Namasset Nm Share Discussion Threads

[mr multibagger] 23/1/2008 07:28

AIM listed TomCo Energy PLC [TOM]

The following write up is in Oilbarrel today: Good summary for new investors.



23.01.2008

TomCo Energy Seeks Development Position In Israel As It Asks Patience Of US Oil Shale Investors.
It is 12 months since TomCo Energy made its first foray into the oil and gas business. Last January the AIM-quoted company, then known as Netcentric Systems, completed a reverse takeover of The Oil Mining Company Inc, which owned almost 3,000 acres of oil shale leases in Utah, USA. Netcentric became TomCo, rejoined AIM and raised £1.78 million through a placing priced at 2.5 pence.

Oil shale is a long term play. TomCo's leases are reckoned to hold some 230 million barrels of oil but the big challenge is not finding the oil but extracting it in an economic and environmentally-sensitive way. There have been some advances in oil shale extraction, notably by Shell Oil, which reckons its in-situ technology could be economic at oil prices of US$30 a barrel, but for now it remains at the limits of the industry's technological knowhow. TomCo believes this will change over the next decade as huge strategic and commercial pressures force the US to focus on its harder-to-reach domestic oil resources.

Until then, the company has put its oil shale assets on the shelf and will sustain itself in the interim by investing in low-cost, low-risk conventional oil production. The AIM company made its first investment in January 2007 when it spent US$56,000 acquiring a 40 per cent interest in the Flusche oil prospect in Texas. There followed a flurry of other investments as the newly-minted AIM company sought to establish a conventional oil business in the US and cash in on booming commodity prices.

These investments have resulted in a dribble of production, around 16 barrels per day – although at current oil prices every barrel counts. Not all the investments were successful, with leases in Tennessee and New Mexico dropped after disappointing exploration results and while that debut investment, the Flusche, created initial excitement when it started producing around 28 bpd, it later disappointed when output declined to 6 bpd. The company's Rock Crossing well in Texas produces around 8 to 9 bpd and additional offset locations are being considered for future drilling.

Production rose in the second part of the year after the company spent US$972,000 on a 50 per cent interest in the Abel and Saratoga leases that lie some 15 miles apart in south-eastern Texas. Abel covers 100 acres on a salt dome structure and produces some 15 bpd from three wells. TomCo and its 50/50 partner Mark III Energy, which together have an 82 per cent net revenue interest in the project, plan to drill another ten wells over the next two years that should yield initial production of 20 bpd per well. The Saratoga lease is another salt dome structure and is home to six producing wells that together produce 20 bpd. TomCo and Mark III, which have a 97 per cent net revenue interest, plan to drill seven wells over the next two years. This is shallow production, with each well yielding small quantities of oil, but as long as costs can be kept down it's a reasonable business and will help keep the lights on.

Now, one year on from its formation, and the company has made its biggest investment to date, and its first venture overseas. TomCo has signed a letter of intent with New York-based Avenue Group Inc to acquire a 50 per cent interest in the Heletz-Kokhav licence, Israel's only onshore producing field. The 50 million barrel oilfield, which lies 55 km south of Tel Aviv and 12 km from the coast, has produced more than 17 million barrels to date from Cretaceous sands. Production peaked at 3,000 to 4,200 bpd in the 1960s but is today running at around 60 bpd.

TomCo believes there is potential to significantly increase this number by drilling new wells and deploying modern recovery methods. The Israeli Government believes there are 2 million barrels of primary recoverable oil remaining, with the possibility for up to 10 million barrels using secondary recovery techniques. There are also a number of undrilled, deeper exploration prospects on the licence that could yield another 30 million barrels.

TomCo must first turn the LOI into a binding contract. It has around three months to sign a definitive agreement, which will then commit it to paying US$1 million in cash, US$0.5 million in shares and around US$100,000 of Avenue's back costs. TomCo will then pay US$4.5 million of development costs over the first three years of the licence plus a further US$1.5 million to Avenue should production reach 300 bpd, thereby triggering the issue of a 30-year-production lease. It will also pay Avenue US$5 million should the recoverable reserves exceed 10 million barrels. TomCo's chief executive Howard Crosby described Heletz-Kokhav as "highly potential", adding the field will "create new horizons and will be an important investment".

It's a nice diversification from shallow oil drilling in the US and, again, it's low risk: the oil is there, it's just a question of getting it out economically. In the meantime, those oil shale assets remain on the shelf. The big hope for TomCo investors is that technological advances, wedded to political and strategic pressures to produce more domestic energy, gives the US oil shale industry a major push and boosts the value of those currently dormant assets.

[mr multibagger] 21/1/2008 13:15

AEI state that recent production has been approximately 70 BOPD from 6 producing wells, whilst TOM mention 60BOPD. Either way the real aim is obviously 300BOPD PLUS to obtain the 30 year Israeli Government Oil Ministry award of a PSA.

AEI also state that there are at least 53 work over wells to be drilled....so with a target of at least 10M BOO recoverable....it looks very much as though AEI and TOM could hit 2,000BOPD [1,000BOPD each] within PHASE 1 [i.e. within the next couple of years or so!]

Not bad, eh?

[mr multibagger] 21/1/2008 13:14

O/T - Good RNS from TOM this morning

[mr multibagger] 21/1/2008 08:47

AEI state that recent production has been approximately 70 BOPD from 6 producing wells, whilst TOM mention 60BOPD. Either way the real aim is obviously 300BOPD PLUS to obtain the 30 year Israeli Government Oil Ministry award of a PSA.

AEI also state that there are at least 53 work over wells to be drilled....so with a target of at least 10M BOO recoverable....it looks very much as though AEI and TOM could hit 2,000BOPD [1,000BOPD each] within PHASE 1 [i.e. within the next couple of years or so!]

Not bad, eh?

[mr multibagger] 21/1/2008 08:43

O/T - Good RNS from TOM this morning

[taurusthebear] 21/1/2008 07:36

Wouldn't "10th-bagger" be a more appropriate thread title for 2008? :0)

[papalpower] 17/1/2008 22:27

Makes it easy to see it all "at a glance".....

[texicon] 17/1/2008 15:31

PP-very impressed with the charts-good idea.

[mr multibagger] 17/1/2008 07:28

For those who invest overseas....

Very interesting newly listed NATURAL RESOURCES play over in Canada namely Lydian International [TSE:LYD]

Major investors include the WORLD BANK and NEWMONT MINING

[mr multibagger] 17/1/2008 07:23

For those who invest overseas....

Very interesting newly listed NATURAL RESOURCES play over in Canada namely Lydian International [TSE:LYD]

Major investors include the WORLD BANK and NEWMONT MINING

[chimpynosebest] 08/1/2008 11:00

Why do you bother clive? Why do you....bother?


Rupert.

[davethechef] 08/1/2008 08:15

And further positive news, re: Matra Ptr

[giant steps] 06/1/2008 22:13

hectorp - worth reviewing AR.

2008 stock doubler choice re post 75

[hectorp] 06/1/2008 19:55

I suspect from last year's sharepicks that if we all inveested in all the above we would certainly return at least 12-13% allowing for the 20% duds and the one or two 5-bagger or so.
Not sure I want to hold 40 shares , might do it on paper .

[knowing] 05/1/2008 23:52

Thanks Paul

[suprstud] 05/1/2008 23:12

is this a ramping thread??

[knowing] 05/1/2008 23:09

Can we stop ramping TomCo