what you want in a junior oiler

Pan Pacific Petroleum is what you want in a junior oiler. It is about to spend US$30 million on up to five wells, three exploration wells and two development/appraisal wells. And best of all it is using its own cash accumulated from its 10% interest in the Tui oil field in the offshore Taranaki Basin.

By the end of the program if all wells fail PPP could be trading at 5.0 to 7.0 cents which would be its remaining cash backing. It has now US$70 million in the bank and no debt. The proceeds of the sale of its Carnarvon Basin interests some US$3.3 m were received after the end of the March qtr when the company reported some $67 million in cash.

So assuming its drilling program will cost around US$30 million it will still have US$40 million in cash at the end of the year plus whatever additional revenue is received from Tui for the remainder of this year say around US$12 million.

PPP's first well is an exploration well the Ca Voi to be drilled by operator Origin Energy in Block 121 offshore Vietnam. That's next to the Block where Neon Energy will also be drilling. PPP has a 15% interest.

Then there is an appraisal well on the Ca Rong Do field in Block 07/03 and another wildcat the Ca Duc 1X well on the Silver Sillago prospect. PPP has a 5% interest in these wells.

The big daddy wildcat is the well planned for the Oi Prospect in the offshore Taranaki north of the Tui field. PPP has opted to increase its interest subject to partner pre-emption to 50% at a likely cost of $15 million. The drilling program in the offshore Taranaki includes one development well on the Tui field Pateke 4H.

If Oi was to come in PPP could be trading well north of a $1.00. If it doesn't look for as I said 5.0 to 7.0 cents.

Pan Pacific has to be one of the best value punts in 2013. Very rare to get a junior with so much cash drilling such an interesting series of wells and still have lots of dosh left at the end if all fail.