foreign military personnel reduces undue overseas influence and boosts the legitimacy and self-confidence of the Iraqi authorities. Democratic elections were successfully run in March 2010, though the lack of an emphatic winner complicated Government-formation. Six months later there is still no government. This has serious implications for the development of the oil industry. Much will depend on the new Minister. They expect that policies will be improved and streamlined to arrest the decline in oil production and to encourage exploration and development. Iraq is capable of producing at least 9 million barrels a day, but current production is under 3 million. In contrast with other companies of its size (Petrel’s market capitalization is £16.48m); Petrel focuses its ambitions on the Shia-dominated south of the country, where much of Iraq’s oil reserves lie. The problem here is the absence of an oil law covering production and exportation. Other small foreign companies such as Norwegian listed DNO International (DNO: OSE), Addax, and ADX listed Dana Gas are active in Iraqi Kurdistan, where only 3% of the country’s reserves lie but where the regional government has passed its own oil law.
Focusing on southern Iraq led to a contract to develop the Subba Luhais oilfields in 2005 to a minimum capacity…
