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PUBLISHED: 05-07-17
Is an ASX Junior Sitting on a Multi-Trillion Natural Gas Resource?
We’re on the trail of a hydrocarbon big-kahuna in this edition of
The Next Oil Rush.
One aspirational ASX-listed gas developer is on the cusp of spudding its first well, searching for around 1 trillion cubic feet (Tcf) of recoverable gas largely overlooked and certainly underexplored by distracted majors.
To be more precise, this natural gas junior, which has only ~200 million shares on issue and ~40 million options, is eyeing up a natural gas prize that could be worth US$1 billion…
…and may only have to spend around $700,000 to make it a reality.
So what is the substance to these claims?
The scene of this company’s audacious attempt to pip much larger developers to its 1 Tcf prize is the Sacramento Basin in California — a place not necessarily synonymous with hydrocarbon production.
The Golden State is much better known for its tech whizz-kids, tech companies and semiconductors, so you might be surprised to learn that California has the largest oil producing US county outside Alaska.
Today’s company, which boasts a very tight share register, has taken up a great position with easy access to a world-class market. It is looking to rank in the top two for production in the Sacramento Basin if it can deliver a flow rate of just 2.5 million cubic feet of gas per day from a combination of existing wells and the imminent well on its Dempsey Project. The company is already ranked in the top three producers in the Basin.
To do this the company is working in a joint venture capacity with three farm-in partners, who have collectively reduced this company’s capex requirement by around 80%.
So, while this company is the majority holder in most of its prospects, its farm-in partners are picking up the bill for a lot more than their share of the stakes.
This company’s Californian mission is a clear case of being at the right place, at the right time, and paying attention where others have failed to do so.
Having bagged a handful of overlooked prospects over the past couple of years, the company’s drill-bit is bristling with intent.
This company’s spud date is just around the corner in late July 2017…
…and as hydrocarbon-savvy investors already know — if this company manages to find gas followed by good flow/pressure rates from its initial well, its valuation could be significantly amplified.
Of course, there are no guarantees in oil and gas, especially when spudding new wells, so investors should seek professional financial advice if considering this stock for their portfolio.
As you’ll soon see, this company’s management team has removed a great deal of uncertainty by getting into a great location, striking a series of well-priced JV deals, and most importantly, possessing a solid portfolio of prospects adjacent to existing gas fields with pipeline access and extensive production histories.
Oh, and did we mention that despite its junior-status, this aspirational gas goliath was already in production, with ten existing wells producing around 860 Mcf per day?
What we have for you today, is a company already in production, in a primetime location, well-funded, and yet…
…remains valued at AU$20 million.
Introducing:
Sacgasco
ASX: SGC
(20min delay)