The Smallcap Oil & Gas round up

Argos Resources (LON:ARG)
Following interpretation of 3D seismic data acquired in 2011 Argos has commissioned a new CPR to validate its view of increased sizes on many of its existing 28 prospects plus, a further 30 new prospects on its North Falkland Basin licences. Argos is currently seeking to attract farm-in partners for a future drilling campaign. A Competent Person’s Report, prepared by Senergy, was issued in October 2011 and was based on the interpretation of fast-tracked processed data. Based on the fast-tracked data, 28 prospects were described with a total unrisked potential of 2.1 billion barrels of prospective recoverable resource in the most likely case and up to 7.3 billion barrels in the upside case. The final processed version of the 3D seismic data was received by Argos Resources in Jan’ 2012 and is considered by Argos to be of exceptional quality. This data indicates that many of the prospects described in the 2011 Competent Person’s Report are larger than reported at that time. In addition, a large number of new prospects and leads have now been identified, and mapped in detail, which do not fall within the scope of the existing Competent Person’s Report.

Bridge Energy (LON:BRDG)
Announced increased resource estimates for 16/1 Asha oil discovery in the Norwegian North Sea. It follows completion of well operations on 16/1-16 and the sidetrack well 16/1-16A on 1st January 2013 and further analysis carried out since then. As previously reported, the Asha discovery encountered good quality oil in excellent reservoirs within the Middle Jurassic Hugin Formation and Triassic Skagerrak Formation. A preliminary estimate of the size of the Asha discovery was reported to be between 25 and 35 mmboe recoverable resources within PL457, which excluded potential additional volumes outside the licence. Recent updates in mapping by the operator indicate that the Asha discovery is in direct communication with a large upside volume to the east of the main structure. These volumes are in addition to the volumes reported previously. Based on this updated mapping, Bridge now estimates the size of the Asha discovery to be between approximately 30 and 100 mmboe of recoverable resources within licence PL457. These estimates exclude potential additional volumes in neighbouring licences, which are estimated to be of a similar order of magnitude.

Gold Oil (LON:GOO)
Released a no nonsense RNS this week. Which simply said thus; average production in January 2013 of the Nancy Burdine field was 500 BOPD. Gold Oil has increased its interest in the field to 81.9 % interest. Now that’s the type of news we like straight to the point!

Hardy Oil & Gas (LON;HDY)
The oil and gas exploration and production company with assets in India, reports that the Hon’ble tribunal, hearing its dispute regarding the nature of the Ganesha-1 discovery, located in the CY-OS/2 exploration block, has issued an award in the Company’s favour. The Company has been successful in obtaining the extension of the CY-OS/2 licence. The Hon’ble tribunal award provides for the CY-OS/2 joint venture to undertake appraisal activities on the CY-OS/2 block, in accordance with the governing production sharing contract, for a further three years from the date on which the block is restored. The Hon’ble tribunal also awarded the joint venture recovery of costs incurred as a result of the arbitration.

JKX Oil & Gas (LON:JKX)
Is to restart its in-field drilling and appraisal programme on the Novo-Nikolaevskoye Complex, Ukraine, in March. The Skytop N75 rig is currently completing a one-well programme for another Ukrainian operator which is expected to complete later this month. The rig, which has been on long-term contract to JKX’s wholly-owned subsidiary since 2004, was contracted out in late Q3 2012 as part of a cost management programme. The Skytop rig will initially be mobilised to the Molchanovskoye field for a horizontal re-completion of the M-166 Devonian sandstone oil producing well.

Magnolia Petroleum ( LON:MAGP)
Rita was at it again today. Rita said that the Helgeson 41-30H well, a horizontal well operated by Marathon Oil targeting the proven Bakken formation, North Dakota, commenced drilling on 4 February 2013. Magnolia holds a 5.428% working interest and a 4.071% net revenue interest in Helgeson. As announced on 24 January 2013, the estimated total cost of the Well is US$8,562,000 of which Magnolia’s share is US$464,745. What Rita didn’t say was how much oil MAGP are producing or indeed how much this has or hasn’t declined.

Max Petroleum (LON;MAX)
Announces that it has commenced drilling the ZMA-A20 development well in the Zhana Makat Field on Block E using Zhanros Drilling’s ZJ-20 rig. Total vertical depth of the well will be approximately 918 metres. *News in 11.50am today*

Mediterranean Oil & Gas (LON:MOG)
Announced that a production test on the well Civita 1 in the Aglavizza Production Concession, Italy, has confirmed excellent permeability.

Nighthawk Energy (LON:HAWK)
Released an operational update this week. Average total oil production in January 2013 was 280 bbls/day, slightly ahead of the December 2012 level of 276 bbls/day. (Nighthawk 80% net revenue interest). The primary contributor to production was the Steamboat Hansen 8-10 well in the Smoky Hill area, which is producing very consistently with almost zero water. Nighthawk net revenue from oil sales for the two months of December and January was well in excess of US$1 million. This exceeds the total revenues received by them in the whole of the last full financial year (US$972,000). Following the upgrade to the salt water disposal facilities in the Jolly Ranch area, the Knoss 6-21 well was brought back on-line on 10th January 2013 and oil production from the Cherokee shale formation built up gradually during the month as the initially high fluid levels in the well were pumped down. Apart from the Steamboat Hansen 8-10 and the Knoss 6-21, the only other well on production in January was the Craig 16-32.

