Teton sees big growth in small Russia oilfields
By Sujata Rao
LONDON, July 8 (Reuters) - Russia may be the latest play for international Big Oil but pint-sized Teton Petroleum <TPE.A> says there is plenty of room for smaller companies like itself to grow business by developing lesser-known low-reserve fields.
Teton Chairman Howard Cooper said on Tuesday his U.S.-listed company, which recently tripled its reserves by buying a stake in its second Siberian oilfield, plans to continue building production with a view to later selling out to a major. "All the majors are going after the mega-fields with reserves of a billion barrels but our focus is the small 50 million to 100 million barrel oilfields," Cooper told Reuters.
"Independents played a big role in developing American oil reserves. They went into small oilfields that the majors could not do economically and that is what we aim to do," he said.
Cooper said his Denver-based company was acquiring renewable 25-year licences to such fields in Western Siberia, which had already been prospected in Soviet times but had never been developed.
"Russia is the only place in the world where you can buy reserves for under $1 a barrel. In Texas you pay $7 a barrel," he said. "Last year we had 100 percent drilling success as we bought into proven reserves so not to risk investors' money."
Teton's net current reserves are about 33 million barrels and its production at 2,000 barrels per day (bpd) is paltry compared to over one million bpd for top Russian oil firms.
But Cooper said output could hit up to 100,000 bpd within three years, with reserves potentially rising to 300 million barrels, thanks to new fields Teton plans to acquire this year.
Teton has already this year bought a 50 percent stake in the 8,500 bpd Chernogorskoye field which it will operate together with a subsidiary of the BP<BP.L>/TNK-owned Sidanco.
"We are currently looking at four to five oilfields, which we shall finance through a mix of equity and debt," Cooper said, adding that once the fields were developed, the aim was to sell the company to an oil major or independent.
Cooper said Teton's advantage is that its operations are near fields developed by BP, Occidental <OXY.N> and LUKOIL <LKOH.RTS> in Western Siberia.
"Oil companies, both majors and independents, are buying into Russia and investing a lot of money," he said. "So our strategy for the next 36 months is to have the fields acquired, increase production and when it makes sense, we shall merge or sell."
As an example, Cooper pointed to the U.S.-registered firm Khanty-Mansiisk Oil Company (KMOC) with 300 million barrels in reserves, which earlier this year was bought by Marathon Oil <MRO.N> for $275 million in cash.
Teton, set up in 1997, saw revenues rise by over 300 percent in the first quarter of 2003, over the same period last year and Cooper said Teton would turn profitable by the end of this year.
First quarter revenues were $3.4 million, up from $821,000 in the same year-ago period, while net losses fell to eight cents a share from 27 cents a share in the first 2002 quarter.
Teton shares were trading at $4.22 on Tuesday, up two cents.
(Reporting by Sujata Rao, editing by Duncan Shiels)
***********************************************************
Great to see that production has increased by about 300 bopd net to Teton since 1Q. Looks like they have drilled some more successful wells. |
