News & Analysis

Xtract Energy Plc (XTR: AIM) review and analysis

By PSQ Analytics

Xtract Energy Plc (Xtract) primarily focuses on identifying and investing in early stage technologies and businesses in both the conventional and unconventional energy sectors. The company’s current activities include various oil and gas exploration and production interests in Australia, Turkey, Morocco, Central Asia, Denmark and the Netherlands. The company was established in October 2004 as Resmex Plc and was listed on AIM in March 2005.

The company is organised into two main operating divisions:

– Oil & gas exploration, evaluation and development: This division's principal activities are Xtract’s oil and gas exploration and production interests in the Danish North Sea through holdings in Elko Energy Inc., in Turkey through Extrem Energy (a joint venture with Merty Energy) and in Kyrgyzstan through subsidiary, Xtract International Ltd. Xtract owns approximately 50.02% of the issued share capital of Elko Energy, which holds an 80% interest in 26 offshore blocks in a 5,400 sq km exploration and production license in the Danish North Sea and a 60% operating interest in gas-bearing P1 and P2 license blocks in the Du tchNorth Sea. Xtract owns 50% of the issued share capital of Extrem Energy, which holds a portfolio of seven oil and gas exploration and production licenses in Turkey, including a significant potential prospect at Candarli Bay in south-west Turkey. Xtract holds a 25% stake in Zhibek Resources Ltd , which owns a 72% interest in the Tash Kumyr exploration license in the Kyrgyz Republic.

– Oil shale exploitation: Activities in this division revolve around the development of a proprietary supercritical technology for the commercial extraction of liquid hydrocarbons from oil shale, and the development of the company’s oil shale resources in Australia through wholly owned subsidiary Xtract Oil Ltd. Through Xtract Energy (Oil Shale) Morocco SA (XOSM; a joint venture with Alraed Ltd Investment Holding Company WLL in which Xtract holds a 70% interest), it is also planning to evaluate and possibly develop oil shale deposits in Morocco.

Key recent news

12 February 2010: Xtract announced an agreement with Merty Energy to purchase an additional 16% stake in Extrem Energy for USD4.9 mn, taking the company’s total holding in the JV to exactly 50%.

20 January 2010: Xtract announced the commencement of commercial production at the Sarikiz-2 oil well with an average daily natural flow rate of approx 60 bbl/day and a planned increase to 350 bbl/day by the end of 1Q 10.

08 January 2010: Xtract announced an agreement with Oakville Capital ET, LLC to acquire their entire 13.2% holdings in Elko, taking the company’s stake in Elko to 50.02% of the issued capital. This further acquisition was undertaken with the strategic intent to become a more involved participant in the business.