OIP - Orion Petroleum

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Orion Petroleum Limited

Eastern Star Gas Limited (ESG) has spun off Orion as one of its subsidiary, and are seeking to raise $20 million by the issue of 100 million shares at $0.20 per share with provision to accept oversubscriptions of up to 15 million shares to raise an additional $3 million.

For each share allotted under the offer, Orion will grant, for no additional consideration, one option exercisable at $0.30 per share on or before 30 September 2010.

The offer underwritten by Comsec has now closed, with their allocation fully subscribed by their clientel.

Expected despatch of Holding Statements 11 December 2007. Expected date of quotation of Shares and Listed Options on ASX 18 December 2007.

Orion’s licences and application area covers approximately 44,000 square kilometres in New South Wales.

Four petroleum prospects, Willaroo (PEL 6), Nyngynderry (PEL 8), Burnamwood (PEL 422) and Netallie (PEL 424), have been identified and are ready to be drilled. Orion proposes to carry out the drilling program using the funds raised pursuant to the offer and to seek farm-in participants to contribute to the costs of its exploration program.

<Good luck to those who are in this float>

 

[Dukey]

Re: OIP - Orion Petroleum Limited

Just to update - SPP was 20cps.
- chart indicates OIP floated on Dec 12 opening at about 16c - fell as low as 12.5 c on Dec 21 but is clawing back - now around 14.5c.

I luckily decided to take the 'wait and see' approach - and didn't take up the offer from ESG - given current market volatility etc. But believe me - I'll be watching keenly... will have to try and dig up an drilling program - have they released a detailed one yet?

The tenements they have seem to have some potential so good luck to all holders. I may well join you soon...ish.
Current prices could look like an absolute bargain if they get some success with early holes.

 

[doctorj]

Re: OIP - Orion Petroleum Limited

This research was completed last week - so you'll have to modify the market cap to allow for the nice little upswing...

Company: Orion Petroleum Limited
Ticker: OIP (only like the coolest ticker for an oil company ever)
Market cap: $15m
Shares on issue: 155m + 115m options (exercisable at 30c before 30/09/10)
Cash on hand: $21.8m (as at December)
Cash burn: $758k (in 6 months to December, $711k of it is exploration)
Ownership: Top20 hold about 64% of the shares on issue.

In about 2 weeks they will spend about $2.3m to spud Willaroo 1 (OIP 97.5%) in the Bowen/Surat basins in North onshore NSW. The well is on trend with existing discoveries. The target has been defined with 2d seismic and is targeting what they call 'most likely' (I interpret that to mean p50, but I could be wrong) oil in place (OIP ) of 40MMBO or 155bcf. The drill itself is quite shallow at about 6000ft and should take about 2 weeks to drill.

They also have a second drill straight after targeting 100MMBO or 160bcf in the Darling Basin.

Quick maths time - 40mmbo @ 30% recovery @ 97.5% equity @ $60/bbl after costs = $702m. Discount for wildcat risk @ 7% chance of success and risked value is $49.1m. Throw in about $16m cash left after drilling these two wells and you've got a good argument for a market cap (undiluted) of $65m right now with a second drill for free...

 

[prawn_86]

Re: OIP - Orion Petroleum Limited

Very nice Doc.

Just a note that at current prices (11c) the MC is about $17mill.

This means that it is in fact being assigned a negative EV with its MC being lower than cash at bank.

These guys also got a half page write up in the latest edition (fast movers) of BRW.

So currently the market thinks that Willaroo and their other projects will be so bad that the will lose millions! LOL

I dont think i have ever seen a co with a MC lower than cash....

 

[doctorj]

Re: OIP - Orion Petroleum Limited

This means that it is in fact being assigned a negative EV with its MC being lower than cash at bank.

That situation certainly isn't unique to OIP, but not many of the others have near term, high impact exploration.

The market continues to be enamoured with iron ore and phosphate and the like based on 'pie in the sky' notional target sizes drilling campaigns that may or may not occur at some distant future point. It's more than happy to ignore o&g explorers that can turn a discovery to cashflow in 6 months.

That said, the oil/gas coys in Australia have been ignored for years and traditionally get picked off by foreign companies as local markets refuse to assign them fair value. Local oil & gas explorers haven't seen anything like the bull market enjoyed in other commodities despite record high prices.

Maybe o&g is yet to have its turn in the sun or maybe it'll never come. If it is to happen, I suspect it'll need some sort of trigger - I'm quietly hoping its the Canning that does it, but onshore east coast could be it also.

 

[jtb]

Re: OIP - Orion Petroleum Limited

This research was completed last week - so you'll have to modify the market cap to allow for the nice little upswing...

Company: Orion Petroleum Limited
Ticker: OIP (only like the coolest ticker for an oil company ever)
Market cap: $15m
Shares on issue: 155m + 115m options (exercisable at 30c before 30/09/10)
Cash on hand: $21.8m (as at December)
Cash burn: $758k (in 6 months to December, $711k of it is exploration)
Ownership: Top20 hold about 64% of the shares on issue.

