Latest update on Cubacan........
Subject: Cubacan Expl. (CCX - A.S.E.) Update on the Oil Play in Cuba
Cubacan Exploration Inc. (CCX - Alberta Stock Exchange) is exploring for oil in the Republic of Cuba. They hold a 100% interest in three Production Sharing Agreements (PSA's) with Cubapetroleo (the Cuban National Oil Company) in the Cristales field and onshore Blocks 16 and 17, covering 6,900 sq. km. (approximately 6.3% of the geographical area of Cuba). Cubacan has conducted 800 km of seismic over Blocks 16 & 17. Drilling rigs have been located and negotiations are underway to commence its drilling program in the next two months. At this point, the company intends to drill a minimum of 6 exploration wells over the next 2 years. The data from the seismic program has identified a number of prospective structures on the Blocks with the potential for significant hydrocarbon accumulations (i.e on the shallower wells - 11 to 49 million bbls potential per prospect and on the deeper, reef structures - 100 to 333 million bbls potential per prospect).
Current domestic production of heavy and medium crude provides about 30% of the current Cuban demand of 100,000 barrels of oil per day (BOPD) of crude and refined products. Refining capacity is approximately 230,000 BOPD from 4 refineries. There are 11 marine terminals in the country, including the super tanker facility at Matanzas. The demand for all grades of crude is expected to increase as the economy improves and any gas discoveries will likely have similar value to oil, where local heavy industry or mining projects require energy.
Under the terms of the PSA agreements, oil can be marketed domestically or internationally with payment in U.S dollars based on international prices and is not subject to an export tax. Cubacan's experience is that it has received 100% of the West Texas Intermediate price for its production less the cost of transporting and refining the oil.
As for operating in Cuba and the Helms-Burton Bill......the purpose of the Bill is to censure individuals and companies profiting from the expropriated property of U.S. citizens that was nationalized by Cuba without compensation following the revolution in 1959. The law does not attack corporations or individuals doing business in Cuba, nor prevent individuals from continuing to trade with Cuba, investing in Cuba, travelling to Cuba or otherwise engaging in any financial transactions with Cuba. Cubacan is not dealing with expropriated property and is therefore not directly affected by the legislation.
On June 27th, 1997, Cubacan announced that they had agreed to acquire, by way of a private trade, 4 million shares (approx. 25%) of MacDonald Oil Exploration Ltd. MacDonald operates a 100% interest in Block 22, which is a 9900 sq. km concession adjacent to Cubacan's Block 16 and 17. MacDonald recently completed 110 km of seismic on the southwest portion of Block 22, which has identified 4 structures with the potential for significant hydrocarbon accumulations. An initial well is anticipated to be drilled on Block 22 before early 1998.
The company has raised over $11,000,000 in the last 7 months and is now in the process of arranging another substantial financing. The company is preparing to drill the initial two wells. These two prospects are Farola North and La Victoria South, both of which are closed structures with an area extent in the order of 4 sq km. The Farola North prospect is estimated to have a vertical closure of 150 meters at a depth of 1,600 meters. La Victoria South is estimated to have a vertical closure of 300 meters at a target depth of 3,600 meters.
Cubacan Exploration Inc.
Symbol: CCX
Listed: Alberta Stock Exchange
Shares Outstanding: 32,419,551
52 Week High - Low: $1.30 - $.30 (Cdn.)
Directors:
Allan Kent - President; CFO of Endeavour Resources; President of Prospect Oil & Gas
Charles Allen - Executive V/P; Director of Endeavour Resources
Gregory Harris - Director; Director of Brittany Capital Corp; Director of Canshore Exploration Ltd
Francis Elliott - Director; CEO of Jerez Energy Intl. Inc; President of Peregrine Oil and Gas; Consultant to Abacan Resources Corp.
Richard Wojcik - Director; V/P Engineering of Premier Pipelines Inc
John Kehl - Director; V/P and CFO of ABC Group Inc
Consultants:
Robert A McPherson - President of Hampton Court Resource Corp
Conrad P. Kathol - V/P Exploration at Elan Energy and Strike Energy
Jean P. Roy - President of GeoGlobal Technologies Inc
Comment: Stock ran from $.30 to $1.30 over the last year based on the initial interest in the Cuban play. It has backed off to the .60/.70 range, appears to have based and is starting to move back up. Trading into the $.70 to $.75 range would indicate a breakout of the trading channel. The company is starting a road show to institutions and I believe that there will be positive news in the next 3 weeks. I own 200,000 shs bought from $.30 to $.85 over the last year. |
