Mosman Oil and Gas Ltd (AIM:MSMN) CEO Andy Carroll this week talked with Proactive about the company’s recent sale of the Stanley assets in the US.
He explained the rationale behind this decision, highlighting the company's new focus on helium.
Here’s the interview:
Proactive: I'm joined by Mosman Oil and Gas CEO Andy Carroll. Andy, good to speak with you today. You've announced that you've completed the sale of your Stanley assets in the US.
Can you take us through the rationale for the Stanley sale and the consideration?
Andy Carroll: Yeah, hello Stephen, and welcome everybody. The focus on helium means that it's appropriate for us to divest both management time and reallocate capital from the oil and gas assets into the helium side of the portfolio.
So, we've been working on the Stanley asset, which is somewhat capital intensive. In particular, our man in the US, Howard McLaughlin, we want him focusing on helium, not Stanley workovers.
We announced the sale a little while ago, and there was some detail to sort out, but we're very pleased that it's now put to bed. We're happy to have that asset sold. The structure of the deal is such that the buyer is motivated to continue work.
Quite a lot of capital works had been on hold with workovers, so there's a fair amount of money to be spent, but it's not going to be Mosman's money. It will be the buyer investing in workovers and possibly an additional well. There's plenty of upside for them to do that investment, and that’s their area of expertise.
So, we’re very happy to work with them. The deal structure is synergistic, and just as we did when we bought Nadsoil, with an initial payment and then subsequent payments, we’re happy with this structure as well. The bottom line is, we can now fully concentrate on the helium portfolio, which is looking very positive, particularly in the USA.
Proactive: What’s your confidence in the operator to manage production so that you receive deferred payments?
Andy Carroll: We know the people involved. We've been talking to them for quite some time.
One of the reasons for the delays was that they had just acquired a property in New Mexico and were busy getting that up and running. So, we know them well, and we know they’re very capable.
There’s been a lot of site visits, discussions, and agreements on the right way forward.
Proactive: Will you continue to generate cash flow from other projects?
Andy Carroll: That was a prime revenue generator on the oil and gas side. But as well as focusing on helium as a priority, we also have significant oil in the ground at Cinnabar, which is held by production. There’s no rush there, but we see significant value.
However, it's not our priority right now compared to the extremely attractive opportunities in helium.
Proactive: What opportunities are you seeing in helium, Andy?
Andy Carroll: We mentioned in this RNS that we’ve contracted a very experienced helium consultant based in Colorado. Howard McLaughlin is actually up with Tim Rynott this week meeting vendors and parties to accelerate helium business development. Helium hadn’t received much attention because it was nationalized, but it’s recently been opened up to the private sector.
Tim is one of the longest-working experts in helium. He has a great range of contacts and understands the geology well.
Howard works well with him, and they're going through technical, commercial, and legal due diligence. It’s very promising for business development.
Proactive: Andy, I hope you’ll keep us updated on any progress.