American Patriot has opened seven new wells and the money is flowing in
Link copied to
Special report: American Patriot has restarted production at its Goose Creek and CWS Aceite oil fields in Texas, drawing out 22 barrels of oil a day from seven wells.
The company (ASX:AOW) made $US32,592 in revenue from the field this month, and they expect to have 15 wells operational in the field by September 30.
The company expects to generate at least $US40,000 by the end of the month from production sold with a daily average of 30 to 40 barrels of oil per day (bopd).
They are targeting 50 bopd and revenue of $US60,000 a month.
American Patriot chief Alexis Clark believes these are important milestones as the company prepares to commence sustained production.
“In the near future we expect to significantly grow production and net cash flows just from these assets, not including the significant uplift from the new acquisitions,” he said.
“The past six months has seen our team, led by chief operating officer Nicholas Melosi, successfully persisted to obtain regulatory approvals and progress this field to production.
“The location of these assets is also important, situated directly adjacent to The Foothills project allowing us to use the same infrastructure and work crews to achieve significant economies of scale.
“Today we have access to an additional 50 wells, some of which we are currently permitting for recompletions, and expect to generate over 100bopd by the end of the year with current assets.”
Becoming a mid-tier producer
The company is on track to close the Foothills, Peak Energy and Magnolia/Burnett deals in the next few weeks and had a site visit at the former with lender White Oak.
They’ve signed the contracts on the Magnolia and Burnett assets and paid a 10 per cent deposit.
At the completion of these deals, estimated EBITDA will increase to approximately $US11.5 million per annum in calendar 2019 (for all assets), following the completion of the capex program based on an oil price of $US65 barrel.
“The visit identified further additional upside from multiple waterflood testing programs and pumping unit/downhole pump sizing exercises on the asset,” Mr Clark said.
“The assets deliver significant value to the company of $US48 million PV10 [present value discounted by 10 per cent] with our current market cap of $11 million.
“The production potential and the reserves base of the acquired assets is shifting the company to becoming a significant explorer and producer.
“We have already commenced the early stage process of identifying the next asset acquisition, which will be more than double the current deal size.
Mr Clark says they are positioned for “significant growth” and are on the way to becoming cash flow positive.
This special report is brought to you by American Patriot.
This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice.
If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a disclosure document, a Product Disclosure Statement or an offer document (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.