Manas Petroleum (CVE:MNP) rose on Tuesday after giving an update to investors on a conference call this morning, saying that it plans to spud the first well of its Tajikistan exploration program in October this year.
The company, which is working toward its transformation from a pure exploration play to both a producer and explorer, is armed with exploration assets in Tajikistan and Kyrgyzstan in the Fergana Basin near producing fields, which together span 4,192 square kilometres and form “one large, connected area”. It has already acquired 2D seismic data on 1,960 km.
Drilling on these licenses, with several drill-ready prospects, is planned for the last quarter of this year, with the company waiting on some long-lead items in terms of equipment, as well as the finalization of a drilling contractor agreement and the execution of a partnership to share the costs - for which it says it is in active negotiations with two parties.
"We are at the end of the tendering process, with evaluation ongoing. By the end of May, we should be ready to enter contracts for materials and services, including drilling," said newly promoted CEO Dr. Werner Ladwein, who has 30 plus years of experience in the oil and gas industry, previously heading up Petrom, the largest exploration and production company in Southeastern Europe.
The exploration program is set to be cost-intensive, with the first well expected to cost between $20 to $25 million. The company is targeting more than 100 million barrels of oil equivalent from one of the first prospects, known as West Supetau – which has a target depth of 3,500 to 4,000 metres.
"There has been a lot of progress with the talks," said Dr. Ladwein on the call.
The company is also in discussions with a “couple of parties” to complete a financing in the next six to eight weeks, which is necessary to close the share purchase agreement that will give it an 80 percent stake in producing oil assets in Tajikistan, and which should cover work for the first year.
Late last year, the oil and gas explorer inked a deal to acquire 80 percent of an unnamed Swiss entity with eight producing fields, which hold 2P reserves of 30 plus million barrels of oil and additional gas. Current production is less than 300 barrels of oil per day, but internal evaluations have pegged peak production of more than 3,200 barrels of oil per day.
Manas is looking to rehabilitate the assets and increase production through proper maintenance, including investing in new equipment, appraising and exploring missed extensions and prospects, and selling the oil locally at a price that competes with import crude oil from Kazakhstan.
"We are in the process of completing the acquisition, and we will have a better idea of where we stand here by the end of May," said Dr. Ladwein on Tuesday, adding that the deal is expected to close in the second quarter, though there is no guarantee.
The chief promised the next conference call to update shareholders would take place in mid-June, when he said he would have a better idea of the timelines in terms of discussions.
“TOTAL just entered Tajikistan, and China National Petroleum Corp – one of the largest Chinese companies – has entered into a joint venture in another basin in the region,” said Dr. Werner Ladwein in a recent interview last month with Proactiveinvestors.
“The region hosts world-class acreage, with a working petroleum system in place, including infrastructure and a railway system to export oil.”
The CEO explained that Russian geologists discovered the main structures, at the time of the Soviet Union, but didn’t have the drilling technology and the project management skills necessary to succeed.
Shares of Manas were up by a penny on Tuesday, trading at 7 cents on the TSX Venture Exchange.
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