MMT.V/MAUXF - Conference call notes...
..in case you missed it. Two rumours have been put to rest and are indicated below in italics. If all goes well, first monthly production report in Q4 should see big rerating.
CEO – Wade
CFO - Demitri
P50 Prospective Resources of 19.87M or 20M are on 100% interest, i.e. not 50% + cost oil Net to Mart. This is because it is difficult to estimate. 20M roughly split between 60%-East, 30% West, 10% central lower sands
Umu-11 to spud May
East prospect is likely exploration well this year due to higher prospective resources
Umugini Pipeline – All clearing done, ongoing negotiations with land owners in a few areas, pipeline been laid next tot ROW. Crude handling agreement delay – no issues expected, new equity owner of trunk line that connects to Forcados (Heritage & NDPC) is reason for non-signing. Shell has signed off but the new signature is needed. More on this below.
Timing on pipeline – commissioned in Q3-2013 per technical team! (Q3 sounds like Sept 30th FYI)
$100M Term Loan – finalization expected soon. $75M 5 year term loan for capex, $25M for other. Not drawn yet.
Question & Answers:
Salman Parners – Justin Anderson
How did RPS handle after tax NPV valuation? Wade: Increase in pipeline loss assumptions. RPS report assumes 13% pipeline losses, but credit given for Shell pipeline when 11.5% assumed. Another decrease in after-tax NPV is from expiry of pioneer tax status as prior valuation assumed more production in 2013 prior to pipeline downtime issues. Also more conservative price deck assumed
Is Umu-10 included in reserves? Wade: Reserve allocations for 4 sands only. Umu 9 fully included
Union Securities Analyst
Status of AGIP Pipeline? Wade: up and running and ramping up back to “levels before disruption”
Is Mart having a more active role in pipeline? Wade: we are a partner
Granite Associates – Tom James
What happened to second drill rig? Needed for horizontal? Wade: Just about to out with a tender to secure second rig for horizontal. Wade has identified 3 rigs that are suitable so no availability issues.
Documents signed regarding pipeline? Wade: Shell has signed off on agreement, waiting for Heritage and NDPC to sign off. Because NDPC is involved they are government. Shell gave full disclosure to new owners when sold and Heritage agreed on volume injections at sale.
What is likelihood that AGIP will allow a volume increase in next couple months? ? Wade: no guarantees, because AGIP is such a big company they are not incentivized to move fast.
Why would you do horizontal when field so prolific? Wade: Some of existing vertical wells Umu 3 & 4 have 36 sands and some sands are optimum for horizontals. By doing horizontals we lower drawdowns and can recover more oil overall. Also targeting sands with lower API gravity.
David Steadman – CSL
What is capex expected to be this year? Demitri: Total estimate for Capex is $90 million
Chen Lin
What is decline on Umu-5? Remember they were pumping 1500 bopd 3 years ago.? Wade: Umu-5 still has minimal declines and is still doing 2000 bopd. RPS has been increasing recovery factors. Pioneer Tax Status ends at end of 2013. New discoveries on Umu East and West Prospects will not be covered under Pioneer Tax Status. Wade pointed out that they have significant tax pools though.
Note: Digitech had previously suggested that new discoveries might be subject to new 5 year tax holidays. This has been put to rest I guess.
David Thompson – Shareholder
What will pipeline construction look like? Wade: buried 6-8 feet then filled with earth on side and not encased on concrete, but 2-3 feet of concrete is laid on top of the pipe. This is a significant point as most information being floated in blogosphere was that pipeline would be encased. Someone could still dig from side and then tap sideways, so Mart plans on being very proactive in community.
Note: This puts pipeline-encased-in-concrete rumor/fact floating around to rest. Pipeline could theoretically be tapped from side but you need to dig a big hole.
Michael Pasto – Shareholder
Elaborate on Mart Merger rumour? Wade: Continue to look at opportunities. One of them is “doing something with partners” but can’t add more, they are looking at all the divestments by multinationals.
Garret Merchi – Shareholder
Wells pads for east & west built yet? Wade: to be started to build in 2-3 months.
Any trenching begun? Wade: No, first step is to lay out pipeline, you trench and bury at same time so trenching is actually fastest step.
