A look through BPH Energy’s Diversification Strategy for Growth

  • Sep 23, 2019 AEST
  • Team Kalkine
A look through BPH Energy’s Diversification Strategy for Growth

Diversified Player, BPH Energy Ltd (ASX: BPH) holds significant investments in multiple growing sectors with continued focus on identifying potential opportunities and growth drivers. BPH Energy has so far experienced a noteworthy growth, backed by its significant investments in biotechnology, resources and medical cannabis sector.

BPH Energy is eyeing many key transactions and agreements to boost its portfolio. It is seeking engagements with big players interested in co-development and collaboration. The company offers project management, commercialization and early-stage funding strategies for a spin out company, a direct collaboration or to secure a license, while their institutional partners provide infrastructure and the core scientific expertise.

BPH’s activities are targeted to achieve long-term value creation, driven by the growth of its key investments. Initially, the company had investments into biotechnology sector through Cortical Dynamics Ltd and Molecular Discovery Systems, and oil & gas sector through Advent Energy Ltd. Recently, it has expanded into medical cannabis sector via acquiring a 10 per cent stake in Patagonia Genetics Pty Ltd (PG Aust), with an option to acquire a total shareholding of 49 per cent in the company via a terms sheet.

Advent Energy Ltd

BPH holds 22.6 per cent direct interest in oil and gas exploration and development firm, Advent Energy Ltd that holds offshore and onshore exploration and near-term development assets around Australia.

Advent’s assets comprise Bonaparte Basin interests, including EP386 (100%) in the Western Australia and RL1 (100%) in the Northern territory, through its wholly owned subsidiary Onshore Energy Pty Ltd. RL1 and EP386 lie in Australia’s third most prolific hydrocarbon producing basins, the onshore Bonaparte Basin. Advent seems to be uniquely positioned to potentially satisfy growing energy demand from each of its assets.

Besides, it owns 85% JV interest in the PEP11 project (Offshore Sydney Basin) through its 100% owned subsidiary, Asset Energy Pty Ltd.

Renewal of Retention Licence 1 in the Northern Territory

The NT Department of Primary Industry and Resources has granted a renewal of Retention Licence 1 (RL1) in the Northern Territory to Advent Energy Ltd, for a five-year term ending in July 2023. Advent is the operator of RL1 in NT, which covers the Weaber Gas Field and is 166 sq. km in area.

RISC has assessed a significant upside potential for 3C Contingent Resources of 45.8 Bcf for the Weaber Gas Field in RL1. Within EP386, recoverable Prospective Resource estimates in conventional reservoirs range from 53.3 billion cubic feet to 1,326.3 billion cubic feet of natural gas, with a Best Estimate of 355.9 billion cubic feet of gas.

Advent has calculated a Prospective Resource (best estimate) of 9.8 TCF for the shale gas areas of the Bonaparte permits of EP386 and RL1.

A sizable market demand of power generation capacity across Western Australia’s Kimberley region has been identified by market studies which could potentially be supplied by Advent’s conventional gas projects in RL1 and EP386. The ongoing rapid development of Kununurra region in Northern Territory provides a remarkable opportunity for Advent to potentially develop its nearby gas resources.

Termination of RL Energy Joint Venture Agreement for the PEP11 Permit

Recently, BPH notified about the termination of RL Energy Joint Venture Agreement (85% Advent, 15% Bounty Oil and Gas NL) with Advent Energy Ltd by mutual consent for the PEP11 permit. The company notified that the Joint Venture is now evaluating proceeding and reviewing the program for the well drilling of the Baleen drill target.

The PEP11 project, which is supremely located to potentially supply gas into the east coast gas market, includes major structural targets that are believed to carry material quantities of natural gas. A geochemical investigation undertaken in 2010 provided the support for a potential exploration well in PEP11. The report highlighted that the Baleen prospect seems to carry a greater probability of success than other prospects. Considering this, Advent Energy conducted a seismic campaign in 2018 in PEP11 around a key drilling prospect at Baleen. The 2D seismic survey was undertaken to support the subsequent drilling of the Baleen target, around 30 kilometres SE of Newcastle.

Advent Energy Ltd has exhibited substantial gas generation and migration within PEP11 project, with the mapped leads and prospects offering high gas discovery potential. The gas supply crisis on the east coast of Australia is offering a considerable market opportunity for BPH to focus on the development of its PEP11 project.

Patagonia Genetics Pty Ltd

BPH’s latest investee company, Patagonia Genetics, has recently purchased 1300 litres of Wonderland Agronutrients products to grow shops and send samples to major licensed producers internationally who have shown interest.

Wonderland Agronutrients is one of the leading Chilean brands of cannabis-oriented fertilisers that has grown substantially in less than 3 years. Patagonia Genetics holds exclusive worldwide distribution rights to Wonderland’s product range, which includes “Algae based Biostimulants” and “Home Grow”. Patagonia’ initial modelling on the Wonderland Agronutrients distribution deal demonstrated potential for margins of between 60-80%.

With the investment in Patagonia Genetics, BPH has made a robust entry into the medical cannabis sector that is showing considerable growth. Recent developments in the medical cannabis space have boosted the sector’s viability, including the announcement by the UK Govt. to legalise medical cannabis, the legalisation of cannabis in Canada and the step taken by the Australian Govt. to legalise the export of medical cannabis from Australia.

Cortical Dynamics

Besides, BPH Energy is progressing well with its exciting medtech investment. BPH holds 4.43 per cent stake in an Australian based medical device technology company, Cortical Dynamics Ltd whose core product is Brain Anaesthesia Response Monitor (BARM), that aims to better identify the impact of anaesthetic agents on brain activity, ensuring optimally anaesthetised patients.

The approach used by BARM is fundamentally unique relative to other competitive players, with the underlying algorithm producing electroencephalogram (EEG) indexes that are related directly to the physiological condition of the patient’s brain.

Cortical obtained impressive feedback from all the anaesthetists that tested BARM at the Sydney Adventist Private Hospital during the initial two weeks of July this year. Currently, the BARM trial is ongoing at Southampton University Hospital by the LiDCO Ltd UK.

A consultant anaesthetist, Dr Adrian Sultana also conducted BARM trials in two hospitals of Sydney during 2018 and 2019. The following conclusions were achieved from the trials:

BPH holds strong growth potential with the global brain monitoring market projected to touch $1.6 billion by next year. Cortical’s competitive advantage has been acknowledged by prominent world experts in anaesthesia, with BARM’s TGA approval and the CE mark now paving way for the sales campaign.

Stock Performance: BPH is currently trading at $0.001 on 23rd September 2019 (1:15 PM AEST) with approximately 2.99 billion outstanding shares. The stock has delivered a substantial return of 100% in the last one year.


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