Wildcat Petroleum plc (LON:WCAT) Chairman Mandhir Singh caught up with DirectorsTalk for an exclusive interview to discuss the service agreement with the Sudanese government, the Bamboo/Wildcat Oil Field and their share price.
Q1: Mandhir, in the update, you stated that Wildcat Petroleum intends to sign a service agreement with the Sudanese government. Why are you signing a service agreement and not a production sharing agreement?
A1: The Director General in the Ministry of Petroleum, he has the power to award production sharing agreements. The issue at the moment is he has no problem issuing us with a production sharing agreement but other departments in the government have to approve it. Because of the current political situation, that is not practically possible.
So, even though he has no problem issuing us with a production sharing agreement, he practically cannot issue us one.
What he can do, and the department has the autonomy to do, is to award us a service agreement. The oil industry in Sudan is still working as normal so what we’ve agreed to do is to get on the ground, start pumping oil, and when the situation returns back to normal, we’ll just convert the service agreement into a production sharing agreement.
Q2: Can you tell us a little more about the Bamboo Oil Field?
A2: You now have to call it the Wildcat Field. That just understates that eventually we will get these assets under production sharing agreement because the Director General has agreed to change its name.
The Bamboo Field is actually made up of four separate oil fields. The initial oil in place is over 500 million barrels, it used to produce 20,000 barrels and now it only produces 4,000 barrels. The decline is due to the fact that there’s been no investment in the field, there’s been some pilot studies which say you can basically double production by putting head down the pipe. So, if you had 4,000 barrels and we double it up with thermal recovery, that makes about 8,000 barrels, fixing of surface facilities that’s another 2,000 barrels.
So, in the future, we could be up to about 10,000 barrels a day which equals to about $500,000 a day of revenue. We’re quite happy with how things are developing there and it should be a very lucrative contract for us, it should be profitable and money-earning from day one. There’s no upfront cost to us and all the infrastructure and wells are already there, we just need to squeeze more oil out of the wells which is not a difficult situation.
While we’re waiting for a production sharing agreement to actually be awarded, we’ll be on the ground making money.
Q3: Over recent months, the share price seems to have drifted somewhat, do you have any thoughts on that?
A3: Well, I’m not very happy about the share price declining. One thing shareholders have to remember is I own 70& of the shares and last month, I actually topped it up so I’m back to my IPO level so I’m quite happy about how things are going.
What seems to be happening is there’s one or two IPO investors which are determined to sell their shares regardless of the price so they’re causing a share overhang and depressing the price. Hopefully, when the share overhang is taken out of the system, the share price should hopefully start going up again.
Another issue is I think people in the city don’t fully understand the scale and the profitability of this. So, what we intend to do now is to visit investors in city, I’m actually meeting seven of them on Monday, and I should outline to them exactly the share profitability and scale of this project.
I think in the new year, once the deal is bedded down and people see how much money we’re making for every barrel of oil we produce, the share price should eventually bounce back up. This is an extremely lucrative and money-making low cap operation and once people actually see the figures and how much money we’re making, the share price will bounce up hopefully.
Since the IPO, I haven’t sold a single share, I’ve actually bought even more so I have total faith in the company. Our main objective is to get that first barrel of oil out of the ground and sold and when people see the margin on that then we’ll hopefully see the share price bounce up again.
