Continuing with a look at supposed penny dreadfuls, WON is of interest at the moment with two wells coming up in March and what looks like a successful farm out of Puffin. The shares closed on Friday at 0.013 cents as against a close of 0.011 cents the previous Friday. WON had a pre Christmas two for three share issue at one cent. This has taken the total number of shares on issue to some 340 million valuing the company at around $4 million. It seems reasonable to expect some price appreciation ahead of the March drilling though the new shares might put a cap on the extent of that appreciation in the short term. Nevertheless volumes and price picked up a little this week.
West Oil gets ten out of ten for effort. It has tried hard to graduate from only an explorer to explorer and producer without success. The Puffin oil field in the Timor Sea (AC/P 22) was to be the company maker for WON and its partner NWE. Drilling in years gone by had proven the presence of oil and WON/NWE expected to prove up the field with an appraisal well, Puffin 6, after finding oil in Puffin 5. In anticipation of success at Puffin the market had WON’s shares at between 15 and 25 cents for much of the year 2000. But Puffin 6 hit the Puffin 5 reservoir below the oil water contact. WON’s share nosedived and have never really recovered.
Experts describe the Puffin Horst Block as divided into a number of discrete fields making it very complex geologically. When WON’s original US partner pulled out of the lease WON and NWE looked for new partners and found them in Century Exploration and Concordia Resources, two related US companies. The arrangement with them is important so here it is. Century and Concordia have agreed to undertake Pre Stack Depth Migration (PSDM) processing on 150 sq km of 3D seismic over the Puffin Horst to earn an option to drill a well in the permit. If Century and Concordia exercise the option they will earn an 80% interest in AC/P22 by drilling and if warranted testing and suspending one well. NWE and WON will each retain 10% interest in the lease and be free carried through any well. The Americans have six months to analyse the seismic from the date a formal farm out agreement is signed. As long as Puffin is still alive there will be interest in WON and NWE.
But it is not Puffin which is likely to influence WON’s share price action in the short term. After a quiet 2001 and a disappointing drilling program in 2002 which included a number of dusters (eg, Carlston 1 and Sleeper) WON went back to shareholders a couple of times for more money and is about to drill two wells, one South Crackling (WON 22%) in the offshore Carnarvon Basin targeting 20 mbo in the Birdrong Sandstone. The other is the delayed drilling of Altostratus 1 (WON 10%), targeting 48 mbo, and also in the Carnarvon basin. Both wells are likely to be drilled in March but this depends on the prior drilling commitments of the rig engaged for the wells.
WON has more than Puffin and these two wells to look forward to. It has quite an extensive portfolio of assets particularly but not exclusively in the Bonaparte and Carnarvon Basins and is working hard on farm outs. Anyone interested in the stock would be well advised to read WON’s second quarter activities report due out shortly or go to the website. WON has the capacity to spring surprises as it did when it announced in December that it had signed a farm out agreement with Chinese Petroleum Corporation of Taiwan which will see WON free carried by CPC in one exploration well in AC/P 32 in the Timor Sea to be drilled by feb 2004. One should never underestimate the ability of CEO Charles Morgan to do deals.
