Roxi Petroleum (RXP) Oil Barrel Report

Today Roxi Petroleum (AIM:RXP) presented at the Oil Barrel conference in London.  Hopefully, the investor presentation will be placed upon the web-site in due course.  First, my earlier post that suggested there would be 17 wells in 2010 was in fact under-estimating Roxi.  Today they talked of 19 wells in 2010 - with the extra two probably being more wells on Ravninnoe than I had assumed.

A copy of the presentation can be found here.

Key highlights:

Overview:

The overview slide near the beginning of the presentation had some volumetrics on it, talking of 29 million barrels (mmbo) of C1 and 45mmbo of C2.  It was a bit unclear precisely what this related to, whether it was current or target or gross or net.

They also showed a graph givng a production forecast out into 2012 or 2013.  I look forward to analysing this further once the presentation in published.

Beibars:

They talked of seeking a farm-in partner during 2010, so they must be becoming increasingly confident of getting the military polygon lifted soon.

Ravninnoe:

We might expect test production in 2010 and pilot production in 2011.  This suggests they are anticipating positive test results from Well #20.  The tests are just getting underway and we can expect the results in March.  I got the impression later that a significant proportion of the funds raised from the partial sale of Galaz will be used to fund further wells on Ravninnoe, once the remaining Canamens funds are exhausted.  Remember, at that point Roxi will only need to fund 30% of expenditure, so its $10m will equate to an overall drilling budget of some $33m, although the funds that Roxi can apply to Ravninnoe may be somewhat less than $10m if they chose to repay the most recent Arawak loan.

Munaily:

Now stopped trying to sell this block, and will develop it.  Expect production in 2010 (I seem to recall ~500bopd gross), which isn't massive but they'd rather have it than not.

Galaz:

Before the oil barrel conference started Roxi made an announcement about the Galaz NK22 well. They have confirmed an oil discovery in the Lower Cretaceous and Upper Jurassic. Although we don't yet know the prospective size of the new discovery, we do know they have found 12.8m of net pay, which is in-line with the declared net pay on Well NK3 on NW Konys.

It was confirmed at the oil barrel conference that the Middle Jurassic formation does not appear to be productive in this location, although it was implied that the Middle Jurassic is productive nearby. The position of  well NK22 well is in the south-east corner of the block.
 
They seemed rightfully pleased with the recent partial sale of Galaz to LG
 
BNG:

Expecting big things from this block. They are in the process of agreeing the prospect inventory with Canamens to agree the drilling priority.  They expect to publish the volumetrics for the near term drill prospects mid-year.  This will probably be in the form of a CPR (maybe this is in connection with the rumoured IPO of Canamens) and will include P50 resource estimates.

They have previously announced the perforation of G-54 on the South Yelemes field and the drilling of multiple appraisal/development wells on this Soviet-era discovery.  They expect a number of exploration wells to be drilled on the acreage during 2010 as well as ~600km2 of new 3-D seismic on  the SE portion of the block.

I think Roxi Petroleum management are anticpating that Canamens will take up their option over the further 12% share of BNG in return for the additional cash for exploration and appraisal.

Post Meeting Chat:

Together with others, I had a brief chat with David Wilkes, the CEO after the presentation.  He was asked where is thought the share price ought to be.  He diplomatically side-stepped this by suggesting his recent share purchase indicated that he thought there was significant upside in the stock.  I understand that the "close-period" prior to the results announcement may commence soon, so it will be interesting to see if Mr Wilkes takes advantage of this for a further purchase.  He is aware that communication with the market needs to improve and the content of the website has room for improvement.  I think he will do something about this, but I got the impression he wants to focus their cash resources on drilling, so it may be unreasonable to expect significant action in the short term.

We might expect Mr. Jang to be granted some options during April 2010.

