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North American Petroleum

  • BY: Andrew Hore |
  • POSTED: 25/12/2013 |

US-focused oil producer North American Petroleum (NAP) plans to move from ISDX to Aim when it has built up its proven reserves.

NAP focuses on proven oil and gas formations and has a relationship with Aim-quoted Magnolia Petroleum, which has interests in many of the same wells as NAP. In November, NAP purchased a 24.2% interest in the Little Drum oil and gas project on the Mississippi Lime formation for $300,000 in cash. This includes four producing wells with daily production of 14 barrels of oil equivalent a day. 

The results of the fracture stimulation of the Moursand A-2 well will be known in January. This well is not included in the proved reserves estimate.

That deal was followed by the acquisition of a 30% interest in the Mathis unit in Osage County, Oklahoma. This is operated by Aim-quoted Northcote Energy and is near to existing interests. The $120,000 purchase price means that P1 reserves cost the equivalent of $1.93/barrel. The first well will be drilled in January.

There are 18 producing wells. Initial daily production rates for two of the newer wells show NAP’s daily share at 14 barrels of oil. As these are initial figures they may settle at a lower level.

The recent investments have increased the estimated value of the company’s proven reserves to $21m.

Further investments will also boost the asset valuation. NAP needs to increase in size so that it is sufficiently large to make an Aim quotation viable.

NAP raised £2m at 0.665p a share when it joined ISDX in March. There is still cash left to invest.

At 0.825p a share, NAP is valued at £3.3m.

Download the latest AIM Journal from http://wwww.hubinvest.com/AIMPDFDecember2013_51.pdf

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