FirstEnergy Global Energy Conference Report: Pt II featuring Dominion Petroleum, Bankers Petroleum, Rocksource ASA and Cove Energy

This article covers the second day of FirstEnergy's Global Energy Conference, completing the review I began in the first part. For some background on the event, my writeup, and a glossary of terms & abbreviations, see that first part. As for the first part, this article is intended as a springboard for readers to DTOR and to generate discussion about the companies mentioned.

Some presentations are not available on company websites, please contact me via Stockopedia's messaging system for further information. Companies covered in this part:

 

• Petrominerales Ltd
• Gran Tierra Energy Inc
• C&C Energia Ltd
• Parex Resources Inc
• Rocksource ASA
• Dominion Petroleum (LON:DPL)
• Seven Energy International Ltd
• Trican Well Services
• Gulfsands Petroleum Plc
• Bankers Petroleum (LON:BNK)
• Serica Energy (LON:SQZ)
• Cove Energy (LON:COV)

Unfortunately, I was unable to attend the last session, which included Eaglewood Energy Inc, Canacol Energy Ltd and Heritage Oil (LON:HOIL) .

Thanks once again to FirstEnergy for this well-organised event.

Headlines

 

Tuesday Early Morning Session

The theme for this session was Colombia & Latin America. Stockopedia's team has already posted a detailed write-up of this session, in their article, which I commend to the reader. As I've mentioned previously, this article highlights that in the light of political improvements over the last few years, Colombia might be a more attractive investment destination than is commonly thought.

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Company: Petrominerales Ltd (TSX:PMG)

Website: http://www.petrominerales.com/

Market Cap: C$2,559m

Net 2P reserves: 53.1mmbbls (as at end 2009)

Current Net Production: 44,203 bopd (2010Q2 average)

Presentation: http://www.petrominerales.com/wp-content/uploads/2009/06/PMG-2010-09-29-Website-View-Final.pdf

Presenter: Corey C. Ruttan (President & CEO)

Notes:

• Pays a quarterly dividend of C$0.125/share (~2% yield)
• Llanos basin seen as an anlogue of West Canadian sedimentary basin
• Two rigs now operating full time in the Corcel/Guatiquia blocks
• OCENSA (mentioned slide 15) is an export pipeline, being expanded to reduce export bottlenecks

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Company: GranTierra energy inc (TSX:GTE, also listed on NYSE Amex)

Website: http://www.grantierra.com/

Market Cap: US$1,823m

Net 2P reserves: 22.1mmbbls (1P, as at end 2009)

Current Net Production: 14,066 bopd (2010Q2 average)

Presentation: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9Mzk1OTkzfENoaWxkSUQ9NDAxNzgzfFR5cGU9MQ==&t=1

Presenter: Dana Coffield, CEO

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Company: C&C Energia Ltd (TSX:CZE)

Website: http://ccenergialtd.com/

Market Cap: C$417m

Net 2P reserves: 11.8mmbbls (2P, as at end 2009)

Current Net Production: 7,000bopd (current)

Presentation: http://ccenergialtd.com/upload/media_element/6/01/september-firstenergy-conference-presentation-[compatibility-mode].pdf

Presenter: Richard Wallis, CEO

 

Tuesday Late Morning Session

Theme: Pure play explorers/pre-production

Company: Parex Resources Inc (TSX-V:PXT)

Website: http://www.parexresources.com/

Market Cap: C$369m

Net 2P reserves: -

Current Net Production: -

Presentation: http://www.parexresources.com/images/stories/pdf/Presentation/2010/q2%202010%20sept%20london%20conferences%20v5.pdf

Presenter: Wayne Foo, President & CEO

See comment in above-referenced Stockopedia article for more

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Company: Rocksource ASA (Oslo:RGT)

Website: http://www.rocksource.com/

Market Cap: NOK329m (£35m)

Net 2P reserves: -

Current Net Production: -

Presentation: http://www.rocksource.com/getfile.php/Filer/Presentation%20Pareto%20conference%201%20September%202010.pdf

Presenter: Trygve Pedersen, CEO

Notes:

Rocksource has a rather unusual USP for an E&P company: it has developed a proprietary technology, combining CSEM with seismic techniques, to improve the CoS for drilling targets it selects. Using its technology it has selected a number of licence blocks and drilling targets which it intends to explore in Norway, West-Africa & the GoM (on hold post-Macondo). It intends to drill in 2011. Business strategy is similar to Encore's, i.e. to identify & prove up prospects with drilling and then sell, rather than attempting to become a producer.

I generally take a rather jaundiced view of claimed technical breakthroughs... however, this comment (with reference to Encore's impressive Catcher discovery) that repobear noted on ADVFN kinda caught my eye:

EO and PMO are now drilling the same block that OIL matured to drill ready. They used a company called Rock Source to define these targets...

If Rocksource can produce results like that, it might be worth a further look. See slide 24 of the presentation for details of finance available for explo/drilling. I have not verified the ADVFN comments, so DYOR!

