News blog
Sefton Resources Inc
- BY: Andrew Hore |
- POSTED: 02/05/2012 |
Sefton Resources has increased its rate of oil production and new technology could raise the rate of production further.
Sefton has oil and gas production and exploration assets in California and Kansas.
Production in California is running at 142 bopd and has reached 220bopd in recent days. Production averaged 40bopd in 2011. All production currently comes from California but there should be some gas production from Kansas later this year.
Steam injection is being used to increase production at Tapia in California. The use of steamflooding is being investigated and this would increase recoverable reserves. There has been a 200% improvement in production at the Yule 5 well since steaming commenced.
At Tapia, the gross reserves, assuming 50% recovery, are 140m barrels of oil. Once production is built up the total costs of production are estimated at $66.50/barrel – well below achievable oil prices.
In Kansas, the primary focus is conventional oil and gas but there are also opportunities for coal bed methane. Sefton has been buying up gas pipelines in Kansas ahead of commencing production. The pipelines will be linked to the interstate gas pipeline during the summer and Sefton can earn additional income by carrying other companies’ gas in the pipeline. There could also be bolt-on production acquisitions in the area.
Net debt was $3.5m at the end of 2011 and further drilling will lead to an increase to more than $5.5m by the end of 2012.
There will come a point where Sefton will seek to raise cash through selling all or part of its interests in its existing assets. Sefton has 100% stakes in its present assets.
Sefton wants to buy other long life, near-production assets that it can bring to production. It is interested in assets outside of the US but wants the risk to be at the lower end of the scale. South America and Europe are areas that Sefton is interested in. The assets will need to be a significant size and be shallow so they are low risk and not costly to produce.
At 2.38p a share, Sefton is valued at £9.44m.
Bill Brand will not be taking on the role of finance director as originally announced.
Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFApril2012_31.pdf
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