Weekly summary of oil news from Proactive Investors: FOGL, Desire Petroleum, Kea Petroleum, Providence Resources, Polo Resources, Northern Petroleum, Europa

Even though the whole junior oil sector is starting to come alive, after a calm summer, it’s hard to look beyond the Falklands for this highlight of the week.

A four-way deal has rekindled interest in the Upside Down Oil Frontier, where several exploration companies have delivered only a few finds.

Today, however, the £ 61million takeover of () by Falkland Oil & Gas () and the eventual affermage deal with () and () paves the way for a new round of drilling in the waters surrounding the Falkland Islands.

There are several important implications of today’s agreements – which have already been selected.

But regionally, perhaps most important is that it provides a long-awaited glimpse into possible machinations of the next phase of exploration in the North Falkland Basin.

The latest drill program saw the Desire and the Rockhopper Club team up to pay the mobilization costs to bring the rig to the remote South Atlantic site.

And today’s agreements indicate an equally beneficial arrangement.

Indeed, Rockhopper said in a presentation to investors that he believes the deals increase the likelihood that a drilling rig will be shared by a number of regional operators in 2014 or 2015.

The focus on New Zealand () ended the week positively, up 13%, as investors eagerly awaited a possible rally in oppressed stocks – which fell around 60% last month .

The company is currently reviewing its options for the Puka field and in talks with Proactive Investors chairman Ian Gowrie Smith revealed that Kea has received “all kinds” of approaches, including offers to buy the entire of the field.

He says, however, that the best option for the company will be decided in the coming weeks.

A farm-out or partnership agreement is considered the most likely outcome. The small-cap oil producer has been in talks with larger companies for some time and a deal could be closed before the end of October.

The support of a new partner would make it possible to drill two additional wells to increase production and put the development of the field back on track.

Puka is currently producing around 200 barrels per day, and at this level the operation is reaching breakeven point.

The two additional wells, estimated to have a combined cost of around US $ 5 million, are expected to increase the field’s production above the 500 barrels per day mark, making the development of the Puka field “self-funded” by the following.

Kea is just one of many AIM oil companies currently looking for a new partner – this is the market for small business finance.

Another is () who wants a bigger company to get involved in the development of Barryroe, Ireland’s first commercially viable oil field.

He said this week that he has generated significant interest from potential partners. In an update as part of the Explorer’s interim earnings statement, he revealed that a dozen companies had reviewed Barryroe’s data.

The companies involved in the affermage process represent a “good representative sample of the main international players in E&P [exploration & production] companies, ”added the group listed in London and Dublin.

Rothschild is handling the negotiations, which should be concluded in the “next few months”.

Focused on Africa, Signet Petroleum, the oil company partially owned by (), gave an encouraging update on the process of finding a buyer or partner as it reported a “high level of interest ”for assets.

Signet has projects in Namibia, Burundi, Tanzania and Benin, and the London-listed investment company Polo owns nearly 47% of the group.

A process is currently underway to find “strategic alternatives” for the group managed by First Energy Capital. This is to look at a “range of potential business outcomes both at the individual asset level and at the portfolio level”.

Polo said on Friday the process was taking longer than expected, but added that it was “progressing well with a high level of participation from a wide range of high quality potential bidders.”

() received approval from its partner at the Cambay field in Gujarat, India, to sell a 15% stake to Magna Energy.

Under the agreement, Magna will acquire a 10% stake for US $ 4 million and have an option on an additional 5% for US $ 2 million. Magna has already made a deposit of US $ 200,000 for the first consideration.

said the other project participants had waived existing pre-emptive rights under the Cambay joint operation agreement. Shareholders must now approve the sale at a meeting on October 4. Gujarat State Petroleum Corporation (GSPC) holds a 55% stake.

() continued its group-wide restructuring with an agreement to sell its assets in the Netherlands for C $ 27.5 million.

Through the deal with Vermilion Energy, the AIM-listed company will also receive a share of future net profits from the Papekop production license as well as unconventional reservoirs.

Municipal broker Shore Capital welcomed the deal and reiterated its buy-for-action recommendation.

“In our view, this divestiture is a strategically important step for Northern and, following recent changes to the company’s asset base and management team, we reiterate our recommendation to PURCHASE,” said declared the broker.

() also received a welcome boost as its shares rebounded somewhat this afternoon as the company confirmed that it had now obtained the renewal of its Béarn des Gaves license, onshore France.

The permit, which includes the Berenx Deep prospect, was renewed for five years, until March 2017.

In July, the renewal process stalled, against the backdrop of a change of minister in the Directorate of Ecology, Sustainable Development and Energy. At the time, Europa warned it would have had to write off £ 1.2million if a renewal had not been secured.

Municipal broker finnCap described the renewal as an important step that paves the way for a farm out process to be launched before drilling in 2014.


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Felix J. Dixon

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