Madagascar Oil has announced its intention to list on the AIM market on the London Stock Exchange, looking to eventually be taken over by an “entity interested in heavy oil plays”.
The company will proceed with an initial public offering (IPO) of its common shares to institutional investors in the United Kingdom and elsewhere.
The joint brokers of the IPO are Mirabaud Securities and GMP Securities Europe, while Strand Hanson Ltd is acting as nominated adviser to Madagascar.
Madagascar Oil has two core assets, Tsimiroro and Bemolanga, both onshore Madagascar.
Tsimiror has a best estimate of 965 million barrels (mmbbl) of gross heavy oil in place (OOIP) in known accumulations, with over 780 mmbbl potential in prospective, adjacent structures. Production there is estimated at 87,500 barrels of oil per day (bopd) for 30 to 40 years.
At Bemolanga, the estimated gross discovered bitumen in place (PIIP) stands at 1,179 mmbbl, with over 1 billion barrels potential upside subject to further delineation drilling.
The company holds a 100% working interest (WI) in Tsimiror and a 40% interest in Bemolanga.
The farm-in for a US$100 million consideration has also provided the company with a carried interest through US$100 million in exploration and development costs expended by operator Total E&P, an affiliate of TOTAL SA (NYSE:TOT).
Madagascar stated that field tests and studies undertaken to date suggest that its heavy oil assets have excellent potential for development.
Said chief executive and chairman Laurie Hunter: “Work completed to date by the company's technical team, which gained extensive heavy oil experience in California and at other similar operations in Indonesia, supports the potential for commerciality of a steam flood operation at Tsimiroro.
“The funds raised through the IPO will be sufficient to bring our largest core asset, Tsimiroro, to the point of commerciality, at which juncture the company is likely at attract the interest of a larger entity, interested in heavy oil plays due to the potential for consistent and sizable long term revenue streams."
The near term work programme planned by Madagascar Oil includes additional drilling to expand and upgrade the resource base at Tsimiroro with first results from the current drilling programme expected in early 2011 and the development of drillable prospects on the exploration blocks, next results from which are also expected in early 2011.