Investors Chronicle14 Mar 2013 18:13
Nice write-up in today's IC apparentely, as below
Trap OilTrap Oil Group PLC (TRAP:LSE)
Scotney and Magnolia
While there continues to be a dearth of big new hydrocarbon discoveries in the UK North Sea, operators are having plenty of success finding and developing smaller fields. That's because advances in exploration techniques, persistently high oil prices and a more favourable tax regime have combined to create a perfect storm for junior North Sea oil and gas specialists such as Trap Oil.
Headed by 30-year industry veteran Mark Groves-Gidney, Trap holds 20 licences in 46 blocks throughout the UK Continental Shelf. In February, exploration wells were spud on two of those blocks, 20/5b and 13/23a, targeting the Scotney and Magnolia prospects, respectively.
Operator Suncor Energy began drilling the Scotney well in mid-February and it's expected to take about 36 days in a dry-hole case. The prospect could hold between 17.2m and 149.5m barrels of oil (mmbbls) gross, or between 2.15 to 18.68 mmbbls net to Trap, and is mapped as a four-way dip closure. This is also known as a 'buried hill' target and is one of the best types of potential reservoir seals.
Trap holds a 12.5 per cent carried interest in the well, which, according to independent consultants and 3D seismic data collected by CGGVeritas, has a relatively high 32 per cent chance of success.
As for the Magnolia well, it spud in late February and drilling is anticipated to last approximately 26 days in a dry hole case. The prospect is mapped as a "three-way dip closure and one-way pinch out" and is of a somewhat smaller, riskier vintage than Scotney.
A spokesman for the company couldn't disclose a probability of success, but pegged Magnolia's gross prospective resources at 20.46m barrels of oil-equivalent in a medium, or P50, case, and net prospective risked resources at just 0.25 mmboe.
If the well is successful, however, management says it would open up many other similar plays in the vicinity, which is near producing infrastructure. Dana Petroleum is the operator of the Magnolia well with a 45 per cent interest. Trap holds a 10 per cent carried interest.
IC VIEW: Trap Oil continues to be one of our favoured North Sea explorers due to its excellent management team, strategic industry partnerships and use of advanced exploration technology. The shares are currently well down on our buy tip (27p, 17 May 2012), but we're compelled to reiterate that advice in advance of two potentially large positive catalysts. Buy at 14p.
Sign In
Follow the stocks