Nostra Terra Oil & Gas (LON;NTOG)
Updated on the outstanding Richfield Oil & Gas Company Note and Warrants. On 14 April 2011 Richfield (formerly Hewitt Energy Group, Inc.) issued to the Company a US$1.3 million secured loan note which has been accruing interest at 10% per annum from the date of issue and which matured on 31 January 2012. The Note is secured against certain producing leases located in Kansas and certain non-producing leases located in Utah. On 1 February 2012, Nostra Terra commenced a lawsuit in the Russell County, Kansas District Court to enforce the Note and foreclose on the collateral. Nostra now operates some of the producing leases in Kansas during the foreclosure process. In addition to the unpaid balance of the Note and interest, Nostra is seeking to recover its costs of collection, including attorney’s fees. Nostra Terra has filed a motion for partial summary judgment on its claims. The motion is set for a hearing on 1 March 2013. Matt Lofgran, Chief Executive Officer of Nostra Terra, commented: “We are happy to get to this stage. Funds recovered under the Note will be allocated to (BMD’s beer fund. Joke!) the drilling of further wells within our portfolio.”

Petroceltic (LON:PCI)
Hit dust this week as they announced that the Mesaha-1 frontier exploration well in southern Egypt was dry. In the Nile Delta, the South Damas-2 development well has been drilled and is expected to commence production in late February. The well encountered the top reservoir interval approximately 33 feet higher than the existing South Damas-1 producer and penetrated 96 feet of high quality gas-bearing sands in the Messinian formation. The well is expected to increase the total South Damas field production rate to over 20 MMcfpd (from the current 12 MMcfpd) and to accelerate the efficient recovery of the field’s proved plus probable reserves of 50 Bcf. The East Dikirnis-1 development well has been successfully tied back to the nearby West Dikirnis facilities using a 14 kilometre, 6 inch diameter flow line and was brought on production on the 26th Jan’ In common with producers in the West Dikirnis field, the new well has initially been completed in the reservoir oil rim to maximise hydrocarbon liquids recovery prior to switching to produce the gas cap reserves later in the field life. The well is currently being produced at a restricted rate of 150 bpd of oil in order to gather reservoir performance data prior to optimising the oil production rate.PCI also announced the appointment of Geoff Stevenson as Project Director, Ain Tsila Development, Algeria.

PetroNeft Resources (LON:PTR)
Took a kicking this morning as they updated on operations at Licence 61. Initial oil flow rate of 140 bopd, from well 112 which is presently shut-in for pressure build up testing. Well 105 currently drilling ahead. The killer jolt came as Petroneft announced that production from two Arbuzovskoye wells had been temporarily reduced by c300 bopd due to mechanical issues; expected to be fixable by workover or pressure maintenance. Total production running at 2,600 bopd; excludes 400+ bopd potential from well 112 and the two mechanically reduced Arbuzovskoye wells. In recent weeks, the Company has encountered mechanical production issues at Arbuzovskoye which have impacted on production rates in two wells. The reduced output may be due to migration of fine grained materials that are gradually plugging the well bore which can be rectified with a simple workover. They are also investigating possible pressure depletion in the reservoir, which can be addressed with a planned pressure maintenance programme. The net impact is a reduction of overall production by 300 bopd. The pressure build up test of the 112 well should assist in determining which is the more likely cause of the reduced rates and we will factor the results of this into future workover and water injection plans. Arbuzovskoye contains 2P reserves in excess of 13 million barrels of oil according to independent reserve auditors Ryder Scott and is the Company’s second field being developed.

Ruspetro (LON:RPO)
Bombed this week as the company finally threw in the towel telling the market that they had (euphemistically) decided to “postpone” the contemplated issuance of Senior Secured Notes, announced in its release of 25 January. The Company will consider recommencing the offering at a later date. YAWN!!! The proceeds from the Notes offering were principally to be used to replace the existing Sberbank loan facility which is currently due to mature in April 2015.

San Leon Energy (LON:SLE)
Announced that an initial study of the Tarfaya Oil Shale, Morocco, has suggested that a commercial development is possible. Enefit Outotec Technology conducted the study on the basis of borehole data from Shell’s operations in the 1980′s. In addition, EOT picked 34 samples, at 0.5 m intervals, from the oil shale layers outcropping in the Trial Pit that was first excavated by Shell. The yield results from the data samples from the R1 and R3 reservoir zones suggest that an oil yield of 72 litres of oil per ton of extracted material is achievable. Preliminary modeling of the project confirmed that a commercial operation is possible.

