Petrel Energy Limited (ASX: PRL) is an exploration company which is focused on the exploration, development, and production of petroleum. It has its operations in Australia, Spain, and Uruguay. The company seeks for conventional and unconventional opportunities most prominently in North America. It is also focussed on an emerging onshore shale gas development in the Barnett Shale region of Texas.
The company has agreed upon the merger of Petrel and Warrego via a reverse takeover through its duly signed Share Purchase Agreement, dated on 21 December 2018. However, the takeover is subject to the approval of Petrel’s shareholders based on several factors.
Strike Energy Limited (ASX: STX) and Warrego Energy collectively operates EP469 project with a stake of fifty percent each. Strike Energy has confirmed about the collaboration with another Perth Basin Operator. This will allow Strike to sequentially plan their drilling programs in order to ease the drilling programmes of West Erregulla-2 well and other basin wells in Easternwell Rig106 to the Perth Basin. As mentioned in the farm-in agreement with Warrego, Strike will likely fund the initial expenditure of A$11.00 million approximately on the West Erregulla-2 well. Following this news, the share price of Petrel Energy Limited increased by 50 percent as on 14 January 2019. The collaboration of Strike Energy Limited for conducting the drilling programs will ease the operations in Easternwell 106 land rig to the Perth Basin.
The CEO and managing director of Petrel Energy David Casey said that the year 2019 is very encouraging owing to the final due diligence, and merger documentation nearly towards its completion. As per David, West Errugulla-2 well is among the largest and most exciting opportunities that Petrel has after Waitsia. The significance of the acquisition of Australia’s largest land rig is immense because it can target up-to a production in excess of a trillion cubic feet of gas.
The managing director of Warrego, Dennis Donald, however, stated that the merger of Warrego with Petrel will help the company to have a strong portfolio of international significance. The success of the West Erregulla-2 well drilled with the joint venture partnership with Strike Energy will be one of the primary factors to decide the success of the company.
Let us have an idea about the financials of the company and its performance of key metrics in 2018. The loss after tax attributable to the company for 2018 was around $29.12 million as compared to the loss of $2.05 million in FY17. The total assets decreased significantly to stand at $4.62 million approximately in FY18, as compared to $34.43 million in FY17 approximately. The net cash outflow from operating activities decreased and stood at $0.857 million as compared to $1.82 million in FY17. However, the net cash outflow from investing activities stood at $8.430 million in FY2018.
Now, let us quickly look at the performance of Petrel Energy Limited’s stock and the return it has posted over the last few months. The stock is currently trading at $0.003 with a current market capitalization of circa $4.83 million. It has a 52-week high price of $0.014 and a 52-week low of $0.001, with an average volume of ~3.25 Mn.
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