Pancontinental Oil & Gas NL Limited (ASX:PCL) Executive Director and CEO John Begg provides an update on the company's offshore Namibia Project, PEL 87 and onshore US Tulainyo Gas Project.
Jessica Amir: Hello I’m Jessica Amir for the Finance News Network. Joining me now from junior oil and gas explorer, Pancontinental Oil & Gas NL Limited (ASX:PCL) is Executive Director and CEO John Begg. John, welcome to Sydney.
John Begg: Thank you Jessica.
Jessica Amir: First up John, in September last year you really ramped up your growth strategy. So where is the company at today?
John Begg: We’ve drilled two wells; we’re about to get into initial gas production in California. We’re looking to scale that business up if we can. And we’ve got a big well coming up in offshore Namibia later this year, in fact just a few months away in September. Overall I think we’ve introduced something like - by that time, we’ll have introduced something like $31 million of investments, to make our project happen. While only tapping into $6 million of shareholder funds.
Jessica Amir: Now to your recent announcement about your offshore Namibia project PEL 87. Just tell us what the mapping revealed?
John Begg: PEL 87 is our newest block; we’ve got an active new venture program ongoing with everything else that we’re doing. It covers over almost 11,000 square kilometres. The geology’s very similar to what we see further to the north in PEL 37, where we’ll be drilling later in the year. But more than that, very similar geology to what we see further up the West African coast, where very large oil discoveries are being made in play types like that we’re mapping, in PEL 87. In PEL 87 in particular, we see a thick oil prone source rock, which has been proved by recent drilling, extending into the block sitting beneath these very large structures and potential traps that we’re mapping. Some of which are hundreds of square kilometres in size.
Jessica Amir: Can you give us a little bit more context about the size of these projects?
John Begg: I think a good indication of the potential is that on this trend, both to the south and to the north of us some of the super major oil companies, the world’s biggest oil companies, have recently farmed into the acreage. We know that Shell Plc (AMS:RDSA) for example are planning a well immediately south of the block. And further to the north immediately adjacent to PEL 37, our block to the north, ExxonMobil Corporation (NYSE:XOM) has entered into the area. Now those companies don’t come into offshore exploration, if they don’t think they can find giant scale resources of oil.
Jessica Amir: In September I understand that you’ll be participating or drilling, in one of the most watched wells of 2018. So just tell us about that?
John Begg: That’s right. We’ll be drilling the Cormorant-1 on one of these big turbidite plays, as we call them that have been so successful up and down the West African margin. The operator is Tullow Oil Plc (LON:TLW), a fabulous operating company and explorer of Africa, we have a big partnership there. We have a 20 per cent interest; we are free carriage through this well, so we don’t have any exposure to the cost of the well. It’s drilling a big prospect. If it’s successful, then there’s a series of follow-up prospects mapped in the block on 3D seismic, so we have a very good definition of them. And the scale, as we’ve just talked about, is potentially for giant scale oil reserves.
Jessica Amir: Moving around the globe to California. Just give us an update on your projects there?
John Begg: Our strategy has been to combine exploration with large volume potential prospects, with projects that we could get into production and revenue more quickly. So to mature the company’s portfolio, so that was the idea of getting into California. We will be in initial commercial gas production there, but at this stage the process haven’t quite hit the scale we’re looking for. We’ve got a lot of ground there and we’re putting it through a strategic review, to see whether we can boost the scale of what we’ve achieved there so far.
Jessica Amir: Now to finances John. Can you give us a quick update?
John Begg: We’re managing that well. Considering the size of the projects we’re in, our cost exposure is minimal. As I mentioned before, we’re carried entirely through the cost of our interest in the well that we’re drilling in September in Namibia, the Cormorant-1. And in fact when that well commences drilling, one of our partners who acquired their interest in the project through us, will be making a $7 million payment to us.
Jessica Amir: Lastly John. Why should investors consider adding PCL, Pancontinental to their portfolio?
John Begg: We’re funded; we’ve got a good game plan. We’ve got a history of bringing in projects, where our shareholders are highly leveraged to success. We keep doing it; we’ve got an active new ventures program that’s going to continue to introduce projects like that. And the next one of course is only a few months away in September, the Cormorant-1. Where we’re participating with an effective 20 per cent interest, in what industry says is going to be one of the most watched wells anywhere in the world this year.
Jessica Amir: John Begg, thank you so much for the update and good luck with the drilling.
John Begg: Jess, thank you.