IPO Watch: Time is right for veteran explorer Finder Energy to hit the ASX
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Finder Energy is no stranger to oil and gas exploration, having been involved in such activities since it was first established in 2004 as Finder Exploration.
Over this time, it has built up a diversified portfolio of exploration assets in Australia’s North West Shelf – one of the largest in the prolific oil and gas region – and the UK North Sea.
Additionally, the company’s history has meant that it has absorbed a lot of learnings about how to find oil and gas in the NWS while building a large seismic data library containing hundreds of thousands of square kilometres of 3D data.
However, high oil prices and a sector that needs to replace reserves to meet growing demand have combined to make the perfect timing for the company to seek a listing on the ASX with a $15m initial public offering to fund its upcoming exploration activities.
Listing is expected on April 8 with the company trading under the code FDR.
Speaking to Stockhead, managing director Damon Neaves said that while the company had made successful discoveries as a private company, the scale of the success was too big for the company, forcing it to divest its interests rather than develop them.
“Whilst that been a successful model for Finder and delivered a lot of value to our shareholders, we feel it’s time to grow into something larger and more enduring,” he explained.
“Access to public equity markets means if we are successful with the drill bit, we can stay in the game by paying our way through the commercialisation of those discoveries in order to maximise the value.
“Finder has a high impact drilling program kicking off in a few weeks time and this year we will be taking a number of high-quality opportunities to the market seeking industry partners to fund drilling.”
Investors in Finder won’t have long to wait. The company is poised to spud its Kanga-1 oil exploration well in early May that targets best case prospective resources of about 170 million barrels of oil with 25.5MMbbl net to Finder (15%) in the high quality Legendre reservoir.
The well in WA-412-P is located near existing oil fields in the heart of the Carnarvon Basin and has been independently assessed to have a 36% geological chance of success.
“A discovery will be a game-changer. Because of our tight capital structure with only around 150 million shares on issue, shareholders have enormous leverage to success,” Neaves said.
“ERCE’s best estimate prospective resource for Kanga is 170MMbbls, which is over 25 MMbbl net to Finder. At current oil prices this would be a major development project with very favourable economics.”
Nor is Kanga-1 the only prospective play in the company’s portfolio.
With nine out of 10 wells drilled on the play encountering hydrocarbons, this is hugely exciting for any company that holds acreage in the area.
“Our WA-547-P block was the most heavily contested block in the bid round and Finder emerged as the successful bidder against much larger companies,” Neaves told Stockhead.
He added that Santos’ recent Pavo discovery confirmed that the oil charge in the Dorado play is prolific.
“Interestingly, we observe the same Fluid Escape Features (FEFs) in the 3D seismic over our prospects, which have been the tell-tale sign present in every discovery in this play,” he explained.
“Dorado is the largest oil development in Australia right now and the addition of Pavo just made it a whole lot bigger and de-risked surrounding exploration.
“This is the hottest play in the North West Shelf and I believe there’s more to come.”
“We can’t comment on commercial discussions but, in the circumstances, we are confident of farming our acreage and drilling the large prospects we have in this play.”
Finder also holds a 50% interest in AC/P61, which hosts the Gem prospect that was identified from new 3D seismic.
This is surrounded by full-to-spill discoveries within a proven play and has a geological chance of success calculated at 32%.
Like Kanga-1 and WA-547-P, any success exploration at Gem will have significant impact given that it has a best estimate prospective resource of 136.8MMbbl of oil.
Nearly halfway across the world, Finder has built an infrastructure-led exploration portfolio in the Central North Sea that is surrounded by giant, multi-billion barrel fields such as the Buzzard and the Forties oil fields.
The company has strategic partnerships with nearby infrastructure owners and is using modern seismic processing technologies and a proven, UK-based technical team to identify new prospectivity.
Notable examples are the reprocessing of 3D seismic over the Whitsun prospect in P2528 that is on trend with the Buzzard field, the Barracudea prospect in P2524 that is located within the proven South Viking Graben, and P2502 which hosts the southwest Heather discovery.
While Finder’s portfolio is certainly enviable, its management is equally capable.
Neaves himself has more than 18 years of experience within leadership roles in the oil and gas industry with commercial and transactional experience.
He was a co-founder and managing director of Pura Vida Energy and served as the business development manager for Tap Oil.
Together with technical director Shane Westlake – an industry leader in seismic processing and interpretation, prospect generation – and the rest of the Finder team, Neaves has closed numerous value-accretive deals with industry partners.
More recently, the company’s leadership was bolstered by the appointment of highly experienced resources executive Brownwyn Barnes as its chairman and former Quadrant Energy exploration team leader Fred Wehr – who was responsible for the Dorado discovery – as a non-executive director.