Gray puts some questions to Antrim Energy
After recently completing a placing at CA$1.07, raising $45m, adding to their current cash position of $25m, I decided to put some questions to Antrim Energy (LON:AEY) in relation to their plans for the year and this money, with Investor Relations Manager Scott Berry kindly replying:
DGW: I note that you hope drilling on the GTA will commence in H2 this year, so could I ask:
a) How many prospects are you hoping to drill this year?
SB: We plan to drill the West Teal prospect this year with a possibility of drilling the Carra prospect.
b) Are you hopeful of Premier Oil (LON:PMO) becoming involved in this campaign?
SB: Yes, this would be a good partnership however we plan to move forward on the drilling of these wells even if Premier does not elect to participate.
c) After the recent fund raising, given your I believe cash position of about US$70, are you now fully funded for this campaign, even if Premier do not become involved? Or are you still likely to consider further partners like you said was a possibility last year so as to keep the costs down?
SB: As above and further, we continue to seek out other additional partners. We have received interest from a number of parties and we are currently evaluating these. West Teal is expected to cost approximately $19 million to drill and a further $11 million to test and complete. Although we could fund this entirely, it is our preference to have at least one partner.
DGW: Also could I ask, which prospects are you hoping to begin drilling this year, the lower risk prospects (Offsetting current discoveries, which I believe you put the odds of success at 1:2) or the higher risk Jurassic (1:5 chance of success)?
SB: As above and further, West Teal is considered to be the lowest risk prospect, as we will be offsetting a discovery well on the licence. Carra offsets the Fyne discovery and is also considered a 1:2 risk and the cost of the well is $11 MM (untested).
*DGW: Just to note, West Teal has probabilistic mean recoverable reserves of 16mmbbls, at a 37 API, whilst Carra has an unrisked mean P50 prospective resource of 23.3mmbbls (12.3mmbbls risked).
END
Conclusion
To conclude, I believe this interview has only re-enforced the view that I wrote earlier in the month, to quote:
Antrim Energy(LON:AEY) this month has raised $45m at C$1.07 a share, adding to their already substantial cash reserves of approximately $25m. Therefore on a market cap of £120m (after placing), with $70m in cash, their Argentinean assets, and the sheer potential of their North Sea assets, they seem to be very cheap. Especially considering they appear to have passed the first hurdle on the Fyne option by Premier (One of Premiers opt out dates have passed). Therefore considering the potential they offer (Which can be seen via their newly updated presentation), with them now appearing completely fully funded, with a drilling campaign at the GTA likely to begin to this year, they still warrant a place in the potential company changing news section of Grays Stocks to Watch.
Disclosure: The author may hold shares in Antrim Energy (LON:AEY)
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11 comments
It seems the good news and progress at Antrim keeps coming:
http://www.investegate.co.uk/Article.aspx?id=20110419135959M7046
Very good to see them on track, and the results will be interesting when released. Lets just hope that the share price finally starts moving in the right direction for once, rather than stagnation or falling of the last year. As this year really should be the year that makes Antrim if drilling goes well.
Antrim's recent Oilbarrel presentation is up on youtube:
http://www.youtube.com/watch?v=jx0PdY8ppos
It covers Antrim's cheap valuation, its near term exploration calendar and highlights its potential in Argentina and Tazania amongst other things. It is well worth watching if you haven't already..
Interesting article on Antrim's current worth has been posted by a well respected poster from iii, on his new blog, worth a read:
http://oilandgasinvestments.blogspot.com/
Calculations on current worth are simlar to mine, at about 130-150p for drill success later this year (80-100p without), with the core NAV of Causeway and Fyne and the giant tax losses (Which are worth even more now thanks to the tax changes) easily supporting the current share price.
Agreement reached for export of Causeway output.
Extract:
I really like the above high resolution picture as it shows Antrim's Fyne field, the new prospects in red, the Greater Fyne Area, and its relation to the Catcher field. Also, it shows the new block 28/5 which Encore owns and lies north-east of Catcher and west of the Bittern field.
Regarding the North Sea tax increase, Ithaca Energy released the following:
http://www.investegate.co.uk/Article.aspx?id=20110325084911M7851
So, accounting for the Small Field Allowance, I guess Antrim's North Sea fields of:
are below the required thresholds of 25 million barrels of oil equivalent, if I got my figures correct. I was thinking we would hear about the implications of the new tax rate when Antrim's results were out a few days back but there wasn't anything in it about the tax situation.
Gray, if you are putting questions to the management again sometime, would it be possible to ask Antrim's position with respect to:
- small filed allowances for their fields
- tax losses in the North Sea to offset any future production
- any decommissioning liabilities
Thanks in advance..
uncommon 13, I have put the questions to Antrim and they as always kindly replied, I posted the answers on my site:
http://grayshares.co.uk/graysinvestmentbloguk/2011/04/08/antrim-energy-the-effects-of-the-tax-changes/
Its not in depth, but tells you everything you need to know, and that is basically the tax should not bother them as we believed.
I see some more great news has come out for Antrim today, with Premier electing to join them at a well on East Fyne:
http://www.investegate.co.uk/Article.aspx?id=20110404070001M8042
Can only be good for Antrim, especially after the North Sea tax increase.
For anyone interested, Antrim has just secured a drilling rig and plans to begin drilling in the near future:
http://www.thepressreleasewire.com/client/antrim_energy/n/release.jsp?year=2011&actionFor=1418690&releaseSeq=0
Good to see progress finally being made on the drilling front, and this year could truly turn out to be a game changer for them.
Just to note, the placing closed during this week, and in total they managed to raise C$51,565,119 just as hoped, adding C$6m to the orginal placing:
http://www.thepressreleasewire.com/client/antrim_energy/n/release.jsp?year=2011&actionFor=1413190&releaseSeq=0
Ah, spotted the Gray article earlier over on ADVFN and was going to post it up for discussion.
PMO needs to take up it's option on the Fyne development before it earns the right to participate in any of the GFA drilling mentioned in the OP.
PMO news could be anytime, but It'll be April at earliest before we find out if there will be a 3rd** party joining the drill(s) as both farm outs request offers to be in by close of business 31st March 2011. Suits me, I want more in next years ISA before news gathers pace here.
So it looks like they aim to go into these drills with 25% as a further 25% on top of the PMO 50% option is up for grabs:
http://www.antrimenergy.com/files/West_Teal_Prospect.pdf
http://www.antrimenergy.com/files/Carra_Prospect.pdf
Lots of good info on the farm out 'adverts', especially the West Teal discovery well drilled by Texaco in 1991
** On the assumption that PMO will be the 2nd party!