(MENAFN - ProactiveInvestors - Australia) Zeta Petroleum's (ASX: ZTA) successful A8.35 million initial public offering has given it the springboard to develop advanced and highly prospective oil and gas assets in Romania and expand into Eastern Europe.
Proceeds from the IPO will fund development of highly prospective Romanian oil and gas assets, and leverage near term and future cash flow for the development of oil and gas assets that may be acquired in onshore Eastern Europe.
Zeta will hit the ASX boards at 12.30am AEST on Wednesday 23rd May 2012.
Zeta's flagship asset is the Bobocu Gas Field, which is a historic gas field that produced 33 billion cubic feet (Bcf) of gas, and where updated technical studies have identified mean contingent gas resources of 44.8Bcf or 7.71 million barrels of oil equivalent (MMboe), and an additional mean prospective gas resource of 68.73Bcf or 11.82MMboe.
The Company has proposed a 6 well development program that will commence with the drilling of the first Bobocu well (Bobocu 310).
OVERVIEW
Romania borders the Black Sea and has one of the world's oldest oil and gas industries that was ranked as 7th largest oil producer in 1937, but had dropped to 50th place after 40 years of communist party rule marked by under-investment and a lack of access to western technology..
Zeta Petroleum was founded in 2005 to acquire and develop Romanian oil and gas assets that were being opened up to private investment after the collapse of communism, development of democratic rule, and a market economy.
Zeta has already raised around 11.5 million of private equity to acquire a balanced portfolio of Romanian oil and gas assets that include appraisal and exploration projects, along with developed prospects with mature drilling targets.
Romania is considered highly prospective with supermajors that include ExxonMobil acquiring Romanian offshore blocks in the Black Sea, and Chevron acquiring onshore blocks to explore for unconventional hydrocarbons. A shift is also underway in the appraisal and re-development of existing onshore fields by developers such as Zeta.
Romania is an attractive destination for a smaller development company such as Zeta as it has an extensive network of oil and gas pipelines that are close to existing projects, and are connected to cross border pipelines that supply Ukraine, Bulgaria and Hungary. Romania is also trying to position itself as a transport route for energy supplies from Russia and the Caspian Sea for delivery to European markets.
The transportation royalty rate for transit through the national pipeline system is 10%, with income tax at 16%, and an excise duty is applied for European sales and levied on a volume basis.
Production royalties are charged on the gross production of a field on a sliding scale of 3.5% - 13.5% for crude oil and 3% - 13% for natural gas.
The Romanian gas price is expected to de-regulate in mid 2013, and that is expected to push up local pricing of natural gas which currently fetches US4.67 per thousand cubic feet (Mcf). Supplies of imported natural gas are currently priced at US11.33 per Mcf, and it remains uncertain if local authorities will allow local prices to appreciate so much.
The IPO funding will allow Zeta to drill one appraisal and development well on the Bobocu Gas Field; farm-out a 50% interest in the Jimbolia Oil Field to finance the drilling of an appraisal well; undertake field development plans on the Bobocu and Jimbolia fields; participate in new licensing rounds in Romania; apply for additional licences; and source and review additional onshore project opportunities in Eastern Europe.
ZETA HAS ASSEMBLED A STRONG MANAGMENT AND TECHNICAL TEAM
Timothy Osborne serves as Non-Executive Chairman, and is an attorney and Senior Partner at Wiggin Osborne Fullerlove since 2003. He is a director of GML Limited, a diversified financial holding company which holds a stake in Zeta Petroleum, and at one time owned strategic stakes in a number of Russian companies that included a majority shareholding in Yukos Oil Company of Russia.
Stephen West serves as Managing Director, and is a founder of Zeta Petroleum and a Chartered Accountant with over 17 years of financial and corporate experience ranging from public practice, investment banking, and development of oil and gas assets. His previous appointments include senior positions at Duesburys Chartered Accountants, PriceWaterhouseCoopers of Australia, Barclays Capital of London, and Regal Petroleum plc.
Philip Crookall is the Chief Operating Officer, and is a petro-physicist with over 24 years industry experience with both independent oil companies and consultancy groups including Valiant Petroleum, Hamilton Brothers Oil & Gas Ltd, Ultramar Ltd, LASMO, Hardy Oil & Gas, Scott Pickford Ltd, and Paradigm Geophysical.
Michael Scott is a Non-Executive Director, and is a petroleum reservoir engineer with over 25 years upstream and downstream industry experience. During his career he has worked for Texaco Ltd, Esso Australia Ltd, and Woodside Energy Ltd, and during 2004-2011 was the Managing Director of Cooper Energy Limited.
Helen Prior is Technical Manager, and is a qualified Geologist with over 11 years experience. Prior to joining Zeta Petroleum she worked for Troy-Ikoda on a range of international projects including geological and log analysis and reserves audits, and as a Senior Geoscientist for Regal Petroleum on their Romanian assets; and for Granby Oil & Gas covering both their central and northern North Sea assets and licensing asset reviews. She has covered a wide range of geo-scientific disciplines and has worked closely with engineers to integrate results and to create a full subsurface understanding of assets.
Bogdan Popescu is the Romanian Country Manager, and is an oil industry specialist and NAMR certified expert with extensive international experience. His prior appointments include Executive Senior Vice President of The Rompetrol Group, Senior Vice President (Australia) and CEO (Switzerland) of Millennium Group of Companies, and held various positions at Petroconsultants SA/IHS Energy, and Earth Sciences Researcher at the Institute of Geology and Geophysics. He is currently the elected President of the Petroleum Exploration & Production Managers Forum in Romania.
IIie Stefan serves as Senior Reservoir Engineer and is a qualified Reservoir Engineer and NAMR certified specialist with 20 years experience in conventional and advanced reservoir engineering.
Jimmy Micu serves as Senior Geologist and is an NAMR certified Geologist with over 40 years experience mainly been spent in Romania.
SHAREHOLDERS
Founders and seed investors will retain an approximate 68% interest in Zeta after the IPO is completed, with the largest shareholder being GML Limited with a current holding of a 35.63% interest.
GM Investment & Co Limited holds a convertible loan of approximately A3,470,046 that converts into a maximum of 18,136,291 shares at the time Zeta Petroleum is listed for trading on the ASX, and is a subsidiary of GML Limited.
