TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH CENTRAL PETROLEUM LIMITED
(ASX:CTP) MANAGING DIRECTOR, JOHN HEUGH
Emma Pearson: Hello Emma Pearson reporting for the Finance News Network. Joining me today from Central Petroleum to talk about the company’s rights issue is Managing Director, John Heugh.
John welcome back. Now you’ve announced a fully underwritten rights issue to raise $22.6 million, why did you decide to raise the money now?
John Heugh: Basically we’ve got a very active drilling programme coming up. Three out of our four joint venture participants including the BG Group are in default, haven’t paid their cash calls and rather than waste time wrestling with them, we have various options before us. One of those was simply to raise the money that we need to get on with the drilling programs. So the main message to the market is business as usual. We have a fully underwritten rights issue of over $22M, strongly supported by Patersons and so that’s what we’re going to do - proceed with the drilling and get these wells drilled that we have to.
Emma Pearson: John talking about those defaults by your joint venture partners, is there a chance that those joint venture partners may pull out of their agreements?
John Heugh: Yes there are various mechanisms; it’s a very complex issue. Some of this is before arbitration at the moment and one particular matter is subject to the court application, so I can’t really describe in detail the options available to us. It’s always possible that a joint venture partner may attempt to pull out. There are certain restrictions on that in the agreements that had been signed with our joint venture partners, however, and so it’s not just a clear cut case of pulling out for them.
Emma Pearson: Now I understand that shareholders who take up the rights will get stock at an issue price of 7.5 cents a share and receive one free option for every five new shares issued. What’s the closing date of the offer and when does rights trading cease?
John Heugh: Rights trading ceases on the 15th of April Thursday and the closing date of the offer is again Thursday, a Thursday I should say - Thursday the 22nd of April.
Emma Pearson: Okay John, where will the money go?
John Heugh: The money will go basically in completing the five coal seam gas wells that we’ve already started - we have another two to drill. We have a very large gas prospect near Alice Springs called the Ooraminna-2 well which has been drilled before. That particular prospect has been drilled and flowed gas to surface before. The next well will be Johnstone, a large oil structure in the north west of the Amadeus Basin and then finally with the three wells that we’re definitely planning at this stage, Magee which will be a well in the southern part of the basin, that will target gas condensate and helium which is a very high price commodity in very short supply throughout the world.We will have some funding left over and we’ll put that towards drilling probably a fourth prospect in the Simpson Block and EP 97 to the east. We haven’t figured out which prospect it will be yet but we have about three or four at our choice.
Emma Pearson: And when is drilling expected to commence?
John Heugh: Well with the conventional program Emma, we plan to spud Ooraminna-2 on May the 1st but we’re waiting to get back into the desert – we’ve been rained out recently, to complete coal seam gas wells number 4 and 5. And we would aim to commence number 4 within the next week or two.
Emma Pearson: Can you tell us about the prospects?
John Heugh: Ooraminna is a very large gas prospect, it could host up to 2 trillion cubic feet of gas. It has been drilled before, we regard it as a very low risk prospect because we’re drilling right next to the old well that was drilled in 1963 and it was never tested properly. The next well we plan will be on the Johnstone prospect in the north west of EP 115. That prospect hasn’t been drilled before, but it’s a very large prospect that could host up to 500 million barrels of oil. We have also another three prospects in that same permit available for drilling. So if we have success at Johnstone, we may stay there and drill wells number 2, 3 and 4 in that particular permit. The third well in the plan programme this year Emma is the Magee-2. Again that’s a prospect which has been drilled before in 1992 and it flowed gas helium and condensate to surface, so again we regard that as a relatively low risk prospect. Finally after the Magee well, we would plan to drill another well in the Simpson Block in EP 97, but we haven’t chosen the location for that last well as yet.
Emma Pearson: You’ve recently announced that oil has been formally identified in samples from a well in the Pedirka Basin Central Australia, how much did you find and what’s its significance?
John Heugh: Well certainly the amount of oil that we found was only a trace amount, but it is very important because the oil has been type matched - we know that it comes from a terrestrial source rock. So that sort of source has never been described before in the Pedirka Basin, so it means we’ve now got several different potential sources for oil in the Basin. We know that that oil migrated into the well in question which was CBM 93003, so we know there’s a migration pathway running through that north eastern part of the Basin. So basically in a layman’s sense, it’s simply increases the prospectivity of the Pedirka Basin and helps underpin our exploration effort for oil in that area.
Emma Pearson: John Heugh, good luck with the rights issue.
John Heugh: Thank you very much.
