It’s real Lawrence of Arabia country, says Jeffrey Auld, chief executive, but like many places that look uninviting on the surface it’s underneath where the value lies.
Tunisia is one of two significant oil and gas assets held by AIM-listed Serinus – the other is a gas play in Romania.
Both have substantial potential believes Auld, so much so that the industry veteran was persuaded out of retirement two years ago to take charge.
The mix of assets in Romania and Tunisia is unusual and interesting he told Proactive.
Tunisia is a 358mln barrel oil-in-place field while Romania is an economically attractive shallow gas play that stretches over a 3,000sq km block and contains
The trick now is to get both sides working properly together says Auld, who has worked for much larger companies than Serinus in the past.
In Romania, the end of the month should see commissioning of a gas plant to process first production from its Moftinu field.
A first well is due to be hooked up this month, with a second well scheduled to be added during July.
Initial production will be 2mln scf (standard cubic feet) while the second well (1007 - a re-drill after a blow-out) will boost this up to around 10mln scf per day.
Commitment wells (two) are scheduled for this year and early 2019, which will boost production close to plant capacity of around 15mln scf/d (2,500 barrels equivalent).
Auld says the appeal in Romania is that for a finance package of about US$25mln it can make a cashflow return of between US$75mln-£80mln at current prices and after taxes and costs.
“The process is also very repeatable”.
Once the gas plant at Motfinu is up to speed, it really is a case of acquiring seismic over a different part of its block and ‘cookie cutting’ the development process, he says.
“These are shallow gas fields. They are not large - 3.65mln barrels equivalent – capital costs are low and the gas sells at a good price.
“We are not Exxon, so having US$25mln capital packages is perfect for us.”
Indeed, once cashflow starts come through strongly at Moftinu, Auld envisages two or more developments can be undertaken simultaneously.
Prices are the standard European gas benchmarks with no special determination in Romania, which is part of the European Union.
In Tunisia, the situation is slightly more complicated due to production being halted in the south due to industrial action and a volatile social situation.
Before that, production was running at 1,100 barrels per day across its Tunisia acreage, but that has now fallen to about 350 barrels per day.
Sabria, in the centre of the country was also shut-in for a while, and Auld is waiting for coil tubing to clear some of the scale that has built up on the pumps.
More workovers are being undertaken while it waits.
Auld wants to get production back up to 650 barrels even without any contribution from its southern acreage.
Given a clear run there’s lot of things that can be done to improve production in Tunisia, he says, and investors should not overlook the fact Serinus has very big reserves in the country.
The company raised £10mln when it switched from a Canadian listing to AIM in May.
Serinus raised the money at 15p and the share price has since ticked up to 15.5p, valuing the group at £35mln.
Family office Kulczyk Investments has a 39% stake, through it was 52% before the placing and AIM listing.
Results last year showed a loss of US$18.8mln as revenues were affected by the Tunisian disruptions, but the numbers are set to change markedly once the Romanian gas plant comes on stream.
There also might be a deal or two for M&A specialist Auld, though he is playing that down for the moment.
“We have lots of work to with existing assets, though clearly if another set we can do the same thing with came along we would take a close look.”