McLaughlin was referring to the AU$53.9 million sale of its Turkish assets last month to Zorlu Energy, a large Turkish company.
Australian investors had little knowledge of the Turkish business environment and were not comfortable with it. This unease was felt in the share price, which spiked at over 70 cents in the days following the Turkey sale, McLaughlin said.
“We could not effectively manage two independent, aggressive exploration E&P programs simultaneously and remain debt-free,” he said.
After pocketing close to A$60 million from the sale, Antares said it would inject cash into more low-to-medium risk exploration opportunities in Texas and Oklahoma.
“These are largely untapped reserves and our two offices in Perth and Dallas make us bulletproof over there,” said McLaughlin.
Since 2002, Antares has recorded an A$21million jump in revenue to $23 million in 2005, while its exploration and development is now valued at $21 million, compared with $14.7million in 2004. Meanwhile, its net gas production stands at 3.2 bcf, also up from last year’s 3.07bcf.
With a market cap between AU$100 million and $115 million, the company has made six gas discoveries in the US in the last nine months.
Moving forward in its high impact exploration of the US, Antares will target onshore deep gas exploration in Oklahoma and Texas, as well as Gulf of Mexico shallow waters.
The company will work initially in the GoM as a non-operator with a 40 to 50% working interest in a 3D seismic defined field, targeting 10 to 30 bcf, with costs projected between $2.5 million and $3 million. It has not yet named any specific projects, but executive director James Cruickshank told EnergyReview that Antares had several prospects in mind.
“We wouldn’t have sold out of strong producing assets without having lined up a strong inventory of possible joint ventures,” he said.
“I think people will be surprised over the next few months when we they see who our joint venture partners are. We are talking to some companies that have a lot of credibility in US petroleum exploration.”
Cruickshank said the company had a US$50 million kitty and planned to generally budget about US$1 million per well. Its equity in individual projects would be largely determined by these parameters.
“Obviously we will tend to have larger stakes in low-cost onshore projects and smaller interests in offshore projects.”
The first project to be announced after the sale was the New Taiton prospect where Antares is moving to earn a 25% working interest in a Wharton County, Texas gas prospect, that it says could have a combined reserve potential of 85 billion cubic feet in two lower Wilcox sands.
The company has agreed in principle to fund US$875,000 of the $3.5 million project and drilling is expected in the next two months.
“Success at this project should produce revenue that is higher than our current market cap,” Cruickshank said, pointing out that Antares’ 21.25 bcf share of the new Taiton prospect's estimated reserves would be worth more than US$100 million at current gas prices.
“It might not come off,” he said. “But spending less than $1 million to have a chance of earning about $100 million makes a lot of sense.
“We have a good success rate in Texas and Oklahoma and we are partnering with companies that are also successful, so as we build up a strong project inventory we have strong expectations of success.”
Meanwhile at the Ellis County project, improved drilling performance – through better casing design, mud systems, bit selection, supervision and planning – had cut the time and costs required to drill the Morrow wells, the company said.
