Thanks for being here and hearing the story of Incremental Oil & Gas
(ASX:IOG). We’re on the conservative side of the small cap oil and gas space, not much of an explorer rather a production based company. We acquire oil fields where others have been and basically harvest the remaining reserves, which are often substantial. All our projects are onshore, presently in California and I will tell you about five. We operate all of our own interests with virtually 100 per cent ownership.
We started as a private company in 2009 with our own funds, did a compliance listing over a year ago, just raised $5 million and have a small shareholder base. Our market cap is about $35 million, revenue base still quite modest and numbers for last calendar year will be announced tomorrow. We don’t carry any debt and Oil and Gas is a very profitable business.
Our team, who worked together previously at Incremental Petroleum, comprises Chris Cronin with senior oil and gas experience at Woodside, Mark Stowell founder of Anvil and Mawson West copper and silver producers in Africa. Sandy MacDonald was in the Australian Senate for 13 years and I’m a worldwide geologist with 40 years’ experience. My guy in California is basically the conduit through which we seal all our deal flow.
Projects
Why are we in California? It has substantial reserves, we like it as a place for producing oil and it has a lot of potential. The projects are mainly in the San Joaquin Basin but are also in the Ventura Basin, the Los Angeles and the Northern San Joaquin Basin. So we have two producing oil fields, two projects we expect to bring on-stream in the next six months and one exploration project as well as others which we won’t go into now.
We’ve been working on Round Mountain which has produced over 110 million barrels in its life starting in the 1920s. It has been in serious decline which is the pattern for many of these oilfields in California. The area is very shallow, the main reservoir just 1200-1500 feet, the oil is relatively light and production in total now is about 9,000 barrels a day.
We started here in February and have drilled six wells to date which has been a learning curve. It presently produces 150 barrels a day, we’ve only spent $3.5 million capex on it and revenue return is nudging over $3 million. So a nice little project, awfully rich in oil with enormous potential.
Ventura has produced about 160 million barrels and we’ve picked up leases in this area – extremely thick oil columns here, very undeveloped and producing about 150 barrels a day and scope for more wells.
McDonald Anticline in the San Joaquin Basin: Light oil, very high chance of success, large lease position of about 1,500 acres and we’re looking at drilling 3 wells in the next couple of months.
Sheep Springs Oilfield, again in the San Joaquin Basin: stacked reservoirs, large reserve base bought in 2010. It is in decline now, about 130 barrels a day but meanwhile, is paying all of our cash costs from other projects. It does have other reserves which we will get round to developing in time.
Raven Pass is our only small exploration project - about two by seven miles long, has light oil and a reasonable volume. There is some complexity here but not too bad.
So a lot of news flow for a small company. We’ll be drilling 10-11 wells this year with a mixture of production wells coming on. At Round Mountain we’ll be drilling four to six wells at least as well as Ventura, MacDonald Anticline, and the exploration project will be farmed down. We’ll acquire additional projects and tomorrow will declare another not insignificant after-tax profit, which is a rare thing in this microcap space for Australian companies. I thank you for your time.
