WELLINGTON: Mosman Oil and Gas (MSMN) promised much when it began trading on AIM in March 2014. The New Zealand and Australia-focussed oil explorer’s share price rocketed fivefold to over 40p within four months, and early investors made a fortune. Since then there has been little to cheer, but a recent spurt suggests things might be about to change.
That initial rally proved short-lived, and by July this year Mosman shares had plunged to a low of 1.85p. But the price had been creeping up for the past few sessions and in the last hour of trade Thursday surged from less than 4p to over 5p.
After maxing out at 8.74p Friday morning – a gain of more than 130% since yesterday afternoon – Mosman chiefs have been forced to react. It said:
“As noted in the announcement made on 3 September 2015, Mosman intends to finance its share of the company’s proposed acquisition of up to a 70% interest in NZ producing oil and gas assets which include the Rimu, Kauri and Manutahi fields from Origin Energy Limited (the “STEP Project”) (the “Acquisition”), through a combination of existing cash, sale of a royalty on future production, debt, equity, and convertible securities.
“The company is progressing discussions with various finance providers and will provide further updates to the market as appropriate. Save for the acquisition, the company knows no other reason for the movement in its share price.
Earlier this month, Mosman said it had executed a conditional sale and purchase agreement to buy onshore NZ producing oil and gas assets for NZ$10 million (£4.2 million). It had also agreed a participation agreement with private firm WRDLS Pty, which will buy at least 30% of the project. Mosman wants to keep hold of 40-70%.
The project, to be renamed the South Taranaki energy project, already produces oil, condensate, gas, LPG and electricity, and since last October has been producing an average 603 barrels of oil equivalent per day (boepd). That would generate annual revenue of about NZ$8 million based on current production rates, oil price and exchange rates.
Mosman has also identified 12 low cost projects that could potentially significantly increase production. The project currently has 2P (proven plus probable) reserves of 1.9 billion cubic feet (Bcf) gas and 1.4 million barrels (MMbbl) of oil, and 2C (best estimate of contingent) resources of 13.7 Bcf gas and 4.1 MMbbl oil. Prospective resources are estimated at 179 Bcf and 166 MMbls.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
