usoil.us
U.S. Oil & Gas plc was formed to exploit the potential for substantial oil and gas finds in one of North America's most prolific oil producing regions, using the most advanced technology available.
U.S. Oil & Gas plc’s (Ticker: USOP) core activities are in the USA, with exploration activity in Nevada where the company holds a large lease acreage and is fully funded to drill three wells.
U.S. Oil & Gas could be ready to drill first well in April
With a pile of new cash burning a hole in its pocket U.S. Oil & Gas (PLUS:USOP) is lining up its maiden drilling campaign in Nye County, Nevada, which could be underway as early as next month.
Yesterday the Plus-listed junior oil firm unveiled the details of new funding arrangements, a mixture of debt and equity, which sets it up for its multi-well drilling campaign. It raised US$3.35 million through a share placing and it has signed heads of terms over a US$5.1 million convertible loan note facility.
The funding was secured on the back of a new reserves estimate, based on re-interpreted 2D seismic, which exceeded USOP’s initial expectations significantly.
USOP had previously estimated that it had around 25 million barrels oil-in-place, but when they analysed the revised data they found that it had 187 million barrels of original oil-in-place. Subsequently the Plus-listed firm entered a closed period. McDonnell called in his geologists to formulate a plan of action, given that they had potentially found so much oil-in-place.
Ending a three-month news hiatus yesterday, USOP unveiled a preliminary estimate of oil-in-place, based on a report from Akrawi et al, which confirmed the 187 million barrels figure. It put maximum recoverable possible reserves at 113 million barrels and set the first target, Eblana Phase 1, at 47 million barrels of probable recoverable reserves.
“We had always intended to drill two wells, but then the new analysis clearly showed that we have five drill targets so far,” Brian McDonnell told Proactive Investors. “So when we set out to get financing, what we wanted was to get enough for at least two wells and put options in place for further drilling.”
McDonnell said that USOP now has enough cash to move forward with drilling, without diluting existing shareholders too much at the start of the programme. He now expects to move forward ‘rapidly’ to sign up a drill contractor.
“There are rigs available. There are a number of rigs that have been offered to us,” McDonnell adds. “There are a number of rig slots, starting at the end of April and we expect to take one of them once we’ve got our admin and operational work sorted.”
He adds: “We were originally intending to start drilling in the first quarter and we’re only out on that target by a matter of weeks.
"But to have launched on the Plus-market in January 2010, to have seen a 14 – 16 fold increase in the share price, to now have US$8 million in place and to be drilling the first in a series of wells, its a really good achievement.
“A good achievement in a short period of time.”
Importantly the new funding adds more than just cash, with it has come a number of new institutional investors. McDonnell emphasised that he was very satisfied that these institutions have come on-board.
Another important corporate development is also on the horizon. McDonnell told us that USOP is planning a step-up to the AIM market – a move that will broaden its appeal to new investors, particularly overseas investors.
“We’re actively working to put a plan together to move onto AIM, which is the right thing to do. It’s important because a lot of our investors and potential investors are based in the United States.” McDonnell added: “The shares are being followed by a number of institutional investors in the states.”
He hopes to have arranged the AIM listing by the end of the summer.
Earlier today SVS Securities, USOP’s appointed broker on the Plus Market, published a research note on USOP, which highlighted that its assets in Nye County, Nevada, are in one of the most potentially prolific oil regions in the US.
The share price has reacted positively to the news-flow since June 2010 but it remains a highly speculative investment given its very early stage of development and hence not without risk.
“U.S. Oil is a highly speculative play given its early stage of development but the share price has had a strong run since its small fundraising in June 2010 driven by ongoing news-flow about its project in Nevada,” the broker said.
