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Permex Petroleum primed for production growth in the Permian basin

Last updated: 00:54 23 Jun 2018 AEST, First published: 19:54 22 Jun 2018 AEST

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Permex has more than 5,200 net acres of held by production (HBP) oil and gas assets in Texas and New Mexico

Junior oiler Permex Petroleum Corporation (CSE:OIL) has certainly not stood still since completing its IPO in May, raising over C$4mln gross, and has been on an acquisition spree since.

The company's stated goal is simple. It will focus on assets with upside potential in Texas and New Mexico - notably in the Permian basin, a huge producing area for oil and gas.

It will acquiring producing assets at a discount, increasing production and cash-flow through recompletions and re-entries, secondary recovery (EOR enhanced oil recovery) and low cost infill drilling and development.

So what's the company got?

The oil firm has more than 5,200 net acres of held by production (HBP) oil and gas assets in  Texas and New Mexico.

There are 33 shut-in opportunities, which can be brought back online. It has over 90 oil and gas wells (46 in production) and ten salt water disposal wells. There are two water supply wells to allow for waterflood secondary recovery.

As at September last year, Permex had 2P (proved and probable) reserves independently estimated at 7.16mln barrels of oil equivalent and a net present value (NPV) of future net revenue independently estimated at US$115mln, using a 10% cut-off.

A clutch of deals..

In May, Permex unveiled a highly promising deal with venture capital group Blackspear Capital Corp on the 680-acre Oxy Yates property in New Mexico.

Blackspear will farm into leases and bear the entire cost of the drilling and completing the operations.

Permex believes that 32 locations could be drilled and completed at an estimated cost of an extremely attractive US$50,000 to US$80,000 per well.

And just days later, the group unveiled a major milestone in its development - with the strategic acquisition of two producing assets in West Texas for around US$1.95mln in cash.

Permex will become the operator at two contiguous sections for a total of 1,220 acres in Gaines county, while notably, the other major working interest partner on the field is international oil giant Occidental Petroleum Corporation (NYSE:OXY).

In total, there are 52 vertical wells, 26 of which are producers, 21 are injection wells, four are shut in wells, and one is temporarily abandoned. The field currently has gross daily production of 158 barrels of oil per day (bopd) and 13,000 cubic feet of gas per day.

Speaking to Proactive, Permex president Mehran Ehsan said the acquisition was in line with the group's "strategy to contine acquiring and developing high quality assets in the Permian basin".

"As indicated, the Permian produces over 3.4mln of oil per day and is a significant part of US domestic production" he added.

A systematic approach..

He said Permex would take a systematic approach at the asset going forward, continuing to produce barrels there but also review potential deeper targets on the property.

And this week, Permex also revealed more operational activity, saying it was to boost boost oil recovery at its Pittcock North Tannehill unit in Texas via a waterflood program.

The Pittcock field is currently benefitting from higher WTI (West  Texas Intermediate) prices.

It also unveiled on Wednesday (June 20) a further acquisition representing a 33% held-by-production increase to its New Mexico land portfolio.

It has inked a non-binding letter of intent (LOI) with Cameron Oil and Gas Co Inc to buy the rights, title and interest in the SW Henshaw Premier unit in Eddy county for US$100,000.

The deal includes a 100% working interest with an 83.91% net revenue interest in the 840 acre property, gross, which is held by production (HBP) in the Delaware Basin of New Mexico.

The unit has seven vertical wells, of which two are producing five barrels of oil per day (bopd) and holding the acreage, as well as five shut-in wells, which offer the opportunity for Permex to re-enter and put on production.

So it's been a busy time for Permex and there’s sure to be more newsflow to come. This could be one stock to watch in coming months.

Fundamental Research targets Permex Petroleum at Buy ahead of growth plans

Permex Petroleum OIL (CNSX:OIL) CEO Mehran Ehsan tells Proactive Investors the junior oiler has had a 'buy' rating bestowed upon it by Fundamental Research. Permex’s current portfolio includes eight producing properties, including six in Texas, and two in New Mexico. In the past few...

on 19/7/18