The group’s maiden exploration programme, in Belize, discovered hydrocarbons, but they were declared non-commercial; however, for many of the institutional investors that have backed New World from the start, Denmark has always been the main attraction.
A farm-out process is now underway with several interested parties and a deal possible in a matter of months.
This comes as New World’s shares linger near all-time lows (since listing on AIM in May 2011).
Disappointing results from Belize wiped off much of the group’s market value earlier this year and with the explorer almost trading ‘at cash’, practically no value is being attributed to the group’s promising but as yet unproven assets.
New World’s ever-bullish chief executive Bill Kelleher remains upbeat, particularly as the Danish project comes into focus.
“After we drilled the non-commercial wells in Belize some investors pulled out in a hurry, in what we think was a rather emotional response,” he said.
“We think this presents a tremendous buying opportunity, and we’ve got a couple of things on the agenda here that will make New World a very interesting proposition over the next couple of months.”
“I can’t say much about the farm-in process, or who the possible partners are; all I can say is we have our heads down and are working hard.”
Given his track record in the industry – which includes many years working with Occidental Petroleum, Chevron, Yukos – Kelleher has a notable contacts book to leverage.
He says, however, that when you have good quality 3D seismic, everybody is interested and everyone wants to have a look.
“I know a lot of people in major oil companies, this is my thirty-third year in the business – and I have no problem approaching any of them, [the majors], large or small. When you’re talking to the right people, and when you’re using the right technology, people respond.”
“The owners of Danica Jutland talked to similar people before we farmed in, but they weren’t interested because of the limited amount of 2D.”
“We’ve now shot around 400 kms of 2D and 75 sq km in 3D. We’ve tripled the amount of data and improved its quality materially. And we put together third party evaluation of this data, through our CPR. So we’ve dramatically de-risked our Danish projects.”
In the coming three months, a farm out could be agreed and, according to Kelleher, a deal could ultimately see more than one new partner join the venture.
Similarly, he explains that some of the interested parties have looked over the findings of the programme in Belize and have been suitably encouraged. So a farm-out could be on the cards for that asset as well.
“The people that understand what we’re doing, and understand this business, realise we actually did quite well in Belize.”
“We didn’t complete the wells. It is not that we didn’t find oil; we just didn’t find volumes of oil that we thought would be economic. We could’ve spent US$2mln on a completion of the first well, and the chances of recovering that $2mln would’ve been doubtful.”
“We’re not in the business of completing wells simply for news flow, that’s not going to happen with us.”
He explains that in the Belize wells the New World team observed a lot of ‘late earth movement’ that had caused traps to breach – though a recent discovery nearby suggests not all traps in the area have been affected.
“So that’s really the post-mortem analysis of the Belize programme, there is a lot more late earth movement than we thought and that has an effect on our trap definition.”
“We now have a 100% interest in Belize, but we’re not moving at light-speed to do anything until we make choices about what technology we’ll apply to better understand the traps.”
“We’re not hanging our heads at all about having to abandon non-commercial wells in Belize. We’ve proved a working hydrocarbon system exists on our acreage. Our neighbour has made a discovery. We’re hunting in the right neighbourhood, and what is key to remember is we are trap hunting.”
“[As a team] we’re oil finders. We’ve made discoveries before and we’ll make them again.
“We’re by no means giving up. AIM investors think this is when companies like ours hibernate, as the news silences.
“Trust me there’s no hibernating going on here. We’ve got our heads down, and we’re working hard. We don’t bruise or bleed too easy.”