Company: Dominion Petroleum (LON:DPL)

Website: http://www.dominionpetroleum.com/

Market Cap: £58.5m

Net 2P reserves: -

Current Net Production: -

Presentation: http://www.dominionpetroleum.com/_uploads/user/Reports/Fist%20Energy%20SG%20Presentation%20210910%20%5BRead-Only%5D.pdf

Presenter: Andrew Cochrane, CEO

Notes:

• Well discussed previously, see Stockopedia threads
• Conclusions from Ngaji-1 well:
  • Location drilled lacked source (slide 13)
  • Suggests lake basin at that location was underfilled (slide 17)
  • Slide 19 represents the overall situation at Lake Edward inferred from seismic + Ngaji-1. Note that the DRC side of the border shown in that slide represents DRC Block 5, shared with Soco.
• Farmout of Block 7, Tanz expected before drilling in August 2011, subject to rig availability

 

Company: Seven Energy International Limited

Website: N/A

Market Cap: N/A

Net 2P reserves: 800bcf 2P/2C

Current Net Production: -

Presentation: -

Presenter: Phillip Ihenacho, Chairman

Notes:

• At present a private company
• LSE main market listing planned for 2H2011
• Focussed on Nigerian gas
• Was spun off from Weatherford
• 70% of ordinary shares owned by indigenous Nigerians
• US$300m equity raised so far
• Aim is to build a local gas distribution network to supply local industry in Port Harcourt area, whereas majors have focussed on exports, leaving Nigeria energy-poor.
• Phase 1a pipeline expected completion 1Q2011, with first gas also distributed that quarter.
• Plenty of gas assets available at low prices

[I have considerably more detail if anyone is interested.]

 Lunchtime

Over lunch we were kept interested with a talk entitled: "Uncoventional Resources: Changing our Industry" by Trican Well Services. Trican specialises in fraccing & cementing and is also building a geological services capability. The talk provided a very interesting insight into recent technical developments and the pitfalls of the developing of shale gas and oil resources. I hope to write a separate article on this but my main conclusion was that exploiting such resources is a "big boys game". Costs and risks are both high. A small operator would require a big dose of luck to succeeed definitively.

Early Afternoon Session

 

Company: Gulfsands Petroleum (LON:GPX)

Website: http://www.gulfsands.com/

Market Cap: £384m

Net 2P reserves: 50mmboe

Current Net Production: ~10,000boepd (2010 exit estimate)

Presentation: -

Presenter: Andrew Rose, CFO

Notes:

• Syria focussed (+ Tunisia & GoM interests, GoM to be exited)
• Syrian lifting cost $1.7/bbl, including transport
• KHE export capacity constrained by needed upgrade to storage & pipeline facilities (now in place, see http://www.investegate.co.uk/Article.aspx?id=20101006070100H9370 )

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Company: Bankers Petroleum Ltd (TSX:BNK)

Website: http://www.bankerspetroleum.com/

Market Cap: C$1,587m

Net 2P reserves: 214mmbbls

Current Net Production: 10,300bopd (as at 13th August update)

Presentation: -http://www.bankerspetroleum.com/en/components/investor/bnk-presentation-2010-_september.pdf

Presenter: Abby Badwi (President & CEO)

Notes:

• Focussed & experienced in heavy oil in Albania (largest on-shore oil field in Europe)
• Substantial contingent reserves, which should convert into 2P, once extraction techniques proved in-situ (horizontal drilling is key).
• Reservoir well understood & team is experienced in developing such reservoirs.
• Oil sells @ 60% of brent price
• Fairly shallow wells: 2,000' - 6,000'
• Decline rate of 50% p.a. anticipated; horizontals expected to produce 150bopd average over first 8 months.
• Strategy is to prove up the development concept and then sell out.
• US$70-$80m cashflow expected this year
• Warning that earlier 15kbopd 2010 exit target might be missed, due to slower than expected permitting to reactivate old wells.
• 24kbopd 2011 exit target

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Company: Serica Energy (LON:SQZ)

Website: http://www.serica-energy.com/

Market Cap: £103m

Net 2P reserves: 18.5mmboe (as at end 2009)

Current Net Production: ~10mmscf/d (as at 4th August update)

Presentation: N/A

Presenter: Paul Ellis, CEO

Notes:

• Current production in  Indonesia
• Explo & development in UKCS

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Company:Cove Energy (LON:COV)

Website: http://www.cove-energy.com/

Market Cap: £251m

Net 2P reserves: -

Current Net Production: -

Presentation: -

Presenter: Michael Blaha, Chairman

Notes:

• "Encore style" strategy of discovering & appraising hydrocarbons and then selling on, rather than aiming to become full-cycle E&P
• John Craven (CEO) is a specialist in turbidites
• Conclusions from Ironclad well:
  • Porosity was low
  • Believe drilled too close to pinchout in fan structure
  • May be better prospects downdip
• Collier had to be suspended due to non-availability of equipment to cope with the pressure regime encountered.
• Cove are supportive of development of a pipeline between Mnazi Bay and Dar Es Salaam (hardly surprising!)