15 Oct 2012 08:24
15 October 2012 Red Emperor Resources NL Quarterly Report for the Period Ending 30 September 2012
Issued Capital: 266M* ASX Code: RMP Closing price: $0.06* AIM Code: RMP Closing price:£0.0395*
* as at 30 September 2012
The Board of Red Emperor Resources NL (Red Emperor or the Company) is pleased to provide the following commentary and Appendix 5B.
Puntland Projects
During the quarter Red Emperor's JV partner and operator of its Puntland Project, Horn Petroleum Corp , continued to drill the second of two exploration wells in the Dharoor Valley of Puntland, Somalia. Horn conducted an open hole Drill Stem Test over a 50 meter gross interval (between 1,910m - 1,960m) at Shabeel North which contained several sands in the upper portion of the primary Jesomma Formation which had oil shows.
The test recovered fresh water (1200 ppm Cl-) without any traces of oil. The well continued drilling through the entire Jesomma reservoir section to reach a depth of 2,200 meters. The section contained several additional sands with oil and gas shows and a full set of electrical logs was run to determine if these sands contained potential oil zones that would warrant further testing. The analysis of these logs indicated that the most prospective looking zone in the well was the upper Jesomma sand interval that had already been confirmed by testing to contain fresh water and thus no further testing could be justified.
Based on the positive evidence of oil shows and the presence of good quality reservoir in the Jesomma, the partnership decided to deepen the well in order to evaluate the potential of the Lower Cretaceous and Jurassic sections. During the quarter the Shabeel North well reached a total depth of 3,945 meters and encountered metamorphic basement at a depth of 3,919 meters. The well penetrated 149 meters of interbedded sands and shales of the Triassic Adigrat Formation with no oil or gas shows and only minor porosity exhibited on electric logs. Accordingly, the well was plugged and the rig moved off site.
By contributing its proportionate share of costs to both the Shabeel North well and the previously drilled Shabeel-1 well, Red Emperor has now earned its 20% interest in the two highly prospective production sharing contracts ("PSCs") for the Dharoor Valley Exploration Area and the Nugaal Valley Exploration Area.
Based on the encouragement provided by these two Shabeel wells, the Operator (Horn Petroleum Corporation) and their partners, Range Resources and Red Emperor, has entered into the next exploration period in both the Nugaal and Dharoor Valley Production Sharing Contracts ("PSCs") which carry a commitment to drill one well on each block within an additional 3 year term. The current operational plan would be to contract a seismic crew to acquire additional data in the Dharoor Valley block and to hold discussions with the Puntland Government to gain access regarding drill ready prospects in the Nugaal Valley block. The focus of the Dharoor seismic program will be to delineate new structural prospects for the upcoming drilling campaign.
Georgia Project
During the quarter the joint venture continued with the revised development strategy in respect of Blocks VIa and VIb of the Georgia Project. The revised strategy will focus on low-cost, shallow appraisal drilling of the contingent resources around the Tkibuli-Shaori ("Tkibuli") coal deposit, which straddles the central sections of the Company's two blocks.
Tkibuli has been estimated by Advanced Resources International to contain recoverable gas resources of at least 0.4 trillion cubic feet of coal-bed methane ("CBM"). Sand horizons have also been identified around the coal beds, which could add additional, conventional hydrocarbon resources to those estimated for CBM at Tkibuli alone.
By prioritising exploration around the productive coal seams, the Company has the opportunity to make early discoveries, add proven reserves and look to provide revenue potential from the Tkibuli CBM play within 18 months from commencement of development, in conjunction with satisfying its PSA commitments. Agreements have been signed with the Georgian Industrial Group ("GIG") who will look at the joint development of the project alongside the current partners as well as taking 100% of the gas produced from the project under the offtake agreement.
During the quarter the joint venture commenced its seismic program which is nearing completion. Processed results should be ready for interpretation by early December 2012.
Corporate
During the quarter the Company completed the issue of 7,500,000 fully paid ordinary shares to raise gross proceeds of A$2.25 million. The funds raised will be used for working capital and to progress the Company's exploration activities in Puntland and Georgia.
For and on behalf of the Board
Greg BandyExecutive Director
Appendix 5B Summary - Consolidated Statement of Cashflow
Current Year to Date Quarter (12 months) $A'000 $A'000) Cash flows related to operating activities Receipts from product sales and related debtors - - Payments for: * exploration and evaluation (5,125) (5,125) * development - - * production - - * administration (294) (294) Dividends received - - Interest and other items or a similar nature 38 38received Interest and other costs of finance paid - - Income taxes paid - - Other Receipts (refunds) - - Net operating Cash Flows (5,381) (5,381) Cashflows related to investing activities Payments for the purchase of: * prospects - - * equity investments - - * investments - - Proceeds from the sale of: * prospects - - * equity investments - - * investments asset acquisition escrow acc 982 982 Loans to other entities - - Loans repaid by other entities - - Proceeds from underwriting - - Net investing cash flows 982 982 Cash flows related to financing activities Proceeds from raisings 2,250 2,250 Proceeds from sale of forfeited shares - - Proceeds from borrowings - - Repayment of borrowings - - Dividends paid - - Costs associated with issue of shares (135) (135) Net financing cash flows 2,115 2,115 Net increase / (decrease) in cash held (2,284) (2,284) Cash at the beginning of the quarter / year to 18,044 18,044date Exchange rate adjustments - - CASH AT THE END OF THE QUARTER 15,760 15,760
For further information please visit www.redemperorresources.com or contact:
Red EmperorGreg Bandy +61 8 9225 2826Rebecca Sandford +44 20 7025 7040
Fox-Davies Capital Limited (Nominated Adviser and Joint Broker) Susan Walker / Simon Leathers +44 20 3463 5000 Daniel Fox-Davies / Richard Hail +44 20 3463 5000
Old Park Lane Capital plc (Joint Broker)Luca Tenuta / Michael Parnes +44 20 7493 8188Tavistock CommunicationsLydia Eades/ Ed Portman +44 20 7920 3150Background
Red Emperor Resources NL is a natural resources exploration company with interests in the frontier state of Puntland, Somalia and the Republic of Georgia.
* In Puntland, Red Emperor has earned a 20% working interest in two licences encompassing the highly prospective Dharoor and Nugaal valleys. These two exploration areas cover over 36,000km2 and shared with JW partners Horn Petroleum, the operator and 60% interest holder and Range Resources Limited who also has a 20% interest. * In the Republic of Georgia, Red Emperor has a 20% working interest in onshore blocks VIa and VIb, covering approx. 6,500km2. Joint Venture partner Range Resources Limited previously funded a 410km 2D seismic program with independent consultants RPS Energy identifying 68 potential structures containing an estimated 2.045 billion barrels of undiscovered oilâ€"inâ€"place (on a mean 100% basis) with the first of two conventional exploration wells (Mukhiani-1) having spudded in July 2011. The Joint Venture is now focussing on a revised development strategy that will target low-cost, shallow appraisal drilling of the contingent resources around the Tkibuli-Shaori ("Tkibuli") coal deposit, which straddles the central sections of the two blocks.
All of the technical information, including information in relation to reserves and resources that is contained in this document has been reviewed internally by the Company's technical consultant, Mr Mark Patterson. Mr Patterson is a geophysicist who is a suitably qualified person with over 25 years' experience in assessing hydrocarbon reserves and has reviewed the release and consents to the inclusion of the technical information.
XLON