In about 2 weeks they will spend about $2.3m to spud Willaroo 1 (OIP 97.5%) in the Bowen/Surat basins in North onshore NSW. The well is on trend with existing discoveries. The target has been defined with 2d seismic and is targeting what they call 'most likely' (I interpret that to mean p50, but I could be wrong) oil in place (OIP ) of 40MMBO or 155bcf. The drill itself is quite shallow at about 6000ft and should take about 2 weeks to drill.

They also have a second drill straight after targeting 100MMBO or 160bcf in the Darling Basin.

Quick maths time - 40mmbo @ 30% recovery @ 97.5% equity @ $60/bbl after costs = $702m. Discount for wildcat risk @ 7% chance of success and risked value is $49.1m. Throw in about $16m cash left after drilling these two wells and you've got a good argument for a market cap (undiluted) of $65m right now with a second drill for free...

Hey Doc,

I like the look of this and have thus joined the ranks (assuming your holding).
Pennant makes me wonder is we won't retest 12.5 shortly?

Can't help myself with oilers

Best of luck

 

[jtb]

Re: OIP - Orion Petroleum Limited

Hey Doc,
Pennant makes me wonder is we won't retest 12.5 shortly?

OK today will do then

Nice bit of volume this arv'y too...

Have a good weekend all, its beer o'clock somewhere

 

[jtb]

Morning all,

Looks like we hit all time high yesterday @15.5c

Market Cap now about equal to cash in the bank Prawn.

Anybody been watching ICN go ballistic lately?
Interesting to see the that over $50 million dollars of value is being attributed to ICN's prospectivity atm (280million shares and only 600K in the bank)

Seeing as we have a lease that adjoins ICN's and covers the same fault/basin (on the NSW side) I wonder how it long it will take for the punters to apply some value for our prospectivity?

"The Company believes oil and gas resource potential of the Exploration Licences is exceptionally large. Within the northern sector of PEL 6, (Surat/Bowen Basin), total potential Oil In-place is estimated to be 173 million barrels and total potential Gas In-place is 386 BCF. The Company believes hydrocarbon potential in the Darling Basin, PELs 8, 422 and 424, is even more impressive. Over one billion barrels of potential Oil In-place or over 2.5 TCF of potential Gas In-place, could exist, collectively, in just three prospects in these licences. The Company believes this magnitude of resource potential is not unlike the potential of the onshore Cooper-Eromanga and Surat/Bowen Basins".

Have pinched some images that I posted on the ICN thread (yellow area is ICN lease) also nice to see a proposed gas pipeline running straight through.

 

[prawn_86]

It certainly is looking promising both technically and fundamentally.

Nice work on the images JTB

A recent BRW issue had a write up, and said that one of the advantages was the pipeline, as this could make even a smallish find economical due to low CAPEX as infrastructure is already there.

Theoretically it is still fundamentally undervalued, as it is assigning about $2mill to all the projects owned, the rest of the MC is made up of cash in bank, and remember that cash is sitting there earning interest, so actual expenditure (admin etc etc) is cut back due to interest recieved

 

[jtb]

It certainly is looking promising both technically and fundamentally.

Nice work on the images JTB

A recent BRW issue had a write up, and said that one of the advantages was the pipeline, as this could make even a smallish find economical due to low CAPEX as infrastructure is already there.

Theoretically it is still fundamentally undervalued, as it is assigning about $2mill to all the projects owned, the rest of the MC is made up of cash in bank, and remember that cash is sitting there earning interest, so actual expenditure (admin etc etc) is cut back due to interest recieved

Hey Prawn,

Nice to see 16.5c hit today

Have to agree with your statement re: fundamentals, as Doc stated above there is an argument for a risked value in the vicinity of 60 mil or > 40c ps just on the first well- comparisons with ICN would make that about spot on.

Cheers

 

[grace]

I've been watching this too. I own some ESG, which still holds 23.06% after floating orion off. Didn't take my priority on listing as the market was sad at the time, and in hindsight, was a good decision.

However, getting close to knowing about Willaroo-1......
This is very close to my home area, so I'll keep my ear to the ground for some gossip....you never know.

 

[jtb]

We're away this weekend

9 May 2008
WILLAROO-1 DRILLING TO COMMENCE THIS WEEKEND
SYDNEY: Orion Petroleum Limited (ASX:OIP) said that drilling of the Willaroo-1 exploration well
is scheduled to commence this weekend.
Located approximately 25 km southwest of Goondiwindi, Willaroo-1 is the first well in Orion’s
exploration program, which aims to assess the petroleum potential of northern NSW.
Drilling operations are planned to take 16 days and the well is expected to reach a total depth of
approximately 2000 metres KB. Oil and gas volume estimates for undrilled prospects are
uncertain. However, Orion's best estimates are that the Willaroo structure has the potential to
contain 40 million barrels of oil in-place in Jurassic sands plus 155 BCF of gas in-place in
Permian sands.
The sedimentary sequence to be intersected by the well is the equivalent of that that produces
hydrocarbons in the Surat-Bowen Basin immediately to the north in Queensland

 

[doctorj]

Nice little run, but with spud confirmed for tomorrow, I would be a little nervous leaving a very healthy open profit to the mercy of the drill bit.

