TRANSCRIPT OF THE RADIO INTERVIEW WITH RICHARD REAVLEY, MANAGING DIRECTOR, HAWKLEY OIL AND GAS LIMITED, an ASX listed exploration and production company with 100 per cent owned assets in the Dnieper-Donets Basin.
http://ukrainian-energy.com/articles/gas_oil/206/
Can you please provide some background on the Company and the strategy for it?
I think the first thing to say about Hawkley is that we are not an exploration company, and we started back in 2007, as you said, with the specific strategy in mind to target assets that have known accumulations of hydrocarbon.? They are primarily gas and gas condensate assets that are close to infrastructure where we would be able to have 100 per cent operational control and to significantly reduce any title risk around those assets.? Now, given that Ukraine gas prices have approached and have almost reached European prices ? a very strong gas price environment in that country ? we wanted to take advantage of that.? But really, thanks to our excellent team in Ukraine and the Board members who?ve had an awful lot of experience working in that country, we were able to acquire assets through the State tender process, which is a very transparent process, and we raised ? in order to acquire those assets, we raised seed capital really through one of our founders out of, you know, really, mums and dads and friends and family and people in Perth, you know, that have sort of made money with things that we?ve done in the past.? And, you know, that really did allow us to go back to Ukraine where we?d been before and acquire these assets and build on the experience that we?d already had.? I think key to what we do, as I said, is we target assets that have got hydrocarbons in the ground.? And, really, what this Company is about is just going and drilling better wells.? And we?re not doing anything amazing and newfangled here.? We?re just drilling and completing good-quality wells and achieving better flow results out of those wells.? You know, the well that we have just drilled really is a very good example of that where we got, you know, three to five times the flow rate.? So that?s in a nutshell the key to the Company, you know, the operational control and total ownership and then just, you know, the technical experience which we?ve got in the Company to drill better quality wells.
What separates Hawkley from the other juniors?
I think, first of all, certainly in the Australia, first of all the fact that we?re in Ukraine and we?re the only Company that?s operating in Ukraine that?s listed here, as far as I?m aware.? And I think that, you know, in terms of ? my background is more London capital markets and I think there, there is a bit more of an understanding about Ukraine whereas, here, it?s more an educational process for us to go through.? And, know, what we really do need to get across is that, you know, Ukraine is a very European country in many ways and, you know, operating there with the team that we?ve got on the ground, it?s a very normal place to operate and do business.? And I think that?s a big surprise to people.? But, really, the things that differentiate us are, you know, the in-country experience that we?ve got with the local team and, you know, the way they are.? They?re the founders, part of the founders of the Company, and they really do provide us with a very, very advantage indeed, and then the fact that
we own and operate all of our assets 100 per cent.? I think that is key, and as I said before at the beginning, with the fact that we?re not an exploration company.? So that?s really the big differentiators for us.
Your main asset, the 201 well, can you please provide some details around this?
Sure.? I mean, obviously, that?s been a success for us and people are starting to ? you know, we?re starting to get people?s attention because of what we?ve done.?
Really, what that does is it makes us a production company.? It puts us into the top 10 oil and gas companies ? in listed oil and gas companies in Australia in terms of revenue, which is obviously a good achievement.? But,
really, what that well has done is, apart from its sort of de-risk to the stock to quite a large extent, it allows us to go and drill two wells and start a third well this year and, also, it really allows us now to go and start to really seriously build the team that is really going to take this Company forward and, you know, attract good-quality people, which we?re very much in the process of doing, and bringing those people into the Company.? And we can do all of this without going out and doing a big capital raising.? You know, that?s obviously a very, very important thing.? You know, it has given us that stability and taken a lot of the risk out of it and, as I said, you know, people are starting to see the Ukraine as a good place to operate.? You know, we?ve been paid for our gas.? As I said, we?ve got that revenue.? We?ve taken that money out of the country and, you know, we?ve done a lot of the things that people wanted to see us do to sort of de-risk the story, because people do like the story and that?s ? you know, what we?ve achieved is obviously important.? We need to repeat that.
Hawkley announced it is now receiving revenue from gas sales and it?s achieved better results than expected.? Can you please elaborate on this?
Yeah, sure.? And really, as I was saying at the beginning, it?s about drilling better quality wells and getting better flow rates out of, you know, these assets where we know there?s gas in the ground.? And we essentially drilled a step-out well from a well that produced ? you know, just to throw some numbers in there ? 4 million cubic feet of gas a day.? We got that on an open hole test and then, when we, you know, drilled our well and completed it and perforated it, it was flowing at three to five times those rates.? And, you know, we didn?t do anything, as I said, particularly amazing.? It?s just about controlling the drilling process through the formation and making sure that we don?t damage the formation, which is something we?ve been very successful at really through the use of a seam.? And again, you know, it?s just about the very good technical capability that?s in the Company in allowing that to drill good quality wells and just getting much better results, because the reservoirs are very, very good there.? You know, the opportunities in the country are significant.?
Really, to summarise, we expect this well, once we have it running at its potential, to provide, you know, around $45 million of revenue for the Company on an annual basis, and we expect to be able to run it like that for seven or eight years out of a total life of the well of 20 years.? So, you know, with another well into that same horizon, with the other well that we?re drilling, we should be able to double that revenue in 12 months? time.What is the biggest challenge and what is the outlook for Hawkley over the next 12 months?
I think, given the success that we?ve had with the well and what it?s going to allow us to do, the challenge really or, you know, the key thing for us ? there are two key things for us to do.? First of all, we?ve got to drill two more wells, and
we?ve got a rig up on the next well and that will be spudding in the near future.?
We expect to start another production well in the middle of the year and, again, towards the end of the year, we?d like to start a third well, and that?s
all funded with cash flow.? So that?s obviously very important, making sure that we repeat the success that we?ve had, and we are very, very confident that we will be able to do that.? But also, I think, we do need to consolidate.? We do need to recruit some key people in Ukraine and in Australia and build the teams in both places, because I think the mistake that we could make would be to try and sort of think, ?Okay, let?s go and drill five wells this year.?? We would lose that control that we have had that has meant the success and has really been the key to the success.?
What we need to do is get the Company in 12 months to position it to such a point that we can then really take it on.? And by that I mean, you know, if we?re doing 2500 barrels a day, or we will be very shortly with this well we?ve just drilled, in 12 months? time to double that production rate is the target, and we feel it?s a very achievable target.? And then, from there, we will have the team in place and really be able to take the Company on to sort of, you know, move on to 15,000 barrels a day and really take it on.? And that?s what the Company is about.? It?s about, you know, resources to reserves to cash flow, and that?s where you really get the value.? And I think, as well, it?s apparent that, you know, we really do need to continue raising awareness of the Company in Australia.? We very much feel we?re an Australian company but we do still need to get that out there.? We need to get people to understand Ukraine, to understand the opportunity, to understand how we have de-risked operating there, and get people much more comfortable with it, because there isn?t that awareness here.? So those are really the key things that we need to achieve.? We need to make sure we don?t try and grow too quickly and get ourselves into a really solid footing so that we can really take advantage of the opportunities that we?ve got in front of us which are, as I said, significant.
http://ukrainian-energy.com/articles/gas_oil/206/