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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (36044)	12/7/2004 6:56:53 AM
From: Ed Ajootian	Read Replies (1) \| Respond to of 206089

Austral Pacific (APXYF) is my second largest position right now (EGSR is the largest). For folks that don't know the APXYF story, this is a tiny New Zealand based company that is gunning for elephants, with a carried interest no less. They have a market cap of under $60 M fully diluted yet they have a 25% interest in a well (the Cardiff 2) that is targeting 1 TCF of gas! Moreover, they have already discovered reserves having a value of around their present market cap. Gas is extremely valuable in New Zealand right now, since their large gas fields are depleting out a lot faster than anyone thought, and there haven't been enough new discoveries to replace them. The situation is so dire that Austral was able to farm out this Cardiff 2 well to the largest electric company in NZ, Genesis, for terms that are the 2nd most favorable farmout terms I have ever seen. They got Genesis to pay for 100% of the drilling costs (capped at budgeted AFE amount) for a 40% interest in the well! (The best farmout terms I've ever seen were FXEN farming out a well to CalEnergy, 100% funding for a 25% interest). It would not be much of a stretch to put $2/mcf for the value of gas in the ground in NZ at this time. You do the math, the potential appreciation for tiny Austral's stock price is mind-boggling. The stock price has recently pulled back a bit, I believe this is solely due to the fact that 2.7 M warrants that are deeply in the money expire early next month. The Cardiff 2 well has just now started drilling ahead into the Kapuni sands, which contain the zones of interest. We should find out by Christmas or shortly thereafter what's down there. For more info see their web site at www.austral-pacific.com plus see the article below: Christmas hope for Cardiff follow up: Genesis chief Neil Ritchie, New Zealand Wednesday, December 01, 2004 THE onshore Taranaki Cardiff-2 well should hopefully provide a grand Christmas present for the PEP 38738 partners, the gas industry and the country, says Genesis Energy boss Murray Jackson. Everything has gone according to schedule so far for the Parker Drilling 246 rig drilling the strategic well which is targeting possibly 1tcf of gas in the Eocene-aged Kapuni formation. The well is now about 4000m down towards the 4923m target depth that should be reached about Christmas Day. "We have focused on Cardiff because we believe it is a good prospect, hopefully as good or better than Kupe, and the nearby Kapuni field has performed extremely well for Shell Todd and has been producing now for over 30 years," the Genesis chief executive told EnergyReview.Net at the Cardiff-2 site today. "New Zealand needs to find at least 150 bcf of additional gas a year just to keep pace with increased gas usage, primarily in the electricity sector that is growing at over two percent per annum and fueled by continuing economic growth. "So success here will be great for us, our partners and the country in general." Genesis - one of this country's two largest gas users - has a major stake in the offshore Taranaki Kupe gas-condensate field and PEP 38738 which contains most of the Cardiff prospect. Kupe is estimated to hold about 264 bcf of gas and Austral Pacific Energy chief executive Dave Bennett believes Cardiff could contain 1 tcf or more of gas. Genesis is funding the drilling and testing of Cardiff-2, to a cap of NZ$15 million, in return for acquiring a 40% equity interest in respect of the deep petroleum rights in the permit and the right to purchase all gas from those reserves. It is also funding a major portion of the Kupe development and has rights for most of that gas. Jackson said it was good the Petroleum Exploration Association of New Zealand was lobbying government to expand its narrow definition of "discovery" relating to reduced royalty rates for new gas. "We understand the Energy Minister (Pete Hodgson) has asked for more work to be done on the tax provisions; Peanz is meeting the minister and his associate Harry Duynhoven. "Peanz also needs to talk to (Finance Minister) Michael Cullen, as he pulls the purse strings." Jackson said he agreed entirely with McDouall Stuart executive director Chris Stone, who recently told ERN the government should not lose sight of the big picture and needed to encourage exploration by tax relief incentives. "Exactly, the tax forgone by the Crown would be negligible compared to benefits the incentives would bring in increased exploration activity and, hopefully, more gas discoveries that we desperately need. "So far, the application of tax incentives has not mirrored the promises made to the NZ Petroleum Conference last March." At that time, Crown Minerals promised an urgent review of petroleum legislation and later announced a reduction in royalty rates for gas until 2009, though it has recently said reduced royalties will only apply to gas from previously unknown reservoirs and prospects. Jackson, engineering manager Bruce Cole and fuel development manager Allan Melhuish toured the central Taranaki Cardiff-2 wellsite as well visiting the proposed landing site of the Kupe liquids pipeline.