Low-cost oil and gas producer, Eon NRG Limited (ASX: E2E) is currently focused on identifying and developing exploration assets in North America. The company has a mix of exploration and producing assets which includes 15,750 acres of oil and gas leases in the Powder River Basin across three counties in Wyoming, Borie Field Silvertip Field and California Fields. These exploration assets are providing strong growth potential to Eon.
What makes Eon NRG unique?
Experienced, low-cost oil and gas producer with operating control and high revenue interest
Last year in September, the company acquired around 15,000 acres of leases in the Powder River Basin (PRB), from the United States Department of Interior with 10-year lease term and a net revenue interest of 87.5%. Ever since the company acquired these leases, it has been involved in identifying potential drill prospects in its PRB acreage targeting oil from multiple formations including the Turner, Minnelusa, Dakota and Muddy. PRB is located in the oil and gas friendly state, Wyoming, which is considered as a suitable state for the exploration.
Besides PRB leases, EON also owns Borie Oilfield, located west of Cheyenne in the DJ Basin of Wyoming and Silvertip Field, located in the Bighorn Basin of Wyoming and California Oilfields located in the San Joaquin Basin.
Potential to add significant production from the upcoming drilling program
First PRB Well: Eon NRG will soon be selling the oil and gas produced from its first PRB (Powder River Basin) well, Govt Kaehne 9-29 well. Recently in July 2019, the company secured all the necessary approvals from the concerned authorities required to start the drilling of the well. The Spudding of the new well is expected in September 2019, subject to rig contractor schedule.
The Govt Kaehne #9-29 is a low-risk conventional well which will target high quality, oil saturated reservoir, in a structurally high position relative to offset wells, significantly adding to the company’s existing 530 boepd (barrels of oil equivalent per day) production.
In the month of March 2019, the company completed a capital raising to support drilling the Govt Kaehne 9-29 well.
It is expected that the Govt Kaehne 9-29 well will be drilled to a depth of around 6,300 feet and upon reaching the total depth, drill stem testing (DST) and open hole logging will be performed to evaluate the reservoir deliverability. Through a detailed geological review of the PRB leases, Eon has already identified various drilling prospects in the PRB region and expects to drill two of these prospects in the year 2020.
Battery mineral exploration claims: Last year, Eon NRG diversified its business by acquiring 840 acres of battery mineral exploration claims in Nevada, a significant step to enter into the battery minerals space. These battery mineral exploration claims are providing a secondary exploration opportunity to Eon with the company conducting low cost exploration work on these claims.
The company believes that global energy demands will require a range of new technologies and energy supply and storage solutions in the future. EON is preparing itself to cater to this future demand. The acquired area in Nevada is believed to have exploration potential for a range of battery minerals, including copper and cobalt.
Positive cash flow from current production supports exploration and overhead expenditure
In the June 2019 quarter, the company produced 43,471 barrels of oil equivalent (BOE) which includes 17,318 barrels of oil production, 22,352 BOE of Gas production and 3,801 barrels of NGL production. For the June quarter, the company reported oil revenue of US$796,833 which is higher than the oil revenue of US$722,950 in the previous quarter, driven by an increase in oil sales volume.
In the June quarter, the company received around US$958k of cash as ‘receipts from customers’ and spent around US$198k spent on development activities, US$313k on staff costs, US$549 on production costs and US$205k on administration and corporate costs, taking the total cash outflow for operating activities to $368k.
At the end of the June quarter, Eon NRG had cash and cash equivalents of around US$2,291k. In the September quarter, the company is expecting to receive around US$1,039k in the form of receipts from customers and expects net cash outflow US$1.19 million in the September quarter. This include, estimated outflow of US $265k on staff costs, US $307k on administration and corporate costs and US $516k on production activities.
Recent Updates on Eon Projects
- Borie Oilfield: At the Borie Oilfield, the company has carried out a workover to return the well to production;
- Silvertip Field: At the Silvertip Field, consulting engineer helped the company in attaining sign-off of the periodic field safety requirements with the concerned authorities;
- Sheep Springs and Round Mountain Oilfields: After reviewing the water disposal procedures, the State Water Board Authorities have endorsed the monitoring and disposal systems that the company has in place with permits provided for these facilities;
- Powder River Basin: Site-works commenced at Govt Kaehne #29-9 well location, following drilling approvals;
Stock Performance: At market close on 29 August 2019, E2E’s stock was trading at a price of $0.005 with a market capitalization of circa $3.85 million.
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