Formal Response from J Kopcheff to Open letter I sent him questioning drilling schedule and other matters...
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Dear Sir,
Thank you for your email of 26th July 2002 expressing your concerns about the timing of Victoria Petroleum’s drilling projects and Victoria’s share price and performance.
With regards to the San Antonio project, Victoria is somewhat constrained from providing timely advice to shareholders on activity as the information we receive comes from the Operator, a private company. Frankly, the Operator tells us what he believes is important and when we should know. This can be frustrating at times to all of us.
At present, we are awaiting the results of the fracture stimulation of the Vaqueros formation which requires a two – three week flow back of fracture stimulation fluids before we know if the fracture stimulation was successful for that zone.
Hopefully we will know something by next week.
With regards to the changes in the Drilling Schedule you have observed, whenever a drilling schedule is released to the website, at the time of the release the drill schedule is based on the information available to Victoria Petroleum from the Operator on those wells where we have no control over the timing of the drilling or testing activities and also from our own operated permits.
You will note that in the Drilling Schedule heading there is a note to the effect that the drill date is subject to farmout and drilling rig availability. Several of Victoria’s projects are subject to farmout as Victoria considers it not prudent to drill many of its exploration wells at high levels of equity and thus risk excessive financial cost exposure to the company.
Sometimes our estimate as to when a farmout can be achieved will be incorrect as sentiment for investment in the drilling industry by fellow explorers can change and often do being subject to the mood of the investment communities support for oil exploration drilling and the public companies that carry this out.
To address shareholders concerns that they do not really know which wells will be drilled in the time frame shown on the Drilling Schedule, you will notice that on the current drilling schedule on the VPE website I have indicated by an asterix those wells that the respective operator has advised are firm wells to be drilled and have been allocated a position in the drilling rigs drilling schedule.
Please note that even though a major operator such as Apache has notified us that they will be drilling the Ceres well in late October and the Argos well in early November 2002 for example, should Apache experience drilling problems or drilling success and associated testing programs as has happened in the past then there will be a delay in the scheduled drilling of the Ceres well and you may see Ceres drilling in early November and Argos in late November 2002.
Conversely should Apache increase the efficiency of their drilling schedule prior to moving the drilling rig to those permits in which Victoria Petroleum has an interest and which have been designated as firm wells then the drilling may be sooner.
Similarly, Origin Energy was to drill our North Perth Basin exploration well Jingemia No.1 in July 2002. However as a result of the development drilling in the adjacent Hovea Oil and Gas field, 5 kms to the northeast, the Operator for Hovea, Origin Energy has advised us that Jingemia No.1is now expected to commence drilling in mid September 2002.
Generally, it is Victoria Petroleum’s experience that wells delay more often than commence early, no matter who the Operator is.
With regards to the share price performance of Victoria Petroleum, I can only make the observation that comparison of Victoria Petroleum’s share price over the last 9 months, with our peers, that is companies of similar nature, shows that invariably almost all junior oil explorers are trading at levels of 50% of their price pre September 11, 2001.
Market sentiment and investor confidence in the oil exploration sector are factors outside of our control and currently are a result to a large extent of a lack of investor confidence in the general market due to the perceived problems of the US stock market.
The Board and Management of Victoria Petroleum NL are resolute in their belief that our current and future drilling program will eventually deliver exploration success to the company and its shareholders.
The Argos and Ceres drilling provides, we believe, a very real chance this year of a commercial oil discovery and oil production and associated cash flow for Victoria Petroleum in 2004.
All correspondence from Victoria Petroleum shareholders is appreciated as it provides Victoria Petroleum’s management with the views of the shareholders.
Yours faithfully,
JOHN KOPCHEFF MANAGING DIRECTOR VICTORIA PETROLEUM NL
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My Comment:
As I post this the share price is .020c No mention of Kingfisher, Raven or Eagle.
Should S.Antonio fracture well, we may see an improvement in the share price.
Redbeard
VPE Price at posting:
0.0¢ Sentiment: None Disclosure: Held
