Kerm's Tier II Portfolio Material Change
I was fortunate to jump into NIKO Resources NKO-T early on and just jumped into Bow Valley as posted a few postings back to this one.
Effective today, I am adding yet another small Canadian international explorer to my Tier II portfolio.
02/14/03
First Calgary Petroleums Ltd. (FCP-T)
Shares 2500
Price $2.40
My interest in the company is related to the 2 Algerian exploration blocks they hold a 100% interest in. These blocks are known as the Ledjmet Block (405b) and the Yacoub Block (406a).
The company has drilled two wells on the Ledjet Block and they have resulted in huge natural gas successes. The wells are known as the MLE-1 and MLE-2.
The MLE-2 well has in excess of 140 meters of net pay in 6 zones, as compared to 60 meters of net pay in the nearby MLE-1 gas well. In addition, all pay zones in the MLE-2 discovery well, including the Triassic Tagi, Carboniferous, and Upper and Lower Devonian zones are 28 to 40 meters structurally high compared to the nearby MLE-1 gas well. Rig release is anticipated for January 7th, immediately after which a service rig will move on site and an extensive production testing program will be commenced for all pay zones. The MLE-2 discovery well is located 2.5 km updip from the MLE-1 gas well which yielded through a production test, 43 million cubic feet per day of gas and 1745 barrels per day of condensate (8700 barrels oil equivalent per day) from 3 zones. The two gas wells are situated on one of several structures on Block 405b, which is 1108 km2 or 255,000 acres in area. First Calgary's MLE pool, prior to the discovery of the MLE-2 gas well, contained proven and probable reserves of 1.021 trillion cubic feet of gas equivalent (TCFe) of which 447 billion cubic feet equivalent (BCFe) were proven (evaluated by DeGolyer MacNaughton - independent Reservoir Engineers). The MLE-2 well is expected to add substantially to these reserves.
Sonatrach (Algerian national oil company) has recently announced that it and its partners, Anadarko et al, are planning to develop the El Merk gas field (located approximately 20 km east of FCP's MLE pool), start-up 2004; 425 million cubic feet per day gas plant; CAPEX US $882 million. El Merk is the first gas development to be commercialized in the Berkine Basin and is very relevant to the development of FCP's Ledjmet Block.
First Calgary will shortly be moving the drilling rig from the MLE-2 discovery well to its 100% Yacoub Block (406a) in order to commence drilling the YCB-1 well in mid to late January, 2003.
Both blocks 405b and 406a lie within the prolific "Berkine Trend" where more than 5 billion barrels of oil and substantial gas reserves have been established in the last 12 years.
The contract to shoot 230 km2 of 3D seismic on FCP's Yacoub Block commenced last February to prioritize drilling locations on several major targets identified by FCP. The Yacoub block is offset by giant oil fields; Hassi Berkine oil field (Anadarko) with 2.8 billion barrels oil, Ourhoud oil field (Sonatrach et al) with 1.0 billion barrels oil, and RKF oil field (Cepsa) with 250 million barrels oil. These fields contain wells which average 44 million barrels oil recoverable reserves and daily production rates of 8000 barrels of oil per day.
I repeat my favorite saying in holdings I believe have great upside - this is exciting stuff.
The negative factor is that there are approximately 134,000,000 shares issued and outstanding. I wouldn't be surprised to see a reorganization in their capital structure sometime after this year. Natural gas production won't be coming on board until sometime in 2004.
The company just announced that it has closed on the remaining 4,086,000 Common Shares issuable pursuant to the previously announced bought deal financing through Canaccord Capital Corporation and Octagon Capital Corporation. Pursuant to this financing, First Calgary had sold a total of 14,893,620 Common Shares at an issue price of $2.35 per share for gross proceeds to the Corporation of approximately $35 million. This financing was factored into the total amount of shares issued and outstanding as mentioned prior.
A map is available in pdf format by going to the following site:
files.newswire.ca
The company has a web-site located at fcpl.ca |
