Lady luck is fickle. The day prior to Voyager Energy's ASX listing, the September 11 tragedy in New York occurred, trashing the stock price along with world markets. Since then, however, Voyager has chalked up two commercial oilfield discoveries.
The team at Voyager has a game plan and it’s working. It’s a simple recipe: take a handful of very experienced operators, gradually build up production and cash flows from existing assets, all the while keeping a weather eye out for value-adding opportunities.
The fact that Voyager has been able to lift the production from its 41% owned Nockatunga oil and gas fields in south-west Queensland has been all but overlooked by the share market which is currently blinkered by the Perth Basin drilling excitement.
Voyager may have an important presence in the Perth Basin region, but strategically the company felt increasing oil production from the Queensland field (in this high price commodity environment) a priority strategy that made clear commercial sense. Farming down the underlying coal bed methane play in the same field, with its capital requirements, was another similar move.
Clearing the decks was also the reason behind Voyager selling its stake in the remote Point Torment (WA) prospect in EP-104. Of the decision, managing director, John Begg, said that funding one well with their 34% stake would use the cash equivalent to paying their way though a number of wells in the Perth Basin. Taking into account the challenges in establishing a market for Point Torment Gas, he said it was a clear-cut decision.
The Voyager business plan goes like this: acquire assets at the right time and (hopefully) right price, increase cash flows from that and build an exploration portfolio around it.
"We've set ourselves big targets and as a consequence have tried to design this company as one that will last and have tried to bring in people who are capable of operating at a much higher level due to their previous track records," Begg said.
The management team is in place with the core being Begg, proven oil finder Ray Barnes and Canadian-born chief financial officer, Gillian Evans.
Barnes is one of Australia's most successful explorers with over 30 commercial oil and gas discoveries and/or developments under his belt in previous roles as exploration manager at Apache Energy and prior to that at Ampolex.
The softly spoken exterior of Evans hides what both Begg and Barnes describe as “a tough nut of a CFO”. Her previous employer was Canadian PacAlta, where Evans controlled the purse strings to a company whose production profile grew from a 2000 barrels of oil per day (bopd) producer when she first came on board to 40,000bopd when it was taken over by Alberta Energy.
The phase of making Voyager's current assets more efficient was successfully undertaken late last year when the company reversed the natural production decline at Nockatunga by successful development drilling. Production levels are higher now than when they acquired it over two years ago. It is now returning between $500,000 and $1 million net to Voyager annually.
Lady luck then threw down an ace. The Hovea oilfield was discovered in the Perth Basin area that Barnes knew well from days at Ampolex (then with a stake in WAPET) and Apache. Additionally, Begg also had intimate knowledge of the area after managing and expanding the Perth Basin assets for Premier Oil after it took over Discovery Petroleum in 1997.
In this phase, the breakthrough basin studies were commissioned and the offshore licences were acquired that led to the resurgence in exploration investment in the area.
“As soon as Hovea came in, and more importantly Cliff Head came in, it proved a whole play concept that could be valid for 300km to the north,” Begg said. The penny dropped industry-wide and the acreage scramble was then on for young and old.
“As soon as we realised what was happening after the Cliff Head discovery we immediately went out to pick up more acreage to lock-up the trend. Within three weeks we had farmed into WA-226P and just beat a range of competitor offers. Likewise, we farmed into EP-413 as soon as we heard there was a sniff of available equity.”
One way or another, over the years Barnes and Begg have seen a lot of the technical and exploration data from a lot of the basins of Australia. Clearly, it is a strength for the company.
“We can look at an area, look at the data that updates the geological models and make a decision very quickly,” Begg said.
“When EP 413 came up, because we had the regional framework in place and the background of the history of the development of the play, we went in and viewed a presentation from John Kopcheff (Victoria Petroleum). We got some extra data, thrashed it around between us for a couple of hours and made the decision.
“Doing a deal with the King of Farmouts may have caused a few good-natured ribbings, but what has been a $250,000 investment will return us anywhere between $3-10 million.
“In that critical period of time, because we didn't have to play catch-up on so many background geological issues, we got down to the important things, checked them out and committed.”
Following the Jingemia discovery, Voyager also farmed into the TP/15 block which runs along the coast, between that and the Cliff Head discovery.
