Mediterranean Oil & Gas hires BNP Paribas to advise on Ombrina Mare financing options

Mediterranean Oil & Gas (AIM: MOG) (‘MOG’) has appointed BNP Paribas SA (Euronext Paris: BNP) as a financial adviser to assist the company, primarily in assessing its debt financing options for the Ombrina Mare project. Earlier this week, the company doubled the 2P (proven and probable) reserves for Ombrina Mare, to 40 mmbbls (million barrels).

“Collaboration with a financial institution such as BNPP will assist us in achieving the goal of becoming a medium sized oil and gas producer in Italy and the central Mediterranean region", CEO Sergio Morandi said. “BNPP has extensive experience in financing development projects in the European oil & gas sector and is a leading European financial institution”.

The latest reserve certification also included an increase in 1P (proven) reserves to 12 mmbbls. Independent reservoir engineers Studio Ingegnera Mineraria (SIM) conducted the new certification incorporating the results of technical studies conducted in 2009.

Following the recertification, Edison Investment Research said MOG was materially undervalued and raised its core net asset value (NAV) to 150p. The research house called Ombrina Mare a potentially value-transforming asset and said that news on project financing or farming out would be a major catalyst for the stock, adding that shares were materially undervalued at around 42 pence and trading at an EV (enterprise value)/2P of £0.64.

The new reserve represents a 100% increase from the June 2008 2P oil reserve certification by SIM. Ultimately, with BNP’s assistance the company’s new financing will enable significant progress at Ombrina Mare. MOG expects to complete the environmental approval process by the third quarter of 2010, and it is targeting the final grant of the full production licence by the end of 2010.

At Ombrina Mare technical studies are ongoing. The reprocessing and inversion of 3D seismic results intends to increase the imaging of both the oil and gas reservoirs and formation evaluation, thus refining the knowledge of the reservoir, MOG said.

The current estimated capex (capital expenditure) for the Ombrina Mare field development plan (FDP) is between €150 and €180 million. The Ombrina Mare FDP has been designed by Proger SpA to produce the field's 20 MMbbls (million barrels) and 6.5 Bcf of certified 2P oil and gas reserves.

The FGP includes a total of five wells, a plant designed for oil production of 10,000 bbls/d (barrels per day) and a 12 km (kilometre) submarine gas pipeline. Production is scheduled to start in 2012 and is expected to peak at 5,000 to 7,500 bbls/d of oil and 3.5 mmcf/d (million cubic feet per day) of gas.

Also at Ombrina Mare in October 2009, MOG announced that 6.5 Bcf (billion cubic feet) of recoverable 2P gas reserves had been certified by SIM. The gas was identified in a Pliocene clastic sequence above the oil field. This gas reserve certification has not been reviewed by SIM in the update, but it could be revised when the ongoing seismic reprocessing and studies are completed.  http://www.proactiveinvestors.co.uk/companies/news/13242/mediterranean-oil-gas-hires-bnp-paribas-to-advise-on-ombrina-mare-financing-options-13242.html