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Kea Petroleum Signs HoA For Puka Farm-Out

Kea Petroleum  Signs HoA For Puka Farm-Out
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Kea Petroleum  Signs HoA For Puka Farm-Out

Revenues from the test oil produced to date now tally US$3.2 million, a useful little amount, but far short of supporting a full appraisal and development of this complex field.  3D seismic suggests the current wells have been  drilled into thin sands on the western edge of a substantial channel and that drilling into the thicker sands it expects to find in the main channel could yield production rates of over 2,000 bpd.

Kea will now enter an exclusive period of final due diligence and transaction documentation with a view to completing a transaction in early 2014. The aim is to land a staged farm-out that will see Kea funded, up to a cost cap, through one firm well and up to three further wells to fully appraise Puka, which it currently reckons holds 1-3 million barrels with potential P50 upside of 7-10 million barrels.

Chairman Ian Gowrie-Smith said the company was pleased with the response to the farm-out process and  by the technical validation and endorsement of Puka by “a significant number of highly credible oil and gas companies”.

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Beacon Hill Resources, likely to record positive cash flows 6P TGT

Beacon Hill Resources, likely to record positive cash flows 6P TGT

thehub's insight:

 Beacon Hill Resources, likely to record positive cash flows 6P TGT

Beacon Hill Resources (BHR) announced its voluntary delisting from the Australian Securities
 Exchange (ASX) after the close of the day’s trading.

On 19th September 2013, the company had announced its application for delisting to the ASX, which was subsequently approved. However, there would be no change to the quotation and trading of Beacon Hill shares on the AIM.

Shareholders participating in the share sale facility, but yet to have their shares sold, would now have their shares offered for sale on AIM with the proceeds distributed on completion. Other holders of CHESS Depository Interests (CDIs) would have their CDI’s converted into ordinary shares on AIM on or around the delisting date. One CDI on the ASX equalled two ordinary shares on AIM.

Our view: Delisting from the ASX would help BHR in saving maintenance cost of trading over the ASX, which trades merely 0.34% of the total shares of the company.

Outlook is positive on the operational front, with the completion of engines to transport coking coal from Minas Moatize to the port of Beira. The company is now keenly focused towards its target of reducing cost per tonne to US$108 from the current US$155.

Last month’s farm-in deal for licence 3788L was an attractive opportunity for BHR for vertical integration of its operations, which is likely to translate into further cost savings and higher margins going forward.

Given an attractive proven & probable resource base of 16.2 metric tonnes (MT), including at least 8.3 MT of coking coal, at the flagship Minas Moatize mine and the continuing cost savings, BHR is likely to record positive cash flows in majority of the predicted price scenarios. We maintain a Speculative Buy rating on the stock.

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