big day out

Melbourne two have a big day out
Barry Fitzgerald
May 16, 2008

IT WAS another big day out on the market for Melbourne-based oil and gas groups.

Eromanga Hydrocarbons shot 12¢, or 83%, higher to 26.5¢ on enthusiasm for an oil find in its Brazilian hunt.

And AED Oil continued its recovery from recent distressed levels by bouncing 47¢, or 17%, higher to $3.16 as confidence grew that China's Sinopec would complete a $600 million deal on AED's Timor Sea oilfields.

Eromanga reported that it had encountered oil shows over a (gross) interval of 38 metres in a well drilled in Block 430 in the onshore Sergipe Alagoas Basin, a joint venture with local partner Gavea. More work is required to determine the well's commercial potential.

Success in the well has increased the market's interest in the planned drilling of a second well in the same block that is said to be bigger and close to an established and free-flowing oilfield. Eromanga has previously found success in Block 330, where its first well in Brazil has been completed as a future oil producer.

Meanwhile, AED's share price gain triggered an ASX inquiry. The company said it had nothing to say other than what had already been announced. The market was looking for confirmation that the Sinopec deal was about to be completed.

Sinopec has received Federal Government clearance for the deal but has been waiting on clearance from Chinese authorities to write the cheque.

Sinopec is to acquire a 60% interest in AED's Puffin oil project for $600 million. Earlier enthusiasm for the project drove AED's share price to a record $11.40. But disappointing production sent the stock to a $1.01 low before the Sinopec deal.