1.6 Bn BBLs Resources Confirmed at Peregrine Project: XCD Energy’s Stock Soared by 25%

  • Jan 21, 2020 AEDT
  • Team Kalkine
1.6 Bn BBLs Resources Confirmed at Peregrine Project: XCD Energy’s Stock Soared by 25%

Alaska North Slope, one of the super basins with commendable historic production greater than 16 billion barrels (bn bbls) till date with remaining resources of 28 bn bbls, has shown optimistic resource estimation for XCD Energy Limited (ASX: XCD)- an Australian listed US focused oil exploration company. Post the announcement of the resource update on ASX, XCD share price witnessed an increment of 25%, a testimony to the positive sentiments among the investors.

Project Peregrine includes total 13 NPRA's leases located ~35km to the south of the Willow discovery presently being appraised and developed by ConocoPhillips. The NPRA leases has no extra expenditure but only annual lease rental of US$3 per acre per annum with most of the contract valid till 2029.

The review of Peregrine project has shown positive result of over 1.6 billion barrels prospective resources in the mean case, i.e. net entitlement after royalty in its maiden Independent Prospective Resources Report updated by the ERC Equipoise Pte Ltd (ERCE) – An international petroleum Reserves and Resources auditor with 40 years of experience in offering professional consulting services in upstream oil and gas industry.

The Project Peregrine Prospective Resources: -

Source: Company’s ASX announcement (21st January 2020)

The announced prospective resources are the combination of the three prospects of Peregrine projects, and they are Merlin Prospect, Harrier Prospect and Harrier Deep Prospect.

ERCE has determined the prospective resources by analysing the areas, i.e. the three prospects using reprocessed 2D seismic data, and to unrisked the prospective resources estimate, the geological chance of success were modelled using Monte-Carlo analysis assuming that – 1) there was no economic minimum 2) The volumes and risk of each prospect are independent except hydrocarbon migration.

  • The Merlin Prospect: The company’s Merlin prospect is inferred to be on the same sequence boundaries as the Willow Oil Field of ConocoPhillips expected to have 450–800 MMBOE (one million barrels of oil equivalent).

  • The Harrier Prospect: The Harrier prospect lies ~15km south-east of ConocoPhillips Harpoon Prospect at which intention to drill up to three exploration wells is shown. XCD believes Harpoon to have similar sequence boundaries as Harrier and thus the achievement of Harpoon prospect is likely to improve the Harrier prospect.

Peregrine’s Harrier and Merlin prospects are targeting drilling at the shallow Nanushuk play using a smaller drilling rig, which the company is continuously evaluating at ~4,300 and ~3,400 ft respectively.

  • The Harrier Deep Prospect: The Harrier Deep Prospect is likely to utilise standard north slope drill rig to achieve the Torok target at around 10,000 ft. However, the drill is likely to intersect the deeper Torok objectives and the shallow Nanushuk in the same wellbore.

Peregrine’s Lease Positions adjacent to ConocoPhillips Prospects: -

Source: Company’s ASX announcement (21st January 2020)

XCD’s next step toward Farm-out Campaign

The company is planning to initiate farm-out campaign soon to execute the drilling options available to farm-in partners to either use the two well low cost shallow Nanushuk drilling initiative or north slope drilling rig to engage in all the targets of Merlin and Harrier Prospects.

Mr Dougal Ferguson – XCD’s Managing Director (MD) Comments

Financial Position

The company announced on 23rd October 2019, two commitments to raise $2,000,000 through two-tranche placement. Tranche 1 raised ~ $500,000 via the issue of ~48,000,000 shares at $0.01 and ~24,000,000 shares with free attaching options. Tranche 2 is projected to raise $1,500,000 through the issue of ~152,000,000 shares at $0.01 and ~76,000,000 shares with free attaching options. After completion of the Tranche placement, the XCD will have ~ 700,000,000 shares and ~ $3,200,000 cash in the bank.

As of 30th September 2019, the company had cash reserves of ~1.3 million with no liability.

XCD Funding Status

The Company’s initiative towards the farm-out campaign is expected to be financially smooth since the company has no debt and it is fully funded to meet the FY20 objective and maximise the shareholder return. The low-cost drilling option at Shallow Nanushuk, located in one of the super basins is expected to provide significant leverages.

Also, it is worth mentioning that there has been continuous bid for Alaskan leases since 2006 and has received US$11 million over 1 million acres bid by Armstrong, ConocoPhillips and XCD in 2019. XCD through its wholly owned-subsidiary Emerald House LLC has been the highest bidder for 45,783 acres (4 leases) in NPRA.

Stock Price Information – The stock of XCD Energy Limited last traded at $0.015 on 21st January 2020, with a market cap of $8.4 million.

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