New Guinea Energy’s oil and gas acreage in PNG ringed by oil majors, attracts unsolicited offers

New Guinea Energy (ASX: NGE, POMSOX: NGE, OTCQX: NGELY), is an Australian oil and gas explorer that holds a large portfolio of over 44,800 square kilometres of onshore licences in Papua New Guinea.

Share Price:  $0.05
Issued Capital:  850.0m
Market Cap: $45m 
Cash: $29m

All of the licences are located within an onshore basin that is a proven petroleum play hosting a similar petroleum system to the prolific offshore North West Shelf of Australia, and is one of the last available locations for highly prospective oil and gas exploration in South East Asia.

Multiple oil, condensate, and gas leads have been developed for further exploration and drilling.  An aggressive and well funded exploration program is underway to develop drilling targets and de-risk assets, with the first round of drilling planned for the second half of 2012.  

The advent of the oil majors actively exploring in the area surrounding NGE's acreage package makes it even more appealing.  Two exploration wells by the Exxon Mobil-Oil Search Joint Venture and three others involving Talisman over the next 6 months will strengthen the prospectivity and further de-risk NGE assets without the company having to drill a well.

The company has a very strong management team in place that has had extensive international experience in oil and gas exploration, which is blended with a similar understanding of energy exploration and development within Papua New Guinea. 

Analysis

NGE has announced it appointed RBC Capital markets to help it assess a number of unsolicited approaches the company has had for some of its assets.  On this news the company’s share price jumped 30%.  

At current levels, NGE’s market valuation is still not reflecting the value of its oil and gas acreage represented by their prospectivity and ignores the resource potential of its large onshore PNG licences and their proximity to energy hungry Asian markets. 

Rather the current market valuation still reflects market disappointment in the failure of one well.
 
Owning one of the largest oil and gas acreage portfolios in PNG, it is unsurprising to see that NGE has fielded unsolicited offers. 

In light of this, NGE is reviewing its substantial portfolio, which is ringed by oil majors.  The value of which would not be lost on any potential suitors for the company’s assets, and so underpinning NGE’s future valuation.

NGE is well placed to reap the rewards of a very significant exploration portfolio in PNG, through exploration and development and potentially through sale of individual assets, where the sum of the potential future value is worth far more than current value (and results from one well).

Originally published at: http://www.proactiveinvestors.com.au/companies/news/23228/new-guinea-energys-oil-and-gas-acreage-in-png-ringed-by-oil-majors-attracts-unsolicited-offers-23228.html