The good news for shareholders in COOPER BASIN ENERGY LTD (COE) is that it has produced some strategy at last after three years of sitting on the sidelines.
The company was one of the lucky ones in the global financial crisis because as it struck shareholders stumped up a sizable capital raising which has carried it through the tough times along with some modest oil output that kept the cash flow going along with interest on investments.
Their cash backing has been around 35c a share, and even higher.
According to the ASX net tangible asset figure it is 92c.
The company has the two Cooper Basin permits from small profitable oil fields.
Cooper Basin has drilled in Indonesia and Tunisia but so far success has eluded it.
On Tuesday the company announced that it has entered into a transaction with GB Energy Ltd (GBX) regarding the sale of all of the shares in Worrior (PPL 207) Pty Ltd which is the holder of the following Cooper Energy group assets:
* 30 per cent of Worrior oil field;
* 25 per cent of PEL90; and
* 30 per cent of PEL93.
In addition, Cooper Energy has entered into farm-in agreements with GBX in relation to the following assets:
* Farm-out of 9.165 per cent of PEL100;
* Farm-out of 20 per cent of PEL495; and
* Farm-out of 10 per cent of PEL110.
The immediate value of the transaction is $16 million plus $500,000 million GBX shares.
The transaction provides Cooper Energy with an immediate value realisation of the Worrior oil field (Cooper share currently around 150 barrels of oil per day) and a future carry on a number of exploration programs.
The benefits enable Cooper to enhance the management associated with the portfolio of South Australian assets and provide additional funding for its ongoing exploration programs.
As per Cooper Energy's announcement in September, PEL495 has 12 prospects and leads containing 52 million barrels (P50) of Prospective Resources across the permit.
Up-dip of the Sawpit-1 well is a ready to drill prospect and it is expected that this prospect will be drilled towards the end of 2011.
Cooper Energy has now secured a full carry on the expected future work program of this block, which serves to manage and mitigate the financial exposures associated with the normal exploration risks on the block.
Cooper Energy retains 30 per cent of this highly prospective block.
The combination of divestment and farm-out allows Cooper Energy to focus on its remaining South Australia portfolio, which includes the highly prospective PEL92 block where it has just commenced a large eleven-well back-to-back exploration program.
The cash injection received from the transaction will further boost the company's cash reserves to around $100 million (34c per share), thereby enabling it to continue funding its growth aspirations and operational activities.
Managing director Michael Scott said the transaction has a number of benefits for both companies and provides a strong valuation metric for Cooper Energy's remaining South Australia portfolio.
"The sales proceeds and the cash released from the exploration work programs will be used to fund new ventures, exploration and development programs so Cooper Energy can continue to pursue its growth aspirations across the company's portfolio," he said
SHARE PRICE MOVEMENTS
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Shares of Cooper Energy yesterday rose 0.5c to 41c. Rolling high for the year is 58c and low 35.5c The company has 292.5 million shares on issue with a market cap of $119.9 million.
Last week, Cooper Energy achieved new success with the first well in Cooper Basin drilling campaign.
Directors said that the Parsons-3 successfully intersected a nine-metre oil column in the Namur reservoir, in line with pre-drill expectation.
The well reached a total depth of 1,410 metres and since then wireline logs were run, confirming the presence of a nine-metre oil column in excellent quality sandstones of the Namur oil reservoir.
Preparations are currently being made to case and suspend the well for later tie-back to the Parsons production facilities.
The well will provide an additional drainage point for the Namur oil reservoir to the north of the Parsons-1 discovery well.
The Parsons oil field is currently producing approximately 1,100 barrels of oil per day from two wells in the Namur reservoir.
The Parsons-3 production well is expected to accelerate production and increase reserves.
The impact on production rates and reserves will be assessed once the full results of the current Parsons appraisal/development drilling program have been evaluated and production rates from the new development wells have been established.
An upgrade of the Parsons surface facilities will be undertaken to handle the expected increase in oil production.
Oil production from Parsons is exported via the flow-line to Tantanna.
BACKGROUND
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Cooper Energy is an Australian and international upstream oil and gas exploration and production company, listing on the ASX on March 13, 2002.
With the primary objective of creating shareholder wealth, the company has a vision of being one of Australia's leading oil and gas companies with recoverable hydrocarbons in excess of 50 million barrels of oil equivalent.
To assist in managing the risks that are inherent to the oil and gas business, the company invests in onshore or shallow shelf proven petroleum systems in politically and fiscally stable countries.
The company has assets in five countries: Australia, Tunisia, Indonesia, Poland and Romania.
Within these five core countries the company has operated exploration assets in Australia, Tunisia and Indonesia, non-operated exploration assets in Australia, Tunisia, Poland and Romania and development/production assets in Australia and Indonesia.
The company mainly seeks to grow by exploring its diverse and deep-value asset portfolio within these five core countries.
To ensure that the portfolio continues to deliver value, additional assets are added from time to time.
All opportunities that the company secures and participates in are evaluated to ensure that the risks are understood and manageable, and that the individual opportunities can provide an adequate return on capital.
COE Price at posting:
40.0¢ Sentiment: Hold Disclosure: Held
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