“Our share price didn’t budge,” said managing director John Kopcheff. This was in contrast to Oilex’s, which plummeted 33% in the days following the news.
“We’re in the low part of our market cap cycle, so now is a good time for investors,” Kopcheff told EnergyReview.net.
VicPet’s share price peaked at 6c around this time last year following the Ventura discovery, but returned quickly to the 4c mark, due in part to a delayed reaction following the disappointment of the Rookwood field, in southern Queensland.
Kopcheff said he has learned to be philosophical.
“We’re not too concerned about Pinnacle – it builds a database for our area and we still have a broad range drilling activities that cancels out incidents such as these,” he said.
“We’re a typical case study of a survivor. Back in the early days, I was known as ‘Dry Hole John’,” he said, alluding to a nickname he earned to him when the company had yet to secure a commercial oil discovery in Australia, during its early exploration of the Cooper Basin.
“We’d had successes at our US acreage during this time, but it doesn’t mean the same to the local market as an Australian success story,” he said.
VicPet’s Australian focus is still planted firmly on the Cooper Basin, which also has ‘company maker’ potential over the next 12 months of exploration and production, according to Kopcheff.
A series of seismic and drilling delays over the past year has meant VicPet’s operations have been compressed into the four months from now until early 2006. For this reason, Kopcheff is confident the company’s shares will rocket upward following a discovery at either its Eagle prospect in California or in the Cooper Basin.
The company recently enjoyed a swift turn-around in its Cooper operations, when it broke a 20-year drought, which saw the Mirage oil well start producing 274 barrels per day in May and Ventura 160bopd in September this year.
A nine-well program started in the fourth quarter of this year, comprising six exploration wells over three leases – PEL 104/111/115 – with targets of up to 16 million barrels of recoverable oil.
In addition, three development wells are scheduled for the Mirage oil field in PEL 115, where VicPet shares a 40% interest.
The PEL 115 joint partners have also scheduled drilling of a wildcat at the 16-million-barrel potential Tom Cat for later this year. Another large prospect, with a projected 23 million barrels, is Skyhawk, planned for drilling early 2006.
Around the same time, VicPet is looking at drilling the 16-million-barrel potential Wirraway project in PEL 104. In mid 2006, it plans to drill a gas well at the PEL 111 Catalina prospect, which contains a 56 billion cubic feet potential.
These enhancements to the existing program have the potential to increase production in the first quarter of next year to net the company an extra 400 barrels of oil per day.
“We’re hoping for a repeat of 2004, where the Cooper Basin produced a 50% exploration success rate for the industry,” said Kopcheff.
“Even though they were only fairly modest discoveries at around four or five million barrels, I’m confident someone – hopefully us – will soon hit the big one. A discovery of between 15 to 20 million barrels would fuel a huge boom in the region.”
This would be very good news for VicPet, which operates six permits and is now the largest acreage holder in the basin.
VicPet’s traditional strategy has been to balance both exploration and production over a diverse range of projects. It aims to continue following this formula in order to reach a market cap of $A200 million by this time next year, said Kopcheff.
As part of this strategy, the company will continue its involvement in testing and development activities at the Jingemia oil field in the northern Perth Basin, Western Australia. An exploration well planned for the first half of 2006 has recoverable oil reserve estimates of between eight and 11 million barrels based on recent 3D seismic and development drilling.
In addition, VicPet has interests in exploration drilling coming up in the Surat and Carnarvon Basins and a 14% stake in development wells at the Flour Bluff Gas Field, Texas, where 143 billion cubic feet of 3P gas reserves are being picked up in the first three wells this year.
It also has high hopes for its Eagle Oil Pool appraisal well to be drilled in California next month.
Success at this single appraisal well, which is targeting 34 million barrels of oil and 58 billion cubic feet of gas, could double the company’s market capitalisation to $100 million. This would be a company maker, said Kopcheff.
VicPet’s busy activity schedule and about 170 million shares issued on the stock market has lead one analyst to describe the company as a “traders delight,” says Kopcheff.
“We have a lot of trader volume,” he said. “So that ensures there’s plenty of liquidity in the market.”
Looking ahead to the future, Kopcheff believes VicPet’s main challenges reflect those facing the entire industry.
“It’s the oil and gas industry’s time in the sun,” he said. “But with that comes difficulties securing good exploration opportunities and finding consultants and personnel.”
