Petroleum player Bass Oil (ASX: BAS) has confirmed it will spend $1.3 million on the acquisition of a producing and earnings-accretive portfolio of interests in South Australia’s onshore Cooper Basin from Australian listed companies Beach Energy (ASX: BPT) and Cooper Energy (ASX: COE).
A sales and purchase agreement signed in March will allow Bass to acquire tenements including the Worrior and Padulla oil fields (producing approximately 75 barrels of oil per day), the Kiwi gas discovery (with an upside P50 prospective resource of 23.9 billion cubic feet) and multiple prospective appraisal and exploration targets.
The company will pay two cash considerations to Beach and Cooper of $650,000 each for the assets and assume all future restoration liabilities.
On completion of the acquisition, Bass will own interests of between 74% and 100% in eight Cooper Basin tenements.
The new assets offer Bass a high-impact gas upside during a time of record prices and significant shortages in the market.
Spot purchases of natural gas currently obtain a premium over contracted deals, with prices of between $30 and $40 per gigajoule representing an increase of up to 400% on prices earlier this year.
Bass will commence studies to evaluate the upside stratigraphic trapping potential of Kiwi, aimed primarily at reserves growth beyond the structural trap.
It will also conduct an economic evaluation of the field’s tie-in to the Moomba gas gathering and processing system and potential sales into the growing east coast gas market.
Bass managing director Tino Guglielmo said the acquired portfolio would establish the company’s footprint in the Cooper Basin.
“This acquisition is an important step towards [our company] becoming a significant owner-operator in the Cooper Basin,” he said.
“Bass has a track record of extracting value from mature fields, and we are excited by the transformative nature of this milestone … it is a watershed moment as we seek to become a self-funding oil and gas producer in the Australian market.”
He said the company would exploit the acquired exploration targets and develop a suite of suitable projects which are capable of achieving a medium-term production base of more than 1,000boepd per day.
The Cooper Basin assets will complement Bass’ presence in Indonesia’s oil-rich South Sumatra Basin, where it maintains a 55% operating interest in the producing Tangai-Sukananti KSO.
Within the licence sits the Tangai field, which was discovered in 1992 and is a structural closure on the upthrown side of the northeast-southwest trending fault to the east of the acreage.
Bass commissioned the Tangai-5 development well last month and it remains the highest of its kind on the structure, producing from the primary target M reservoir which has best-estimate remaining recoverable reserves of approximately 435,000 barrels of oil (Bass’ joint venture share).
The well is currently producing approximately 750bopd (Bass’ joint venture share) which has lifted total exports from the Tangai-Sukananti KSO from approximately 300bopd to its export nameplate capacity of 1,000bopd.
Given the recent sharp upturn in global oil and gas prices, Bass expects oil sales will repay its initial investment in Tangai-5 within two months.
“Indonesia has been our core focus for a number of years and provides a great foundation as we onboard our exciting Cooper Basin acquisition,” Mr Guglielmo said.
“It is pleasing to see the Tangai-5 well exceed our initial expectations at a time of strong commodity prices … it represents our best result in Indonesia to date.”
The company, currently trading with a market cap of around $7.1m and an enterprise value of $5.6m, is aiming to generate free cash flow of around $9m in the next 12 months following the completion of the acquisition.
Capital raising shortfall
Bass Oil is raising capital to fund the costs of the Cooper Basin transaction and cover planned production enhancement and exploration activities.
The raising is designed as a 1-for-2 non-renounceable rights offer priced at $0.045 per share with eligible shareholders also receiving one free attaching Bass option with every share subscription.
Its aim is to provide an opportunity for investors to participate in a capital raising at the same issue price as the company’s $1.2 million placement completed in March.
Peak Asset Management was appointed lead manager to the raising, which has sought to issue 89.3 million new shares and options.
However, Bass has disclosed total applications for 13.3 million new shares fell short of the target amount. Peak will use the next three months to place the remaining 75.9 million shortfall shares.
Bass’ directors have already committed to the raise.
Mr Guglielmo will acquire 5.2 million shares for a total consideration of approximately $238,000; chairman Peter Mullins will acquire 766,667 new shares for approximately $34,500; Mark Lindh will acquire 1.45 million shares for $65,400; and Hector Gordon will acquire 333,333 new shares for $15,000.