A Gusher in Uganda?
For a relatively smallish hydrocarbon producer, Heritage Oil Corporation (TSX: HOC.A) has two very large pluses running in its favor.
First, it can boast a rather well-stocked corporate treasury with about US$15 million in cash. Second, the Company struck oil and higher order gases in Uganda last year -- an historic and potentially very prospective first for a country with not a drop of domestic oil supply. Naturally, it would be quite a coup for Heritage too. That is, if the Company’s second well into the target, Turaco-2 spudded his fall, transforms the mere “indications” of hydrocarbons (as were termed the results from the mechanically-flawed Turaco-1 Well) into significant flow rates this second time around.
“We’re very confident of finding a significant oil reservoir,” said Chief Executive Officer Micael Gulbenkian. “But,” he cautions, “only time and Turaco-2 will tell.”
Turaco-1, drilled to a total depth of 2,487 metres, encountered good shows of both methane and higher order gases (C1 to C4) and also shows of live oil, but mechanical difficulties prevented logging.
However, Mr. Gulbenkian’s confidence in finding a large body of hydrocarbons is not solely a function of the Turaco-1 Well. Geologically, the Middle Miocene Kisegi Formation sand, Uganda’s primary reservoir target along the southeast portion of Lake Albert, represents a world-class reservoir with 100-meter-thick sand demonstrating extremely good reservoir parameters. As well, surface oil seeps at the margin of the Graben indicate the basin has generated oil, while seismic data, the first ever to be acquired in Uganda, points to the potential for a significant hydrocarbon source province.
“Putting all of these favorable factors together, we stand a solid chance at a significant find,” Mr. Gulbenkian recently told CHF’s SmallCap Spotlight.
But Heritage is more than a throw of the dice on a couple of exploration holes. It has, as noted, a bulging corporate treasury with which to acquire new properties in other locations of the world. In fact, the Company has embarked on an acquisition campaign that could generate either new opportunities for existing production or new advanced exploration targets.
“We have a very active project review under way in several parts of the world,” Mr. Gulbenkian said. “I think we will soon find a project with the right kind of ingredients that can enhance shareholder values.”
And Mr. Gulbenkian should know. He is the great-nephew of Calouste Gulbenkian who formed a syndicate nearly a century ago that first discovered the oil riches of Iraq. Mr. Gulbenkian, before joining Heritage, managed the oil and gas interests of the Calouste Gulbenkian Foundation, developing the firm into a fully-fledged energy business.
Heritage’s current production comes from the Republic of Congo, where the Company holds a 25% interest in the Kouakouala field. Average production in the second quarter of 2003 from Kouakouala was approximately 260 barrels per day (bpd) net to Heritage. A BEICIP-Franlab field evaluation conducted earlier this year, confirmed that full field development should eventually provide gross production approaching 9,000 bpd.
Heritage and its partners, Maurel & Prom (50%) and Tacoma Resources (25%), are planning a potential three-well program to further develop the field.
In Oman, the Company holds 10% interests in two gas fields and recently announced a new gas/condensate discovery, confirming a 185-meter gross hydrocarbon column.
In terms of Heritage’s total reserves there was very good news indeed recently. An independent reserve report in June 2003 pegged total proven reserves at 4.6 million barrels of oil equivalent (boe), a significant increase from the 0.9-million-barrel figure of six months earlier. Total proven and probable reserves (unrisked) now stand at 17.8 million boe valued at an unrisked US$47.2 million or Cdn$74.4 million. The proven plus risked 50% probable reserves are 11.2 million boe with a value of US$29.5 million (Cdn $46.5 million) at a discount rate of 10%.
The Company’s common shares trade on the Toronto Stock Exchange under the symbol HOC.A. And one of other piece of good news -- the “A” in the stock symbol does not stand for a separate class of multiple voting shares, but is only a part of the symbol. The Company believes in the shareholder democracy of one share one vote.
AI