Market cap (undiluted) is up circa 60% (~$10m) since my post. It's probably not yet reached the risked value of the first drill + cash, but typically funny things happen after spud.

I don't like to brag, but the small end of the market has been tough for a while now

 

[jtb]

Nice little run, but with spud confirmed for tomorrow, I would be a little nervous leaving a very healthy open profit to the mercy of the drill bit.

Market cap (undiluted) is up circa 60% (~$10m) since my post. It's probably not yet reached the risked value of the first drill + cash, but typically funny things happen after spud.

I don't like to brag, but the small end of the market has been tough for a while now

Ice cold and Steely Hatchetman

Have taken profit twice on the way up and happy to leave 50k in the ring presently.
Assuming a duster at Willaroo I would assume 10-11c to hold as support as it will still represent cash on hand.
Personally I'm impressed with the amount of geological/geophysical experience in the company and Willaroo is obviously no BS conceptual target coloured in by some dude who minored in geology in 1961.

The following image is from the NSW Dept Primary Industries and shows Willaroo as a valid target.
If we draw a line from the three red stars below back up to Moonie then I reckon we're in with a reasonable chance

Got more to say but gotta run, see you soon.

J

 

[jtb]

Evening all,

Still on my cash backing - ICN comparison rant,

Doc, I wonder how many other oil/gas explorers trade on cash backing (pre or post drill) as I can't say I'm aware of any (granted I have little time for research atm)?
I dread to think what the likes of EGO, FAR, PCL etc etc would be trading at at present if that were the case?
You would be able to buy the company for the price of a chiko roll and coke surely?

Anyhoo, in regard to the value being placed on ICN atm and in particular ATP 626 in the Surat basin, I find it reassuring that Orions land holding over the Surat basin and fault substantially dwarfs 626 and is also CSM prospective.
Nice addition to the conventional targets imo.

Bought more today and will be interested to see what becomes of the 2 mill order at 20c

 

[woltage]

Does anyone have any thoughts on the recent announcement?

Looks like no hydrocarbons in the Precipice Sands but an oil show in the reservoir sands, but of poor quality. Could this be regarded as a negative or positive announcement? Market seems to think negative

Maybe further analysis of the drilling data will shed more light

 

[prawn_86]

I can see both pros and cons in the announcement.

Pros: shows that there is oil there somewhere, so now just need to refine the targeting a bit further and hopefully hit something economic.

Cons: not the big hit that short term traders were after hence the drop in price today.


note that MC is about equivilant to cash now so theoretically you are paying for the cash backing and getting all the projects and upcoming drilling for free

 

[jtb]

I can see both pros and cons in the announcement.

Pros: shows that there is oil there somewhere, so now just need to refine the targeting a bit further and hopefully hit something economic.

Cons: not the big hit that short term traders were after hence the drop in price today.


note that MC is about equivilant to cash now so theoretically you are paying for the cash backing and getting all the projects and upcoming drilling for free

G'day Prawn,

Yeah would have been nice for a gusher on the first hole, but I'm comforted by the result and it confirms my belief in the team and prospectivity of the leases.

Source and reservoir info shows promise imo and also very underexplored.

From the NSW DPI

"The Surat Basin, and the underlying Bowen Basin, host a large number of oil and gas fields in the adjacent state of Queensland. No commercial oil or gas discoveries have been made in the New South Wales part of the Surat Basin, although a potential gas field has been identified in the underlying Gunnedah Basin in the east. The lack of exploration success in New South Wales does not reflect the true potential of the basin since the majority of drilling predates multiple fold seismic surveys and may not have been valid tests of structures. Most exploration effort in the Surat Basin has focused on the northeastern, deeper areas of the basin where it overlays the Bowen Basin. Only 6 wells have been drilled in the western half of the basin in New South Wales."

Also wonder how much coal there may be (at depth / CSM) with the Bowen/Gunnedah/Surat interfaces

 

[jtb]

Evening OIPers,

Gee this 13c buyer is relentless, been waiting and waiting for weakness........
Figured 11.5 should hold but considering the vertical drops many others have taken someone seems to want a lot these bad- would expect a sub' shareholder notice shortly (one would think)

Any theories or sheer value?

 

[seasprite]

Director increased holdings today by 200,000 to 1,550,000 . Share price has been absolutely hammered lately @ 0.059 , did not help with a dry one at Nyngynderry 1.
Anyone have any info on when Netallie prospect(PEL 424) with target 800 MMBO or 2860BCF is due to spud or is Burnawood in PEL 422 next???