Value Microcaps Junior Energy

[stock_peeker]

Digitech clarifies Mart's pipeline situation. There is no threat to any pipelines that Mart uses now (operated by Agip) or plans to use in future (operated Shell).

This is the answer I gave on IV to a question about the pipeline used by Mart:

The pipeline Mart uses is the AGIP pipeline from Umutu to the Kwale AGIP facility 20 KM East of Umusadege. It is a small pipeline.

At this point it connects to the Large AGIP Export pipeline that ends up at the Brass river terminal 200 or so KM away.

Mart has a crude purchase agreement with AGIP. AGIP buys all the crude Mart produces. The amount of crude is determined every month between AGIP and Mart. If AGIP cannot deliver the crude to the terminal they pay Mart anyway. The oil not delivered is called the "deficit oil" AGIP recovers the deficit oil in the following month(s) shipment. The advantage is that Mart is assured of a steady cashflow.

What was new this year is that AGIP said "we forgot to tell you but we lost some oil during the 2011 year and we will make it up by just not paying you for the equivalent amount of oil you already shipped" Nice guys but I guess it was in the contract. Before everybody jumps up and down it is a common thing to have loss on the line. It is not only from bunkering. You can get a 3% loss just due to temperature.

The deal with Shell is a crude purchase agreement of X BOPD for X amount of years. The crude will be shipped on a Mart operated pipeline of 54KM to the Eriemu Shell facility. That Mart pipeline will have a capacity of 60,000 BOPD and it will be underground with a 18 inches slab of concrete on top. Expected completion (IMO not the company) is Q3 2013.

In Eriemu the Mart pipeline will connect to the main Shell pipeline that goes to the Forcados terminal 150KM away. Forcados is 150 KM west up the niger delta coast. Mart indicated that Shell reserved a 25,000 BOPD allocation for Mart on that pipeline.

The Shell pipeline that is shut down for repair (usually a few days) is a pipeline that end at the Bonny terminal about 100KM East of Brass river and 250 KM south of Umusadege.

I hope that helps the understanding of the pipeline geography.