Sefton Resources (LON:SER)
The Sefton dog growled today as the company tried desperately to kick start the sp for another EFF dilution via an update of oil & gas exploration and production in Kansas. Oil production has been established in north east Kansas by putting in place surface facilities, working over and re-equipping existing oil and gas wells and providing a gas gathering system which should allow for a significant growth in oil production. 550 barrels of oil have been sold since operations began in the latter part of 2012, (5 months ago) which includes 300 barrels of oil sold in January 2013 with production coming primarily from two leases. Current monthly production is estimated to average 300 barrels of oil. (Don’t forget to check the figures with Kansas state authority campers) Production is planned from two additional leases in the near term which should add to this level of production. Vanguard pipeline is now certified and in the process of being joined to the LAGGS-Southern Star pipeline system. YAWN!! Discussions with two potential suppliers of 3rd party gas are continuing concerning deals to transport their gas to market, through Transmission’s pipeline system. Jim Ellerton, Chairman of the Board said: “Kansas E&P operations are now generating revenue from oil sales with plans for a steady increase of such. The scope for growth in Kansas is considerable, especially as gas sales are added over the coming months. We look forward to being able to make regular production updates from Kansas and demonstrate the validity of our growth strategy for this business. How much has Jim spent here in Kansas? 12 YEARS TO LATE JIM. Your times up.

Tangiers Petroleum (LON:TPT)
Advised that a detailed 3D seismic program has highlighted the significant upside for the Company at its Tarfaya offshore block in Morocco. Seismic data, which Tangiers has just finished processing, confirms the Trident prospect and secondary objectives at Assaka and TMA potentially contain best estimate prospective resources of 750 million barrels of recoverable oil (100% basis) with a geological chance of success of 23% according to Tangiers. Under the farm-out agreement struck between Tangiers and Portuguese major Galp Energia in December last year, Tangiers will retain a 25 per cent interest in the Tarfaya offshore block.

Trapoil (LON:TRAP)
Confirmed details today of its farm-in to the Trent East Terrace area and provided an operational update, principally in respect of certain of its planned exploration wells. On 7 February 2013, Trapoil entered into a sale and purchase agreement to acquire a 33.33% working interest in Licence P.685 (Block 43/24a) (the”Trent East Terrace Area” or “TET”), containing the Trent East gas discovery, from Perenco UK. Block 43/24a is located in the Silverpit Basin in the Southern North Sea. Trapoil has committed to secure a drilling rig within six months for the planned TET appraisal well and it is currently anticipated that the Company’s share of the drilling costs will be approximately £5 million as and when the well is drilled. Trapoil will also assume its share of the abandonment liability for the 43/24a-3 well via a letter of credit for £0.7 million which will be provided from Trapoil’s existing cash resources. TET is an eligible asset within the terms of Trapoil’s US$20 million senior secured borrowing base facility with GE Energy Financial Services announced on 30 January 2013.It is intended that Trapoil will be the operator of the TET area, subject to the approval of the Department of Energy and Climate Change, which remains a condition precedent to completion of this farm-in transaction.

Urals Energy PCL (LON:UEN)
Released an update on strategy and trading. As previously reported on 7 December 2012, the Company has paid the final loan principal amount to Petraco Oil Company. The only sum that remains outstanding to Petraco relates to interest and totals approx’ US$3.0 million. This remaining interest payment is anticipated to be made before the end of 2013 and is linked to the timing of the next tanker shipment from Arcticneft. Petraco have released the security pledge they held over the Company’s Petrosakh asset and the Board are in discussions with Petraco about them releasing their security pledge over Articneft. However, since the release of the pledge is linked to the full discharge of all debts due to Petraco, there can be no guarantee that Petraco will agree to release the pledge earlier than contractually required. The Board is satisfied with the conclusion of the arbitration against a former director, Vyatcheslav Rovneiko, relating to the repayment of a loan totaling US$3.7 million made by the Company to Mr Rovneiko in 2007. This arbitration has confirmed the Company’s legal rights, vindicated its position and issued a final award that the sum in the amount of US$7.5 million (including loan amount, interest and legal costs) must be repaid to Urals Energy together with a daily accumulating interest. The Company has formally demanded payment from Mr Rovneiko and is committed to using all appropriate means to collect the outstanding amount. Having achieved a satisfactory resolution of these past issues the Board is now able to fully focus on the Company’s operations and growth opportunities.

Victoria Oil & Gas (LON;VOG)
Said that it has successfully raised £ 23.4 million before expenses through Fox-Davies Capital, through a placing conditional on admission, which will be managed through a two stage equity (DILUTION) placing of 1,465,329,020 new ordinary shares at a price of 1.6 pence per share to fund the execution of its downstream strategy at the Logbaba Gas and Condensate Project in Cameroon. This Placing was oversubscribed and supported by a number of leading financial institutions who now have a disclosable interest in the Company’s share capital.

Wessex Exploration (LON:WSX)
Iain Patrick has been appointed a non-executive director of the Company with immediate effect.

Zoltav Resources (LON;ZOL)
Just what this company does is a mystery to me! Announces that the second and final tranche of GBP 250,000 of the GBP 500,000 unsecured convertible loan to the Company provided by its largest shareholder, ARA Capital Limited, has now been drawn down and received by the Company. And what?

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