Roxi Petroleum (RXP) Announces Galaz Discovery

Today Roxi Petroleum plc (AIM:RXP) made a further announcement about the Galaz NK22 well.  They have confirmed an oil discovery in the Lower Cretaceous and Upper Jurassic. Although we don't yet know the prospective size of the new discovery, we do know they have found 12.8m of net pay, which is in-line with the declared net pay on Well NK3 on NW Konys.

It was confirmed at the oil barrel conference later that the deeper, Middle Jurassic formation does not appear to be productive in this location, although it was implied that the Middle Jurassic is productive nearby.  Moroever, the NK22 well is in the south-east corner of the block.

Roxi Petroleum (RXP) Announce Options for Directors

It was announced today, that Roxi Petroleum plc (AIM:RXP) have awarded options to two directors: the CEO, David Wilkes, and the new non-executive, Edmund Pery.

The options have been issued at 12p per share, a premium to today's share price.

David Wilkes receives 2,000,000 shares and Edmund Pery receives 200,000 shares.

It was also announced that David Wilkes seems to have previously been granted options over 354,918 shares at 12p, a further 1,162,555 at 38p and 1,462,618 at 65p.  Maybe the 38p and 65p options were transferred from part of former CEO, Rob Schoonbrood's holding.

It is encouraging to see options being awarded at a premium to the prevailing share price, and comes on top of David Wilke's recent outright purchase of 262,000 shares.

Perhaps strangely, no options for Hyunsik Jang, the new COO.

Edmund Pery joins Roxi Petroleum

It was announced on 3 February 2010 that Edmund Pery (7th Earl of Limerick) has joined the board of Roxi Petroleum as a non-executive director.

He was described as follows in the Roxi Petroleum news release:

"Edmund Limerick has been involved in Central Asia and financing the oil and gas business for the last 18 years. He is a manager of the Altima Central Asia Fund which has invested in private equity in the oil sector in many countries in the region, and prior to that he spent many years in Deutsche Bank as a project financier and senior oil and gas investment banker in Moscow, London and Dubai.

Previously Edmund was a solicitor with Milbank Tweed in Moscow and Freshfields and Clifford Chance in London. His early career was spent in HM Diplomatic Service with postings in Paris, Dakar and Amman. He was educated in Oxford, London, Moscow and Paris and speaks Russian.

He is a non-executive director of Chagala Ltd, Saddleback Mining Ltd, GCRC 1 Ltd, a Governor of Ardingly College and a member of the Association of Conservative Peers."

Here are a number of links describing Edmund's pedigree:

http://en.wikipedia.org/wiki/Edmund_Pery,_7th_Earl_of_Limerick

http://www.altimapartners.com/

http://www.chagalagroup.com/index.php?lang=eng

http://www.saddlebackcorp.com/board_directors.htm

http://www.roxipetroleum.com/PDFs/Rns030210.pdf

Roxi Petroleum (RXP) Drilling Programme

Roxi Petroleum (AIM:RXP) has released a great deal of operational news over the past few weeks. By combining this with the recent Matrix broker note it is possible to compile a tentative schedule of drilling for the rest of 2010 and beyond.

Galaz

Well NK22 has decalred a discovery in the SE corner of the block in the Cretaceous and Upper Jurassic.  However, given the deal to sell part of Galaz to LG was announced last week, it is likely that LG believe the oil shows that were encountered in the Arksum and Upper Jurassic sands will be commercial. Moreover, we do not yet know if hydrocarbons will be encountered in the deeper exploration target.

We know that LG have committed $26m of funding to develop the Galaz field. We don't know exactly what that money will be spent on, but we know that Roxi Petroleum have submitted an application to produce the 7.3 million barrels (mmbo) of C1 reserves.




