Operations o In the UK, Dart Energy concluded a successful 3-month controlled production testing at Airth-12 well, PEDL 133 in Scotland. Sustained flow rates in excess of 500 Mscf/d were observed with a peak rate in excess of 800 Mscf/d. Test results validate the economic viability of the project.
o During the 4Q 2012, Dart Energy International commenced a process to seek strategic co-operation and farm-outs opportunities with potential partners for its UK and broader European unconventional gas prospects.
o In November 2012, the final instalment was made in respect of the Company’s acquisition of Greenpark, a U.K. based CBM business via the acquisition of GP Energy. This comprised the issue of approximately 65 million new shares in the Company.
o Since the financial close of the US$100 million senior secured reserves based lending facility with Hong Kong and Shanghai Banking Cooperation Limited, Singapore Branch (“HSBC”) in 3Q2012, Dart Energy has successfully drawn down approximately US$8.8 million against the facility as at 31 December 2012. Funds have been applied towards the development of the Airth project at PEDL133, UK.
PEDL 133 (Airth, Scotland) During 4Q 2012, Dart Energy successfully concluded a three-month production test period for the Airth 12 well at the Airth Project: The Airth 12 well was completed in March 2012 as a quad-lateral well, at an average depth of 950 metres, with a total “hole in coal” in excess of 2,000 metres. No hydraulic-stimulation (“fraccing”) is being used for any CBM wells at PEDL 133. The well was brought on line in June 2012 for initial dewatering and early commercialisation through electricity generation.
During 4Q 2012, the well was operated continually for 3 months on a controlled production test basis. Sustained gas flow rates in excess of 500 Mscf/d (thousand standard cubic feet per day) were achieved during the production test period, with peak rates in excess of 800 Mscf/d. The well was, however, held back from maximum peak production, to minimise the need for flaring of gas.
This successful production test provides a robust validation of the project’s economic viability and a number of key assumptions that underpin the long-term development of the Airth Project:
o Sustainable continuous commercial gas production has been demonstrated.
o Test data indicate that well flows in excess of 1,000 Mscf/d are attainable in the production area for the intended well design with “hole in coal” ranging between 3,000 metres and 4,000 metres.
Preparations for the initial development of the Airth project continue to progress. The detailed design work commenced following the earlier Front End Engineering Design (FEED) studies. Bids for long lead items and associated equipment were also evaluated.
Community engagement and engagements with members of the UK Government continued. Dart Energy awaits approval of the local planning permissions. Subject to these approvals, development is expected to commence in first half of 2013 to enable commencement of gas sales into the existing GSA with SSE Energy.
So taking all this into account and accepting it all as truth: - they have a debt facility which can be drawn down on - they have a project that will be in production within 12 months (revenue could be $500 million over eight years) - they are in discussions with potential partners to join them and help fund this gas play in UK and elsewhere - the UK Govt is supportive
Obviously I am missing something that explains market cap being only $100 million
DTE Price at posting:
10.7¢ Sentiment: LT Buy Disclosure: Held
