American Petro-Hunter’s Near-term Catalysts Look Promising
By Justin • on June 10, 2009
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American Petro-Hunter (AAPH) may not be as well known as companies like Exxon Mobile Corporation (XOM) or Chevron Corporation (CVX), but this development-stage company has several promising near-term projects that make it worth a closer look.
American Petro-Hunter (AAPH.OB: 0.43 +1.18%), a development-stage oil and gas exploration and production company, is one stock that speculative investors may want to watch. The company’s 25% working interest in a California natural gas project and 25% working interest in a Kansas-based oil drilling project represent substantial opportunity for investors.
American Petro-Hunter’s primary natural gas project, located in the Central Valley of California, already has a seismic shoot in the final planning stages with the well to be spud next month. The company believes that the project, if commercially viable, may represent a venture with an in-situ value of greater than $20 million in contained gas to its working interest.
The natural gas project’s proximity to prolific gas fields like Union Island (271 BCF), McMullin Ranch (63 BCF) and Vernalis (103 BCF) suggest that it could exhibit long life and stable rates of production and decline. If the sands are 100% gas filled and the well is commercially viable, the first well has a projected initial production rate of 5,000 Mcf/day.
In May 2009, American Petro-Hunter also acquired a 25% working interest in the Poston Prospect, located in Trego County Kansas. The 750 acre block contains a potential multi-well program with the first location to be drilled named the #1 Lutters Well. If a successful oil well is established, the company could receive an 81.5% NRI.
The company anticipates that commercial production at the #1 Lutters Well will begin on June 15th. Engineering estimates of the potential production from the indicated pay zone is between 35 and 100 barrels per day from a successful well. Meanwhile, full development of the field could produce up to 400 BOPD of light oil, generating substantial profits for shareholders.
Overall, American Petro-Hunter seeks projects with very short pay out periods for seismic drilling and pipeline tie-in costs, while selecting only the highest quality prospects. With its existing two properties in development, the company believes it may be able to create a positive cash flow as soon as the third quarter of this year.
In the end, American Petro-Hunter is a shareholder-friendly oil and gas exploration company with strong prospects materializing in the near future. The company’s limited cash burn and strong near-term projects make this a substantial opportunity for high-risk/high-reward investors looking to get in ahead of any hard results that could move shares very quickly.
AI
