Regal Petroleum has its potential been overlooked news story imageFor those that don't know it, Regal Petroleum (LON:RPT) is an AIM-listed E&P business focused on gas field development in Ukraine.  In addition the Group has oil and gas exploration assets in Romania and Egypt under appraisal.

Yes, I know, it's good old Frank Timmis' company (Google the name if you dont remember). Still, Regal is one I've been monitoring for a while now, basically since David Greer took over at the company. Greer has a top class CV  at Shell ending with being CEO and project director for Sakhalin 2. As such, he knows a thing or two about deep drilling and gas. Following a lot of buying today, we now have a decent chunk of Regal.

So what's the story? Well, RPT is, as the graphs show, a big underperformer, almost halving since September against a markedly higher sector. This is all down to a number of factors, all too evident from a review of the RNS's since October - lots of mechanical problems well problems, political uncertainties (Ukrainian elections). Why am I buying? Essentially, the results on SV-58, RNsd yesterday showed that their jet perforation technique has succeeded with an improvement in flow of 100%. In my opinion, this removes a significant part of the doubts that the market has had over commerciality of the 2P reserves (c170MMBOE) in the B sands. At the current price, it simply seems too cheap compared to the NAV.

By way of catalysts, there are three wells testing over the next month - SV-61 and the MEX106 and SV-66 wells will start testing the deeper T & D sands from the end of this month. Note that there isnt any reserves attributed to the T&D sands at the moment. This work, with the success of the jet perforation intervention will, I feel lead to a revised CPR with potentially very significant upside. Estimates I've seen put a figure around the 350mm boe figure based on the B & T sands but excluding the D sands.

The company's own development plan is for up to 95 wells with a plateau production level of 40k boepd in 2015. Up to this point, with the unproven commerciality, this has been widely ignored by the market. A major attraction of the Ukraine is the high gas price (doubled to…

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