American Patriot Oil & Gas gains momentum as production revamp strategy bears fruit
American Patriot is anticipating a further production lift from the current workover program on its US oil and gas wells.
Operations are ramping up rapidly for American Patriot Oil & Gas (ASX: AOW) in the United States, to the extent that the company’s head honcho is jetting off to settle in the aptly named “Land of Opportunity” this week.
In its recently released December quarterly, the explorer and developer announced the pending relocation of chief executive officer Alexis Clark to Texas in order to be on the ground to manage the company’s growing operations.
American Patriot has spent the last year building a portfolio of conventional oil and gas assets across Texas and the US Gulf Coast with its production rejuvenation strategy now starting to bear fruit.
Mr Clark told Small Caps there is “a lot more to come” with a further production lift expected to arise from a low capital expenditure program as well as new acquisitions.
Rapid production growth
American Patriot has advanced significantly over the last 12 months, with the company recently reporting an average production rate of 310 barrels of oil equivalent per day for the month of December 2018. This equates to a monthly net production of 5,721 barrels of oil and 23,276 million cubic feet of gas.
A year ago, the company was preparing to close on recent acquisitions and by June, it was still working on restarting shut-in production at its Lost Lake and Goose Creek oilfields.
In September 2018, American Patriot reported net quarterly production of 38boepd with net cash flow sitting at $234,598.
Fast forward to the end of the 2018 and net quarterly output has shot up by 542% to average 250boepd, while cash flow more than doubled to $471,144.
The company has attributed the recently closed Peak Energy and Magnolia/Burnett transactions for the boost in figures, also noting the results only incorporated two months of production from the assets (within the three-month period).
American Patriot is also hoping to gain momentum in the coming months as recently commenced workovers deliver additional production and cash flow.
In light of this, it makes sense for the company’s boss to shift to the region to focus on building the scale of its operations.
“With the operations ramping up, I need to be there on the ground and on top of the growing production business,” Mr Clark said.
Looking ahead
The company is undertaking 10 workovers over the next month, which are expected to deliver additional net production of 20-30boped.
The program consists of several workovers and equipment repair operations ranging in cost from about US$10-30,000 per item.
“This isn’t expensive drilling. It’s cheap maintenance style workovers and recompletions … going back into old wells and restarting them, fixing motors, logs, tubing, really basic style capex,” Mr Clark said.
“It’s not rocket science, it’s just old school oil and gas,” he said.
Without giving too much away, Mr Clark said acquisitions still formed a large part of the company’s strategy for 2019.
“Acquisitions always give a significant uplift, no doubt about that … now that we’ve completed deals, we’re being approached regularly for new transactions,” he said.
“There’s a lot more to come, through the organic capex program of the assets to deliver additional production, combined with the closing of the Foothills deal and new deals down the track,” Mr Clark added.
American Patriot announced the signing of a purchase and sale agreement for the 17.77sq km Foothills asset in July last year. The Gulf Coast acreage is estimated to hold 1P oil and gas reserves of more than 2.8 million barrels of oil equivalent.
Mr Clark said the company is currently working with a number of funding partners and is anticipating the close of this transaction in early 2019.