Hugh Mackay, the chief executive of Europa Oil & Gas (LON:EOG), talks about the prospects of the Wressle and Kiln Lane wells. The former will be production tested over the next six months, while the latter will be drilled. Mackay believes the value of the Irish assets (£12Million) is not being reflected in the company’s share price
NORTHLAND CAPITAL PARTNERS VIEW: No major surprises in the statement. The company delivered operational result as expected and has outlined significant catalysts to come in financial H115. If successful, these will provide the opportunity for Europa to break out of its current trading range. Upcoming events include the outline of prospect inventory and CPR at the Porcupine Basin licences (15% EOG) operated by Kosmos (NYSE: KOS). Europa is encouraged by 3D seismic interpretation and is hoping Kosmos will elect to drill a well in early 2016. The technical success of the Wressle well (33% EOG) operated by Egdon Resources (EDR.L) was encouraging but it may be two months before it is known whether this well will be a near term producer. Europa will also test its own-operated Kiln Lane well (PEDL 181 50%) which is a larger target testing a 2.9MMbo 1 in 3 prospect in which it has a 50% interest. This well may also provide valuable information on shale potential in the basin in Q4 calendar 2014. The company is still seeking to farm out its French Bearn Des Graves permit to test shallow gas prospects. In all, several upcoming catalysts and we remain optimistic for the shares in Q4.
Extremely good positive results!!!! Post-tax profit, cash in the bank, fully-funded for next phase of drilling programme 'largest un-drilled prospect in the UK' and poised to deliver significant shareholder value in near term......what's not to like???!
Great RNS and very detailed, while they are never going to be high in the league of PR, it seems the board have got the core skills of running the business in the right way, showing a good turnaround in performance from last year. With results being found on HH plays today, the UK O&G sector will be focussing people's minds and hopefully some new investors looking for the next big thing will spot Europa as having excellent potential.
Could DB and UJO be negotiating a farm in to PEDL181, Kiln lane drill? Fits in with their "drill ready" game plan (just waiting for planning approval) and also the fact it has unconventional potential as well as the 2.9mmbo of conventional potential.
Current interest are: Europa 50% (Operator) Egdon Resources 25% Celtique 25%
Drilling scheduled for Q4. At the rates UJO paid for the Wressle farm in (16% of drill costs, for 8% interest) then Kiln lane would cost around £500k for a 10% interest.
Not even sure if the work over drill is in place yet at Wressle but it will take a while to evaluate all plays and I doubt whether they would release individual updates so 3 months is a reasonable time frame.
Have just been through all comments on the Kiln Lane application. A few from neighbours who live half a mile away and on the other side of the carriageway. The local council only objection is direction of traffic not the site itself. Can't see any problem with approval - the application was sumbmitted in July and the consultation period has passed for all agencies so a decision soon.
Would have thought we may get some kind of update on Wressle in shorter time frame than 3 months. No experience in this sort of testing so don't know but I would have though they would soon find out whether it is oil or gas for starters, then some indicitive flow rates???
Oilsectordude whats your thoughts on this, would you expect any updates sooner? also what is your expectation of flow rates if successful based on your knowledge of the area?
Oil & Gas: Europa Oil and Gas (EOG.L, BUY, TP 10.1p) FY results to July are expected next week. We look for revenue of £3.8m on the basis of an average of 165 bopd production guided by the company at the interims. We look for Adj. PBT of £0.5m for FY14 although surprise cost increases are possible in the case of maturing assets where any capex is generally expensed (given insufficient time and/or visibility to capitalise and depreciate). Even so, cash flow covers operating overheads and enables the company to deploy capital in exploration. This means it is comparatively well placed as a microcap with the potential to ‘break out’ like Egdon Resources (EDR.L) did earlier this year. Europa also recently updated that it was encouraged by 3D seismic interpretation on its Porcupine Basin licences (15% EOG) where it is hoping Kosmos (NYSE: KOS) will elect to drill a well in 2015/2016. It is expecting to update prospect inventory and produce a CPR in Q414. The technical success of the Wressle well operated by Egdon Resources (33% EOG) is encouraging but it may be two months before it is known whether this well will be a near term producer. We also expect Europa to update on its own-operated KilIn Lane well (PEDL 181 50%). The well, where Europa has a 50% interest, is expected to spud in Q414 to test a 2.9MMbo 1 in 3 prospect. The company may update on its French Bearn Des Graves permit where it is seeking to advance shallow gas prospects via farm out. In all, several upcoming catalysts. Whilst we do not expect next week’s results to reveal anything significantly new, we would be optimistic for the shares in Q4."
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