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Season’s thoughts turn to wells and takeovers

DESPITE the warm weather and impending holiday season, not many managing directors of Perth Basin companies have relaxation on their minds. Instead, most say they are too preoccupied with potential New Year commercial oil finds.

With up to six new oil discoveries possible, onlookers are also preoccupied, but in a wider sense.

The observers are examining the companies, their associations, and the reputations of their management, to pick the inevitable corporate activity that will follow the drilling results.

Voyager managing director John Begg agrees.

“Industry is watching this very closely,” he said.

“This is potentially one of the most influential drilling programs on the books in Australia.

“Everyone’s in position now, just waiting to see the results.”

Hartleys analyst, emerging oil and gas, Kevin Tomlinson, said there were several players who were undervalued and ripe for takeover activity at a time when the bigger players were beginning to recognise the Perth Basin as a potential oil province.

Already there have been three separate oil finds since October 2001 – Hovea, Cliff Head and Jingemia.

Mr Tomlinson said that, if the Twin Lions prospect on the shoreward side of Cliff Head came in, the whole region would light up.

“People will get very excited,” he said. “They will come in to the basin and go further north, to collect more seismic data in what is a real greenfields area.”

Smaller companies will begin to attract not only small-fund institutional investors, but also the attention of larger oil and gas players seeking a slice of the action.

One company viewed as a magnet is Arc Energy, operator of the new Hovea oil field, a 2001 find that has already delivered exceptional returns.

Arc successfully fought off what was considered an inadequate offer from Tap Oil this year.

Voyager Energy is also well positioned and offers investors good leverage, according to Hogan & Partners research analyst Adam Conigliaro.

Voyager has small equity in the recently discovered Jingemia oil field and has interests in Cliff Head, last summer’s oil discovery, which will be appraised early January. It has also gained interests in the three prospective permits north of Cliff Head and one – TP/15 – in between the Cliff Head and Jingemia finds.

Mr Begg agrees the company has already had an exciting time since listing in September 2001, but says it would love more equity in the two proven oil licences it is already in.

He is “pretty certain” of commercial development from the onshore Jingemia and is confident of being only one well away from commercial development of Cliff Head.

“We’re expecting a good result from Cliff Head-3, and anything else will be a bonus,” Mr Begg said.

He said any listed company could be vulnerable if its share price did not reflect the value of its assets.

“We’ll be doing our best to make sure the market understands the value in Voyager,” Mr Begg said.

Arc managing director Eric Streitberg said he was not concerned with takeovers.

He also preferred to make sure people understood the value of the company, one which has more than quadrupled in the past year.

However, January’s planned onshore Eremia oil exploration well – one “in an extremely good prospect” – would be very important to further development.

“If it works, it will substantially change the view of the basin,” Mr Streitberg said.

p See Perth Basin focus, pages 14-15

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