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Mosman Oil And Gas Ltd: DEEP DIVE

Mosman Oil and Gas working to build substantial US portfolio

Company has exploration and production interests in shale licences in the US and Australia
oil well
OVERVIEW: MSMN The Big Picture
Stanley-2 is the next well scheduled to be drilled
  • Oil and gas explorer with acreage in US and Australia

  • Strategic alliance over fields in Texas with Baja

  • More wells at Stanley expected to follow first well drilled last year

  • Net revenue attributable to Mosman A$614,000 (A$534,500) in the half year to December 


What it owns

Mosman Oil And Gas Limited (LON:MSMN) has a raft of exploration and production interests in shale licences in the US and Australia.


Arkoma Stacked Pay Project (Oklahoma)

Mosman's wholly-owned subsidiary owns a 27% interest in the Arkoma Stacked Pay Project which has production of oil and gas, sold to local refineries.

Welch Permian Basin (Texas)

Located in the Permian Basin consisting of 27 existing wells of which ten are currently producing. A feasibility study will consider horizontal drilling at Welch.

Under the umbrella of a strategic alliance, Mosman and Baja Oil and Gas are participating in several projects onshore east Texas. These include the Stanley, Challenger (46.83% Mosman) and Champion projects.

Strawn Oil Project (Texas)

The project consists of 27 wells, of which several are operational and producing oil which is sold direct to a local refinery.


Amadeus Basin

One granted permit and one application which covers a total of 5278 sq. km. The Amadeus Basin is considered one of the most prospective onshore areas in the Northern Territory of Australia for both conventional and unconventional oil and gas, and hosts the producing Mereenie, Palm Valley and Surprise fields.

What the boss says: John Barr, chairman

"The weather has resulted in lower production than expected, mainly due to wet road conditions affecting access to well sites.

"For example, production at Welch was limited by some wells not producing due to broken rods (which is a routine workover); and the drilling of Stanley-2 has been delayed as the road needs to be in dry condition for the heavy rig loads.

"Once the roads dry out, the workovers at Welch and drilling of Stanley-2 can proceed. Both of these activities are expected to further increase production."



Inflection points

Gross production in the six months to December was 18,253 barrels, an increase of 49% on the 12,260 barrels produced in the preceding six months.

Net production attributable to Mosman was 6,476 barrels equivalent (4,417) or 35 barrels per day on average.

Stanley-2 (Mosman 18.5%) is the next well to be drilled as part of the strategic alliance with Baja and will be the second to be drilled at the Livingston Oilfield, Polk County.

Bad weather has delayed spudding from the scheduled start date of December 2018. The drilling programme at Stanley-2 is expected to cost US$400,000.

A further US$150,000 will be required for completion if the well is commercially successful. Mosman will use existing cash resources to fund the well.

The first well to be drilled with Baja was the nearby Stanley-1, where Mosman owns a 16.5% working interest. This was producing at 90 barrels per day gross at the end of the last financial year to June.

Flow tests suggested the potential for 150 boed or 25 net to Mosman from Stanley-1.

Blue Sky

  • Stanley-2 will increase output with longer-term potential for third and fourth wells at the field.

  • Horizontal wells to boost production at Welch.

  • Output from Stanley-1 rises to 150 bopd gross.

What the broker says: SP Angel

"February's update underlined the progress made towards a point of self-sustainability, with the partial period that Stanley-1 was online making a significant contribution.

"With Stanley-2 likely to throw more light on the expected degassing of the accumulation, and the subsequent production of liquids, we believe that the management will be in a position to update its reservoir model and better understand the potential of the asset.

"Once the team has assessed all the data from Stanley-1 and 2, we are certain that the potential of the asset will be better elucidated, and more informed valuation on the asset be produced.

"Until such times as we have a better understanding of the asset and it's potential, we are maintaining book value contribution from its Stanley acquisition.

"Furthermore, we have also adjusted our expectation for the Welch horizontal well to 3Q'19.

"Additionally, due to the apparent de-emphasis of the Australian assets, we are extending our expectations for the timing of exploration out to 2025, or beyond. Consequently, our valuation is adjusted to $6.32mm (0.78p)."

At 0.24p, Mosman is valued at £1.6mln. 

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Mosman Oil And Gas Ltd Timeline

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