Moving in the right direction

EVEN before this week’s announcement of an oil column in Cliff Head-3, share prices of companies appraising the offshore Cliff Head oil discovery near Dongara looked like running true to forecast value.

From late last year prices for all Cliff Head partners – Norwest Energy, Voyager Energy, Australian Worldwide Exploration, Roc Oil and Arc Energy – had risen steadily.

Euroz Securities resources analyst Oliver Foster said the interest and spending had been encouraging given recent market sentiment.

There had been good movement in the prices of those ranked highest in leverage tables prepared by Mr Foster and Hogan & Partners’ Adam Conigliaro.

According to these tables, Norwest has the most to gain, followed by Voyager, Roc, Australian Worldwide and then Arc.

Since mid-December the prices of the smaller local companies – Norwest and Voyager – had trended positively, to highs representing 31 per cent and 14 per cent increases respectively.

The other local partner, Arc, had achieved the next highest proportional boost of 13.6 per cent.

But it is believed oil testing and production in the onshore Perth Basin Hovea field accounted for much of the rise for Arc.

Similarly, progress on Victoria’s BassGas project had contributed much of Australian Worldwide’s 4 per cent gain.

Since November, Australian Worldwide had improved 21 per cent on its eastern Australian interests.

Australian Worldwide and Roc had experienced rises of 4 per cent and 5.6 per cent respectively in the same time period. But despite being the operator of the Cliff Head permit – WA 286 P – Sydney-based Roc, which has producing interests in the UK, had kept a relatively low market profile, experiencing just a 4 per cent rise, peaking at $1.50.

Mr Foster has figured Cliff Head-3 could be worth a potential $12 million to Norwest, which last week had a market cap of $16 million.

This figure was calculated conservatively on 30 per cent recovery of 110 millions of barrels of oil in place, and on A$7.50 per barrel.

Cliff Head-3 was drilled for reservoir evaluation in the northern Cliff Head oil field.

This week’s early indications of what was described as ‘a 48 metre gross oil column with at least 40 per cent net oil pay with moderate to good reservoir characteristics’ initially boosted Norwest’s and Roc’s price the most, to $0.125 and $1.57 respectively.