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Clontarf Energy, Fastnet Oil & Gas, Sound Oil, Gold Oil news briefs

Contributed by Fox-Davies Capital

Clontarf Energy: Proof of Life - The fact that Petrominerales has proved up the potential commerciality of Ucayali Basin shouldn't matter to investors, as without a cost to Clotarf helps to not only shed light on the play within the basin, but should also help it to refine its own prospectivity. Peru has made significant strides in nurturing its oil sector, such that the only hinderence to commerciality of an finds in the country is limited to operational issues and access to markets.

In this news:

- Petrominerales light-oil discovery
- Sheshea-1X well 70km northwest of Clontarf's Block 188
- Oil bearing structures discovered by Sheshea-1X believed to be in Block 188

Fastnet Oil & Gas: Next Step Taken - Management has appointed WesternGeco to reprocess its 2D seismic in order to help it identify drill targets. This is the next stage in the approvals process that will hopefully lead to a number of solid prospects being identified and drilled.

Jupiter Energy: Steady Progress Being Made - Jupiter continues to make solid progress in its transition from explorer to fully fledged E&P company, and while there is a long way to go before the contingent resources identified can be classified as reserves, such as finding a suitable long term sales solution, given the pedigree of the management team, and that of the advisors available to it, the odds are fairly high that it will be achieved.

In this news:

- The J-55 well reached total vertical depth of 3,400m on 29 September 2012.
- Initial analysis of the J-55 well indicated 112m of gross reservoir and approximately 60m net pay in the Mid Triassic carbonate reservoir unit. This is similar to that of the already discovered Akkar East oilfield. The 90-day flow testing programme for J-55 is expected to commence in early November.
- Production from the J-51 and J-52 wells produced ~35m bbl barrels during the quarter generating revenues of ~$2mm.
- J-50 was shut in during the quarter for modifications to its top side facilities and awaiting the installation of an electric submersible pump ("ESP"). Following the October installation of the ESP, the well is currently flowing at ~250 bopd.
- J-53 underwent a chemical treatment that partially reduced the water production; the well will now undergo a workover with cement squeeze to further reduce the water influx.
- Successful Rights Issue completed in July raised $11.25mm (after costs).
- Conversion by SNG of $3.45 Convertible Notes to ordinary equity.
- POST PERIOD END:
- J-58 well was spudded on 21 October. This is the Company's 6th exploration well and the 2nd well drilled on the new southern extension area.
- Trial Production Licence applications for both J-51 and J-53 wells are progressing with a current expectation that all approvals will be received before year end.

Sound Oil: Nervesa Funding - That management have sought innovative ways to fund themselves is massively positive. However, it appears to be coming at a high price, which means that either the asset isn't as close to being commercial as we first thought, or the Company is more desperate for cash than we believe; under these types of arrangements a strong grasp on costs must be maintained, especially as there is a cap of €19mm. Given that there is an option (if Nervesa is unsuccessful) for CSTI to pre-empt participation in development (of Strombone or other asset at Sound's election), one wonders if the Company has made a rod for its own back. Still, it is in recovery mode, and as the saying goes, "cash is King."

In this news: 

- CSTI will fund directly €1.5 million towards the Nervesa appraisal well, which equates to roughly 50% of the remaining spend on the well. The payments will be phased in three equal tranches over the drill period.
- In addition CSTI will, as part of the subsequent field development programme (which is subject to the results of the appraisal well), have pre-emption on funding directly the total cost of the facilities, currently estimated to be €4 million and on the associated EPC (Engineering, Procurement and Construction) contract for Nervesa.
- Based on the P50 contingent resources of 21 Bscf gas (the Company's base case), Sound Oil estimates that the contract will result in a reduction of the Nervesa project NPV for Sound Oil of approximately 8% (assuming CSTI fund both the well and the facilities) or approximately 7% if they fund only the appraisal well. The payments to CSTI are structured as a "net profit interest", with CSTI receiving a maximum of 36.5% of the project's net cash flows (net of taxes, costs and royalties) for a maximum of four years. Total payments to CSTI are also subject to a monetary cap of €19.2 million (assuming CSTI fund both the well and the facilities) or €12 million (if they fund only the appraisal well).
- Should gas production not start at Nervesa for any reason, Sound Oil will have no liability to repay any funds to CSTI. In this scenario CSTI would however be entitled to a pre-emption right on one future EPC contract (either Strombone or one alternative appraisal well of Sound Oil's choice).
- Sound Oil retains 100% ownership and control of the Nervesa and Strombone opportunities and associated licences.
- The funding contract is conditional on the final government approval of the Nervesa appraisal well.

Gold Oil: Christmas Comes Early! - Well, actually it hasn't, but with Rudolph running the show and Gold Oil changing its name to Blitzen Energy, we couldn't resist, especially as good cheer is thin on the ground in the markets at the moment. Despite the name change, Gold / Blitzen is still in the GOO and the cheer won't get any better until the management team resolve the cash flow issues that are facing the Company. The Company has a number of solid assets, and work to date should place it in a strong position going forward, if it can stabilise itself. While a name change will not change the Company's fortunes, in applying to shareholders to reset the Company's capital structure and prepare for a fund raising, the first steps have been taken towards putting it right. Christmas may not have come early, but it is comforting to know that it is at least on its way, if a little delayed.