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Mosman Oil And Gas Ltd

Mosman Oil and Gas lines up next drilling projects as producing portfolio builds

Snapshot

Company has production and exploration interests in shale licences in the US and Australia

oil well

Quick facts: Mosman Oil And Gas Ltd

Price: £0.00

Market: AIM
Market Cap: £2.3 m
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  • Oil and gas explorer with acreage in US and Australia

  • Strategic alliance over fields in Texas with Baja

  • More wells at Stanley expected to follow first well drilled last year

  • Net revenue attributable to Mosman of A$614,000 (A$534,500) in the half year to December

 

What it owns

Mosman Oil And Gas Limited (LON:MSMN) has a raft of exploration and production interests in shale licences in the US and Australia.

US

Arkoma Stacked Pay Project (Oklahoma)

Mosman's wholly-owned subsidiary owns a 27% interest in the Arkoma Stacked Pay Project which has production of oil and gas, sold to local refineries.

Welch Permian Basin (West Texas)

Located in the Permian Basin consisting of 27 existing wells of which ten are currently producing. A feasibility study will consider horizontal drilling at Welch, where Mosman is the operator.

Stanley (East Texas)

Under the umbrella of a strategic alliance, Mosman and Baja Oil and Gas are also participating in several projects onshore east Texas. These include the Stanley, Challenger and Champion projects.

Mosman acquired a 16.5% working interest in Stanley by paying 22% of the first two wells and reimbursing a small amount of previous expenditure.

The partners are to begin drilling on a third well in August, with the first two wells flow naturally at a low operating cost.

Champion (East Texas)

Originally Mosman owned a 60% working interest in Champion, containing the Falcon prospect and the Galaxie prospect, before striking a farm-out deal to bring in new partner Xstate Resources that could take a 25% stake if it fulfills its obligations.

These obligations include Xstate helping pay for the drilling of two prospects, Falcon and Galaxie in coming months. 

Strawn Oil Project (Texas)

Mosman sold out of the 27-well project in July after deciding that it had provided a "small but important" stepping stone by leading to the acquisition of the more exciting Welch.

Australia

Amadeus Basin

One granted permit and one application which covers a total of 5278 sq. km. The Amadeus Basin is considered one of the most prospective onshore areas in the Northern Territory of Australia for both conventional and unconventional oil and gas, and hosts the producing Mereenie, Palm Valley and Surprise fields.

What the boss says: John Barr, chairman

“At current oil price and flow rates, the well costs [for Stanley-1 and 2] are recovered quickly, and production is anticipated to continue for years. Additional proposed development drilling at Stanley will be considered by the joint owners once steady state production is achieved at Stanley-2.”

“The board is pleased to see the growth potential at the Stanley project which continues to deliver increasing oil production, reinforcing the strategic move in the US and Mosman's investment decisions on the Stanley Project,” said Barr in June.

“In addition, the Baja Strategic Alliance continues to be a valuable partnership as it continues to deliver attractive projects to Mosman.”

He added: “Mosman looks forward to drilling Stanley-3 in August 2019, to be followed by Falcon-1, the first well at the Champion project.”

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Inflection points

Gross production in the six months to December was 18,253 barrels, an increase of 49% on the 12,260 barrels produced in the preceding six months.

Net production attributable to Mosman was 6,476 barrels equivalent (4,417) or 35 barrels per day on average.

Drilling at Stanley-3 is to begin in August 2019, to be followed by Champion's Falcon-1.

Mosman raised £750,000 in May to drill the two Champion wells at £235,000 apiece, which company expects will provide an increase in production and revenues.

Blue Sky

  • Stanley-3 should add to output with longer-term potential for a fourth wells at the field.

  • Horizontal wells to boost production at Welch.

  • Funding secured for two wells at Champion prospect in Texas

What the broker says: SP Angel

"February's update underlined the progress made towards a point of self-sustainability, with the partial period that Stanley-1 was online making a significant contribution.

"With Stanley-2 likely to throw more light on the expected degassing of the accumulation, and the subsequent production of liquids, we believe that the management will be in a position to update its reservoir model and better understand the potential of the asset.

"Once the team has assessed all the data from Stanley-1 and 2, we are certain that the potential of the asset will be better elucidated, and more informed valuation on the asset be produced.

"Until such times as we have a better understanding of the asset and it's potential, we are maintaining book value contribution from its Stanley acquisition.

"Furthermore, we have also adjusted our expectation for the Welch horizontal well to 3Q'19.

"Additionally, due to the apparent de-emphasis of the Australian assets, we are extending our expectations for the timing of exploration out to 2025, or beyond. Consequently, our valuation is adjusted to $6.32mm (0.78p)."

At 0.24p, Mosman is valued at £1.6mln. 

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Watch

Stanley project gives Mosman Oil & Gas production a significant boost

Mosman Oil And Gas Ltd's (LON:MSMN) John Barr speaks to Proactive London's Andrew Scott after reporting a sharp rise in second-half production, driven by strong output from the Stanley project in Texas.  Net production attributable to Mosman came to 11,742 barrels of oil equivalent...

3 weeks, 3 days ago

4 min read