Wildcat Petroleum plc (LON:WCAT) Chief Executive Officer Mandhir Singh caught up with DirectorsTalk for an exclusive interview to discuss how the conflict in Sudan is affecting the oil industry, probability of securing an oil block, the cost of the assets, and when they expect to sign a deal.
Q1: Mandhir, how is the current conflict in Sudan affecting your efforts to get things done? How is the oil industry been affected there?
A1: The first thing is the conflict isn’t as bad as everyone thinks. We’ve actually got people on the ground in Khartoum and they’ve just reported that the fighting is just centralised in the city centre area.
We see the conflict more as a speed bump than a roadblock. Unfortunately, in the last two years, there’s been about two coups, and this is a way of life out there.
In regard to the actual oil industry, as far as we understand it, the oil industry has not been significantly affected at all. The oil fields are the equivalent in distance from Glasgow to London, they’re way down in the south and usually in these situation, both sides leave the oil industry alone because they need the revenues for their army’s and whatnot.
So, it looks bad on the news but it’s a way of life in these countries and the oil industry is not affected. It’s a slight setback for us because we can’t get out there and do face-to-face negotiations but things have significantly settled down, I think it’s been about 3 weeks since Sudan was mentioned by the BBC.
Hopefully, in the next couple of weeks, it’ll settle down enough for me to fly back out and negotiate a deal.
Q2: What’s the probability of Wildcat Petroleum securing an oil block in Sudan?
A2: The probability I would say is extremely high. We’ve actually opened an office in Khartoum so that gives an indication of how we feel that we can get a block. Also, we’ve got an excellent team out there and they know how to get stuff done in difficult situations and we’ve got excellent relationships with all the people that matter.
In February, I was a guest of honour at the 25th celebrations for the state oil company Sudapet, and I know the Oil Minister, I know all the people that matter. Basically, getting oil deals done in these countries comes down to relationships between people and we’ve got excellent relationships.
We signed an MoU last year over four blocks, all of these blocks are producing and hopefully this year, once it’s safe to travel out there, we will actually turn the MoU in production sharing agreements.
Q3: In light of Savannah Energy agreeing to pay $1.25 billion for Petronas assets and that’s just across the border in south Sudan, how much do you expect to pay for the assets?
A3: We’ve got a rough idea of how much it’s going to cost but I can assure shareholders that it’s nowhere near close to a billion dollars.
We’re hoping we can get competitively priced blocks, and one part of the political conflict has gone our way is that we are basically the only game in town. So, we’re hoping that we can actually pick up an oil block for a bargain, when things settle down, it’ll basically turn into an arbitrage deal. We pick up something cheap in a distressed state and when things are better, the value of the asset will go up.
So, we are super confident and we’re in constant talks with the ministers and all the people that matter. I think our people have a meeting in Port Sudan next week with some of the people from the oil ministry so we think we can pick it up at a fraction of its true value.
Rest assured. I wont be spending anything like Savannah is spending but we think we can strike a good deal, and time will tell I suppose.
Q4: Speaking of time, when do you expect to sign a deal in Sudan?
A4: Before the fighting started, we were hoping to sign a deal this half of the year, the fighting has significantly decreased so we’ll try to get a deal signed this year.
Ideally, I need to be out there on the ground negotiating the deal but if the situation doesn’t improve significantly, we’ll try to get the deal done remotely, but we do have people on the ground in Khartoum. So, we’ll try to get a deal done over Zoom if we can but if we can’t then I’ll have to fly out there which is the best situation.
We are confident that, in the not too distant future, we will be able to get a deal signed.
Q5: Now, you’ve consistently claimed that your aim is to turn Wildcat Petroleum into a profitable, dividend paying oil company with no debt and have billions of barrels of oil resources, do you think you can achieve that?
A5: I’m 100% we can achieve that, that is how the whole business plan has been developed. I own 70% of the company, I haven’t sold a single share since IPO, and I totally stand behind that statement.
Everything comes down to the deal and I think we can structure a deal and get some partners in which means that we can, at the end of this year, be a producing oil company, profitable, debt-free, and hopefully paying dividends by Christmas. This is my aim.
I stated that was our aim at the beginning of the year, if things significantly improve in Sudan, we’re still on to achieve those aims, and time will tell but I’m supremely confident that we can do what we aim to do this year.