Clontarf Energy set for success despite challenging environment

Clontarf Energy PLC (LON:CLON) reported its first interim results since listing on AIM in April this year, only a day after announcing a milestone deal in Peru, having finally signed exploration and development contracts on two blocks there.

Clontarf was formed by a merger of Hydrocarbon Exploration, an unlisted company with projects in Bolivia, Ghana and the US, and Persian Gold, with a project in Ghana and dormant mineral projects in Iran. The new venture raised £2.7 million upon listing.

The pretax loss came to £693,000, mainly consisting of administrative expenses and costs for the listing and acquisitions.

“This is a challenging time for exploration ventures and financial markets generally. We successfully raised money and listed Clontarf Energy during a period when equity financing was difficult to obtain. Clontarf is funded for all immediate needs,” the group said.

Notwithstanding the current market turmoil and general lack of confidence, Clontarf believes its recent achievements have put it in a good position from where to grow the business.

It considers the signing of the Peruvian onshore exploration blocks to be a significant milestone and the first of what it hopes will be a series of positive announcements.

The licences were awarded in the October 2010 tender round, approved by official decree in July 2011 and signed this week by the president of the state oil company, Perupetro.

Neither block is a stab in the dark: Block 188 consists of 595,809 hectares of prospective ground close to the world-class Camisea producing field which is estimated to contain 16 trillion cubic feet of gas and 400 million barrels of condensate. There’s plenty of seismic data available three main producing reservoirs exist in the wider area and an undeveloped oil discovery at neighbouring La Colpa.

Block 183 consists of 396,826 hectares in the Marañon Basin, which has produced since the 1940s.  It is located beside existing production, two oil fields and one gas field, and thus within easy reach of existing gas and oil/condensate transport infrastructure.

Peru is a priority area for oil multinationals due to its attractive fiscal terms, a stable government and a relatively unexplored hydrocarbon system.

Progress is also being achieved in Ghana which is fast becoming a major oil province. Since signing an agreement with the Ghanaian National Petroleum Company (GNPC) in 2010 on the 1,532 sq km Tano 2A onshore/offshore block, the attractiveness of Ghana has increased.

Clontarf holds 60 percent of the concession with Petrel Resources (LON:PET) holding 30 percent and Ghanaian interests 10 percent.

It noted that the giant Jubilee oil field owned by Kosmos and Tullow Oil (LON:TLW), not far from Tano, is now producing, and  Tullow recently announced a significant oil discovery on their Tano offshore block which is close to Tano 2A. Ongoing work by Clontarf on data relating to the Tano 2A block has identified a number of areas which need follow-up.

The group’s third sphere of activity is in Bolivia, a country with significant mineral and hydrocarbon potential.

Clontarf inherited a company which has been active in Bolivia for over 20 years. The acquisition brought interests in two producing fields.

It holds a 30 percent interest in the Monteagudo oil and gas field which has been producing for 40 years and is in decline. Operator Repsol holds 30 percent, Petrobras 20 percent and state-owned Andina 20 percent. 

Agreement has been reached and formalised with Repsol, and Petrobras, for both to sell their stakes. Operatorship will be transferred to Clontarf’s new partner, Latinoamericana de Energia, which will result in significantly lower operating costs for Monteagudo.

This restructuring will also facilitate early drilling of a deep gas play there which has been identified.  Approvals by the Bolivian government and parliamen are expected by the end of the first quarter 2012.

Clontarf also holds a 10 percent interest in the producing El Dorado gas field near Santa Cruz in Bolivia. There is a legal dispute with state-owned operating partner YPFB Chaco which Clontarf believes it can resolve. The field is currently producing 21 million cubic feet of gas and 500 barrels of condensate daily.