ARQ 3.70% 8.4¢ arq group limited

arq-to blackgold

  1. 539 Posts.
    On this may explain the 5000bopd delay- I posted this last week after a ph conference-love this stock.

    On ARQ energy.

    Listened to a conference the MD gave on Friday. The salient points not generally discussed on HC are as follows:

    1. The monies from sale of Cliff head will not be used to retire debt. They do not need to retire it as plenty of cashflow to cover repayments. They like the flexibility of money in the bank.

    2. They bought the stake of in Jingemia to allow ARQ perusal of that jvs permits in detail and give it a voice at the table. The important point for Arq is that it has the capacity to bolt on storage at Hovea upto 24000 bopd. This would allow Jingemia to cheaply access the facilities at Hovea rather than go to the considerable expense of a stand alone plant. Especially as Arq will have built the pipeline to Eremia.

    3. They will start production testing at Eremia this month at about 500bopd rising to 1000bopd as allowed under there exploration permit. They cant raise production on eremia until they have the requisite licence to do so.

    4.On Hovea they will be producing at 5000 bopd by end of May-what I only just understood is that the ramp up to that level has been constrained by its licencing requirements rather than production issues.

    5. Each discovery like eremia is incrementally cheaper than Hovea due to plant. Until they get to about 25000-30000 b of fluid per day would they consider the pipeline option.

    6. Costs of production are less than $10 per barrel- ( i suspect it is closer to $7than $10 but that is commercial in confidence that co is not directly stating.

    7. They are working on 20 targets, including gas ( as they can link into either Dongarra or Bedarra), and shall begin a new round of drilling in Sept.Remember onshore the area is 3 out of 3 so reasonable to assume there is more oil there. The co certainly thinks so.

    The next 4- 6 months are a nervous time for Arq as they are relatively unprotected against takeover until next round of drilling as they only reflect current producing assets and not its prospectivity. The co that understands having a central plant and drilling areas like swiss cheese is Apache-my pick for Arq,s problem at some pt.

    Thought these pts may be of interest.
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Mkt cap ! $9.892M
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