Tangiers targets new high value ass12 Nov 2014 09:02
Tangiers targets new high value assets with the success of its recent new funding initiative. The company now has its destiny in its own hands.
Tangiers Petroleum’s goal remains the building of a successful exploration and production company, targeting overlooked or emerging play types. The Company is now in a rebuilding phase, having announced a planned exit from its Moroccan TAO-1 oil well play, made possible by recently acquired new funding.
Management at Tangiers Petroleum (ASX: TPT) admit it has been a rough ride for shareholders following the failure of its key Moroccan asset but MR. David Wall clearly explained the factors effecting the lack of success and highlighted they were beyond the company’s control due to the structure and involvement of other parties in the process. Importantly this structural problem will not be encountered again. Belief in the Company and its management team has meant that new funds have been raised and Tangiers is ready to move forward again.
The Company’s TAO-1 well was declared unsuccessful on the 4th August, having failed to encounter a quality reservoir or significant hydrocarbon but the final cost of the well also exceeded the Company’s internal budget.
“This was largely due to factors not associated directly with the drilling, which was completed safely and efficiently. Unfortunately, several of the costs were not fully quantified until after the well had reached total depth,” Tangiers Petroleum managing director, David Wall told The Australian Investor.
Following an internal strategic and technical review, the new board at Tangiers elected to exit its 25 per cent interest in the TAO-1 well and enter into a Deed of Settlement and Release with operator Galp Energia Tarfaya (Galp).
Following a brief suspension from trading, Tangiers was re-instated after reaching an agreement with Galp to pay $3.4m, in stock or cash, if the market capitalisation of Tangiers exceeds US$50m within seven years of the agreement.
After a final financial post-mortem, Tangiers revealed it spent A$12.64 million on exploration and evaluation in the three months to September 30.
An additional A$1.4 million was spent on operating costs, and the company was left with A$1.26mln at the end of the period, a figure well below company expectations.
“The well was drilled on time but not on budget, unfortunately ,” he said.
“If we had known the well was trending over budget we would’ve tried to raise some more money, but our only reference for tracking cost was the schedule and on that basis we thought we were OK.
“After the well had hit total depth, it became clear to us through some conversations with the operator that the costs were trending higher.
“The costs went higher than we imagined possible and we had to negotiate a settlement, which effectively meant that we owed Galp US $3.4 million, an amount we couldn’t pay.
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