Hey Roz,
Good to hear from you!
Well I can gladly inform you that the Borsano permit will not be farmed out. I contacted CEO Ken Russell about a month ago and he confirmed that things were progressing nicely with the integration of their Italian operating fully owned subsidiary Puma Petroleum, and that seeking out potential farminees for Borsano was not something that they were considering. However, there is a possiblilty this may have changed due to the fact that the costs of the current Tanzanian two-well drilling programme are going to spiral fairly heavily. This could result in Key searching for a potential farminee, however I believe that this is unlikely. I think a capital raising would be more beneficial. Besides, they will still have enough cash for an exploration well at Borsano barring some catastrophic event in Tanzania. Unfortunately I think Q3 is a more realistic target for drilling in the Po Valley. Remember they originally said end 07 start 08, then the drilling schedule said April 08, now it is 'end of the first half' - June. And Ken Russell hasn't even declared the targets for Borsano - I asked him about potential reserves of his Borsano#1 target and he replied, 'I am not willing to make a public statement about potential reserves of the Borsano #1 target.' Who knows, independant geologist and numerous information from the public domain stress that Borsano - 8km from 250mmboe and 175BCF gas Villafortuna / Trecate - is fit for shallow gas plays and deeper oil plays. I don't think they will do extra seismic. Seismic lines are available from the previous permit holders and Italian oil & gas authorities.
I think Lampedusa offshore Italy is very exciting. Huge upside potential here, especially considering Cairn's takeover of Medoil. IMO - I stress IMO - a potential farm-in of Cairn into Key's Lampedusa is very possible. They are flexing their FTSE 100 muscle right next door and Lampedusa is in reality an extension of Cairn's Louza permit. IMO significant upside in SP if this was to occur.
17c per share is factoring in NO UPSIDE into the stock. This is a very rare phenomena. Can't wait for TD because it means the Comapny will be able to grow organically with very little raising of extra capital - given successful exploration.
Hold on to your hat!
Cheers Roz,
SS.
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