“I’ll be mapping out a future in Arc, or they with me … I want to give Eric [Streitberg, Arc managing director] a hand and in the long term see if there’s a future for me in the company,” Begg told EnergyReview.net yesterday.
The complicated nature of the strategic offshore Cliff Head project will require Begg's involvement in the company for at least the first year, he said.
“It’s a modest-sized field with sticky oil from day one [of production], water injection from day one and two flow lines back to the platform.”
The merger idea consolidated earlier this year when it became apparent that Voyager would have its hands full trying to obtain more rights to Yemen blocks, spending more at Cliff Head, and trying to bridge a gap in its drilling programs.
Arc was an attractive merger proposition not only because it operated a lot of Voyager’s projects, but also because it acted as operater in its own developments, according to Begg.
“Being operator means you could drive your own projects more readily [after a takeover],” he said.
Voyager has broadened its exploration to include Yemen and currently has a 12.5% interest in Block 35 and an agreement with Oilsearch on another block which Begg would not name.
The company is also a 23% partner with a group of companies bidding for other blocks in the Middle Eastern country. The bids are expected to start before the end of next month.
These assets would move from the four-year-old Voyager to Arc as the smaller company’s business carries on despite the merger proposal, Begg said.
Most of Voyager's assets fit with Arc's Perth Basin-based strategy, and neatly extend Arc's interests into the offshore Perth Basin as Cliff Head moves towards production.
But the Yemen interests don't fit at all with this business plan. Begg agreed that the Yemeni blocks could be taken on by Arc's sister company, Adelphi Energy.
Adelphi was set up to give Arc – its major shareholder – exposure to a high-risk, high-reward portfolio without compromising Arc's ability to derive value from its existing portfolio of core Perth Basin assets.
“There’s certainly a discussion to be had between Arc and the affiliated Adelphi about those assets - but there have been no discussions so far,” he said.
There is also personal link between the companies.
Begg, a geologist with 25 years experience in the industry, worked with Arc managing director Eric Streitberg who was exploration manager at Occidental Oil in the early 198Os. They have kept in contact.
Voyager was the first company Begg, aged 46, established and it is currently valued at about A$48 million.
In 2001, 24 hours after the 9/11 attacks on New York, it was the only company in any western nation listed on September 12.
“We had very tough beginnings and raised A$4 million with a market cap of A$6 million,” Begg said.
But, along with its assets in the Perth Basin and Yemen, Voyager can now offer Arc its five experienced fulltime staff who will be offered jobs at the larger company currently valued at $390 million, he said.
