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Whitebark Energy Ltd: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Whitebark Energy is one of the ASX’s newest oil and gas producers

The company has cash-generating oil and gas operations with exploration upside.
oil well in Alberta
INVESTMENT OVERVIEW: WBE The Big Picture
All seven resolutions were passed at yesterday's AGM

Whitebark Energy Ltd (ASX:WBE) is looking forward to spudding wells in Canada and hopes to return to Warro Gas Field in Western Australia if the state’s no-fracking policy is overturned by the government.

The company yesterday outlined at its annual general meeting (AGM) its vision to build itself into a mid-tier oil and gas producer through growth and acquisition.

Whitebark is one of the ASX’s newest oil and gas producers through its 20-30% working interest in its joint venture with Point Loma Resources Ltd (CVE:PLX) in Alberta, Canada.

The Point Loma project asset provides a strong production base of 1,400 barrels of oil equivalent per day (boepd) gross or 320 boepd net.

Production and reserves development is underway with daily net production targeting to surpass 1,000 boepd in the next 12 months.

READ: Whitebark Energy names Albertan oil prospects as it focuses on Canadian portfolio

Whitebark Energy managing director David Messina told Proactive Investors: “Our medium-term objective if we take out to two years, is to grow into a mid-tier oil and gas explorer and producer.

“We have quite ambitious plans to grow the company and we’ll do that by undertaking drilling activities on our existing assets in Canada.”

Two wells will be drilled this year at Point Loma project, the Rex sands horizontal exploration well and the permitted Wildwood exploration was licensed for drilling in December 2018.

Corporate leader Messina said he expects drilling could begin this month.

Messina said: “That (drilling)’s obviously going to lead to further drilling opportunities, which we’ll embark on in 2019.”

The MD confirmed the company was fully funded as it embarked upon the series of drilling programs.

Messina said: “That will provide incremental growth to the business and obviously we’re looking forward to that.”

Whitebark recently collected $2 million cash upfront from its $5 million sale of the Xanadu project in Western Australia to Triangle Energy (Global) Ltd (ASX:TEG).

The company is currently holding $4 million is cash reserves and plans to use proceeds from its Xanadu sale to fund its exploration campaign in Canada.

 

‘Material acquisition’ expected

When Whitebark was previously known as Transerv Energy Limited (ASX:TSV), its flagship project was a fracking project at the Warro Gas Field in Western Australia.

Then, Western Australia’s Labor government moratorium on fracking, or hydraulic fracturing as it is more formally known, interrupted those plans.

Transerv rebadged as Whitebark 16 months ago and then progressed Xanadu project in WA.

Now it’s looking for another project and is talking to debt providers about potential funding proposals.

Messina told Proactive Investors: “We’re also looking for further acquisition opportunities, and now we’ve built a production base in Canada and have relationships we’ve built over the last 12 months, we have been talking to various debt providers.

“We’ll be looking to make a material acquisition in the next six months to fast-track the growth story outside of a modest drilling campaign on our existing acreage.”

READ: Whitebark Energy names Albertan oil prospects as it focuses on Canadian portfolio

Whitebark’s MD emphasized the value of the company’s Duvernay Shale formation acreage in Alberta and the potential upside to the company of its neighbours’ efforts.

Messina said: “Duvernay Shale has been drilled up aggressively around our acreage in Canada.

“As we see those results starting to come in and they are positive, we will see activity in that shale play start to accelerate over the next 12 months.

“That alone has the potential to drive value into our business … driven primarily by our neighbors’ drilling, if you like, on that Duvernay and proving that up.

“When the time is right, we'll obviously be looking at various ways to monetise that.

“That may be drilling a well ourselves, and maybe doing it with a third party, or there may be some type of exit opportunity there on some of those assets that will materially increase in value over the next 12 months as that activity accelerates.”

High-impact potential through Western Australia gas asset

West Perth-based Whitebark is one of a number of junior Australia companies hoping to see a reversal in the WA Labor government’s no-fracking policy.

An independent inquiry known as the Independent Scientific Panel Inquiry into Hydraulic Fracture Stimulation in Western Australia’s gave its recommendations to the WA government on September 12, 2018 on the moratorium after collecting industry and community views.

Industry figures are hoping to see a reversal in the ban, with Messina acknowledging yesterday to Proactive Investors that a lifting in the ban could “company mover” for Whitebark.

The Warro fracking project 200 kilometres north of Perth was originally a joint venture with Alcoa Corp’s (NYSE:AA, BMV:AA1, FRA:185) Alcoa Australia arm.

Warro has a 4.4 to 11.6 trillion cubic feet contingent resource.

Latent Petroleum Pty Ltd, Whitebark’s wholly-owned subsidiary, embarked on the Warro JV 10 years ago, with $95 million being spent on their efforts.

Over the past six months, Whitebark regained a 100% interest in the Warro Gas Field on the Retention Lease 7.

Potential exists to unlock significant value at Warro pending the fracking embargo being lifted.

Messina believes that as Whitebark now holds the entire project, the company will have “the flexibility to move quickly” project on a policy change.

A fracking enquiry report and recommendations is due in the current December quarter of 2018.

— Tharun George, Amanda Ellis

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