(MENAFN- ProactiveInvestors - Australia) Cott Oil and Gas (ASX:CMT) has sold its 10 million share stake in Kina Petroleum (ASX:KPL) on market netting over $3.3 million in cash.
CMT already held $2.1 million in cash at the end of June 2014, and will now hold around $5 million in cash following operating expenses in the September quarter.
The company holds some quality assets, and considering the market cap. of just $7 million, this gives an Enterprise Value of just a couple of million dollars.
CMT is focussed on Papua New Guinea with four licenses and a gas discovery.
Its flagship asset is the Pandora Gas Field (CMT:40%) an offshore gas discovery with 2C 800BCF which has exploration upside.
Highlighting the prospectivity, previous license holders suggest Pandora could contain up to 1.3 Tcf gas in place.
The recently developed Concept Study by FLNG developer Wison Offshore and Marine demonstrates Pandora is technically and commercially viable.
Pandora Gas Fields
The Pandora Gas Fields located in Gulf of Papua midway between Port Moresby and Daru in 120m of water at approx 1,400m TVD.
The joint venture has CMT with 40%, Talisman 25% (Operator), Kina 25% and Santos (ASX:STO) 10%.
It is a carbonate reef structure with excellent porosity and deliverability.
- Pandora 1X drilled in 1988 over A Structure discovering a 298m gas column which was tested at 57 mmscfpd; and
- Pandora B1X drilled in 1992 over B Structure discovering a 110m gas column which was tested at 43 mmscfpd.
There are several prospects that have been identified within the licence by 3D seismic.
Growing awareness that many gas fields will not be developed other than with FLNG is driving technological development and reducing costs making FLNG far more commercially and technically viable.
Pandora FLNG concept study
Cott engaged Wison Offshore & Marine to undertake Concept Study for Pandora Gas Field.
Option 1 € Offshore FLNG
- 3 well development with subsea completions
- 1 mtpa vessel with 170,000m3 storage
- Onboard gas treatment and re-injection of sour gas
- Estimated Capex US$900m € US$1,100m (US$900 € US$1,100/ tpa)
Option 2 € Near Shore LNG
- Field Production via a Buoyant Tower for processing and sour gas reinjection
- 160km clean gas pipeline to near shore location
- 170,000m3 storage barge with 1 mtpa liquefaction capacity
- Estimated Capex incl pipeline and tower - US$1,300m - US$1,400m
Funding is likely to come from vessel and infrastructure owners € tolling model.
Analysis
CMT has now received $3.3 million in cash from the non-core sale of shares in Kina Petroleum, and Proactive Investors estimate that by taking existing cash into consideration, the company will have $5 million in cash at the end of September 2014.
Considering a market cap. of just $7 million, the Enterprise Value of $2 million positions the company as being highly leveraged to any potential future Joint Ventures or farm-ins that provide the company with free carry.
CMT also has a tight register, with 77 million shares on issue.
Now the key ingredient.
Papua New Guinea is a growing LNG hub for Asia, and CMT's licenses offer exposure to this very hot market segment.
Already several vessel owners and infrastructure partners have expressed strong interest in Build Own Operate € tolling model for gas owners.
Worth noting Michael O'Keeffe (ex-Riversdale Mining Chairman/ founder) holds a 8.7% stake in CMT.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.