According to the schematic (re-produced above) in the Matrix broker note, one can see that there are 5 or 6 more wells required to fully develop the C1 reserves. An estimated cost of $1.5m per well (per well cost estimate given at the November GM) would leave ~$17m. Presumably these remaining funds could be used to either:
a) Fund further development of the C2 reserves - according to the schematic, a further 8 or so wells, or ~$12m plus costs of surface facilities and/or,
b) More appraisal/exploration of the apparent new discovery in the Arksum/Upper Jurassic and deeper targets on the acreage. Note that RXP are also planning to shoot 3-D seismic over the northern part of the acreage.

Once production comes on stream from NW Konys, then the cash generated ought to be able to fund further development of new discoveries on the block.

Assuming the regulatory consents for the LG deal are forthcoming in a short timeframe, it seems we can expect results from NK22 soon and at least half a dozen development wells on Galaz this year and maybe some exploration/appraisal wells if the deeper target on well NK22 is successful.

Ravninnoe

We know that Well #20 is undergoing testing, and results should be announced shortly. The Matrix note indicated that a further 3-4 development wells would be drilled in 2010 to exploit the mid-Carboniferous target if Well #20 is successful. However, the funding from Canamens will probably only be sufficient to drill one further well on the acreage. So, funding of the further development wells will probably come from the $10m recently received for the partial sale of Galaz..

So, let us assume for the moment that we will get results from Well #20 shortly and three further wells will be drilled on Ravninnoe in 2010. We don't know if this will target the Lower Carboniferous or not; and there also remains the potential to drill the even deeper Devonian formation below 5,500m.

BNG
Roxi Petroleum recently announced plans to perforate well G-54 on the South Yelemes field, drill two shallow wells there and a further 6 wells to be drilled in 2010. The Matrix note talked of drilling a total of 4-5 shallow wells, presumably on South Yelemes. We can hope that one of these shallow wells will be deepened to explore the Triassic target that lies beneath the G-54 discovery.

This leaves 3-4 other targets to be drilled on BNG in 2010. We can perhaps assume that 2 of these will be on the fields discovered by the G-1 and G-7 wells, so this leaves a further 1 or 2 wells to probe other targets or appraise whatever is found in the earlier wells.

Summary

In total it appears as though we can expect 6 or so wells on Galaz on top of the NK22 result; possibly 3-4 wells on Ravninnoe as well as the test results from Well #20 and the results of a total of 8 wells on BNG, many of which seem to be targeting discoveries that were made in Soviet times. A total of at around 19 well results in 2010 – a very busy drilling programme indeed for a company with a market capitalisation of only £40m.

David Wilkes buys Shares in Roxi Petroleum (RXP)

It was announced yesterday that David Wilkes, CEO of Roxi Petroleum (AIM:RXP) had bought 262,000 shares in Roxi at a price of 9.5p per share.

It seems the purchase has come in the small window of opportunity since the last operations update, yesterday's announcement of the partial sale of Galaz and the expected results of the Ravninnoe Well #20, the Galaz NK22 well and the re-perforation of one of the shallow wells on the South Yelemes field on the BNG block.

Given this is a purchase with his own money, it looks like a great expression of confidence.

Roxi Petroleum (RXP) Beibars Block

Post updated and content moved here.

Content below up to date to 28/2/10, but will not be maintained.

Roxi Petroleum's (RXP) Beibars 50% owned contract area is about 40km from Aktau and 14km NW of the Oimasha field in quite a prolific hydrocarbon bearing area in the Mangishlak basin in Kazakhstan. In the 2008 Visor Capital Presentation (slide 6) it was described as one of the longer term, high impact blocks in the portfolio.

When Roxi Petroleum acquired the acreage they didn't think that there had been any Soviet-era exploration. But they have now "found" two old wells. The first encountered oil and the second flowed a small amount of gas.

However, the block is currently under a "military polygon" which has invoked "force majeure". So, as there can be no further activity until this is resolved, we shall have to wait to see just how prospective this block may be.

In the announcement of 3 February 2010 Roxi Petroleum stated they were "evaluating the potential of the block" in anticipation of lifting of the "Force Majeure". Perhaps a sign that things are starting to move forwards.