AOIFF Conference call
All,
If you own shares you should listen in. In general, the info was quite useful and encouraging. Here are my notes. Accuracy isn't guaranteed!
Investment bankers. Have talked to 40 over past 10 days. Most of the buzz is over oil pricing, not company specific info. Summary on oil pricing. No one knows the bottom, most expect it to end up $70-80 long term. Many think it will settle out by the end of this year.
Comapny is debt free. Only one obligated well for 2015, so going forward their spending and drilling has much flexibility. Will defer some high risk drilling until next year. Focus on reservoir certainty, field development plan.
Had very good results on 3 appraisal wells. Quite encouraged and good chances numbers will grow. Are gathering much hard data on existing discoveries.
Epir, good shows, may have trap problems, thick volcanics. Still encouraged.
Balance sheet. Numbers not available, but said spend rate has been steady so the analysts can do their projectsions. One questioner said $150 m at end of 2014. Hill said they had cash to get us to mid year.
Talkign to farm in and merger partners. It's not a question of if the Co can raise the money, rather it is should we raise $ now - in this low SP, low oil price environment.
Q&A
Budget still to come. Drilling will drop from 4 rigs today to one righ by end of second quarter. Have flexibiltiy to scale/reduce spending.
Lots of focus on EWTs for Amosing (6 zones) and Ngamia. Resutls by mid year.
By 3rd quarter they expect much better info on recovery rates and reserves as a result of the EWT and core analysis.
Volcanics. seems to vary from well to well. Always a risk. hard to see on 3-D
Engomo looks like Ngamia. String of prarls. Risk: source, reservir, seal. Very much a frontier well with high rish. Very large basin, 3x size of others.
Recent appraisal wells were significant step out distances. Hope for reserve increases. Ngamia 7 is a big step out, new pocket. Are seeing connectivity & pressure communication.
Big deal is the refining of recovery factor. now wide range from 16 to 35%. Hope to narrow the range via analysis.
Plans for Twiga 2a? Considering it but nto certain. First will do Eckales (?spell?). That one is a step down dip and away from edge. Eckales deep is next up.
Cap Gains. Lots of progress and much supporto including the Kenyan Sec of Energy. Keny to hold bid round this year, so CGT impacts that response. Expect bill introduced in June and maybe acted upon by Sept (timeline is from prior legislation).
Afe Costs: $12-$14m for Lokichar at 2500m. New basin $25 m, EWT - $8 m??. Completion $12 m.
Edosowan? Why not sidetracked? Had 3-D tah thoguth it woudl be big thick sand. Porosity ended up on 3-5. Somthing about nto wanting to sidetrack down dip. (didn't understand) Big area between Amosing and Ekosowan. Plant to step out Amosing 4 toward Ekosowan fist. Probably in 1st half this year. Still has large potential and they like it.
Pipeline. 2 routes. Either works for us. Up to govt. Study out in April. Are anxious to get it started.
Merger discussions. A partner with geographic Africa focus is desirable, but any partner is acceptable. Big issue is how shares might be dilluted. Will pursue all options.
If Farm out, what's CGT exposure? Farm out is the best scenario under present CGT. New legislation, Farm out is excluded from tax. Is a lower CGT a prerequisite for new parnter? No.
PSC renegotiation mentioned by Tullow. Didn't sound like it was a priority unless oil prices stay at $50.
Feild Development Plan (DP). Is it based on Ngamia and Amosing only? yes they're the core, but can be scaled . Hope to have FDP by end of 2015.
Possible for a rail line to move oil before pipeline. Kenya looked and isnt' economic, so focus should be on pipeline.
FDP timing? Hill said the most important milestone isn't the FDP (develop plan) instead it is the FID. (I don't know what the FID is!!). FID decision connected to pipeline route and hope for decison at end of 2015 adn the FID complete by end of 2016. (fuzzy translation as I don't know what the FID is)
Possible for a 3-way deal with Tullow, AOI and farm in? No, Tullow isn't looking for Farm in.
From here forward in 2015 the company focus will be appriasal and moving reserves from 3C adn 2C to 2C adn 1C. Keep building value.
Hope this helps.
dat
