Pancontinental Oil & Gas NL : Stock Analysis – Pancontinental Oil & Gas NL 2018

By Peter Strachan

Written under AFSL: 259730

All Ordinaries	6,208
Energy Index	11,640
Brent AU$/bbl	$ 101
AUS$/US$	$ 0.738
Live Gold/AU$	$ 1,726

GOLD LIVE AU$

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First published in StockAnalysis Vol 15, Issue 22 - 20 June 2018

Pancontinental Oil & Gas NL

(PCL)

Pancontinental Oil & Gas (PCL) has quickly moved to sell its Californian gas project interest, and is now refocused on lower risk and higher impact opportunities. The company is now gearing up to participate in operations, offshore Namibia, where it has two strategic permits with a high impact well on target for Q4 '18 drilling.

The company is now benefiting from a small operating contribution from gas sales at the Dempsey well in the Sacramento Basin but its cash and convertible note debt currently cancel each other out.

However, when the Cormorant well begins drilling in PEL 37 in September '18 Pancon will receive an injection of $7.7 million, so it should finish 2018 with $5-6 million of net cash.

Pancon has a 20% carry on the Cormorant well, targeting 124 million barrels of Prospective oil during Q4 '18. StockAnalysis estimates that at an insitu value of $12/bbl, success at that level would be worth nearly $300 million, or 4.7 cents per share to Pancon. The Cormorant-1 well will test one of a series of large, Early Cretaceous submarine "sedimentary fans" mapped on 3D seismic with interpreted access to the northern, Walvis Basin oil kitchen. The company says that good quality oil prone source rocks in the Walvis Basin were proven by the Wingat- 1 well, drilled just south of the block in 2012. Once again consistent with extensive oil seep data, also found in its 75% held PEL 87.

ALL ORDINARIES

S&P ASX 200 ENERGY INDEX

BRENT CRUDE OIL $AU/BARREL

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By Peter Strachan

The age and type of the Cormorant trap in PEL 37 is similar to those being outlined in PEL 87. Drilling will access a separate oil source kitchen and reservoir source for the large, submarine fan sand reservoir targets.

Mapped targets in PEL-87

Source: Pancon

The company has been working with pre-existing 3D seismic data over PEL 87 and has found several prospective targets in the permit where it holds a 75% interest. One large anticline structure with multiple reservoir targets is mapped to cover over 600 km² of potential closure, which could host a massive oil accumulation if hydrocarbons are present, which is supported by oil slicks and nearby drilling.

Pancon has an initial 75% interest in PEL 87 and is thus in a strong position to attract funding for further 3D seismic acquisition and drilling.

While a structure with an aerial extent of 600km2 could host a Resource of over 1 billion barrels of oil, StockAnalysis assumes a target of 300 mmbbls in PEL 87. If the company can retain a 23% interest for drilling, such a target could offer a risked value of ~0.5 cps and a value on success of over 12 cps to Pancon.

Source: Strachan Corporate

Based largely on drilling the Cormorant prospect late this year, StockAnalysis assesses a risked value for Pancon of 1.2 cps and a value for success of 5.1 cps, compared with its current share price of 0.4 cps.

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Peter Strachan © 2017/18

Pex Publications Pty Ltd

ACN: 59 077 704 146

By Peter Strachan

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Disclaimer

The information or advice (including any financial product advice) herein is believed to be reliable and accurate when issued however, Strachan Corporate Pty Ltd ABN 39 079812945; AFSL 259730 ("Strachan"), does not warrant its completeness, reliability or accuracy. Strachan, its Directors and their Associates from time to time may hold shares in the securities mentioned in this report and therefore may benefit from any increase in the price of those securities. Opinions and estimates constitute Strachan's judgment. The author certifies that the views expressed in this document accurately reflect the analyst's personal views about the subject company and are subject to change without notice. Strachan, its officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The investments and strategies discussed herein may not be suitable for all investors. In preparing such general advice no account was taken of the investment objectives, financial situation and particular needs of a particular person. Therefore, before acting on the advice, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. There may be a product disclosure statement or other offer document for the securities and financial products we write about in StockAnalysis. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. If you have any doubts you should contact your investment advisor. The investments discussed may fluctuate in price and changes in commodity prices and exchange rates may have adverse effects on the value of investments.

Recent Strachan Corporate commissioned research or corporate advisory services have been supplied to the following companies, for which it has received a fee: Sun Resources, Gulf Manganese, Strata-X Energy, Nusantara, Winchester Energy, Empyrean Energy, Pancontinental Oil & Gas, ServTech, Buru, Sacgasco, Xstate, Rox Resources and Peel Mining. In addition, over that period Strachan Corporate has delivered lectures at several Universities, provided expert witness statements and confidential financial services and advice to listed companies, several private investment companies and institutions as well as private investors. Disclosure of interests in these confidential actions by Strachan Corporate is only appropriate should Strachan Corporate determine a potential for conflict of interest.

The author has small holdings in shares of G88, SUN modest holdings in CVN, DRM, SGC, IGO, TLS, TDO, CMM, ADX, ANZ, MLX, NAB, FAR, IDR & WPL and larger holdings in PTM, RFX, FZR, RIC & HAV.

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Peter Strachan © 2017/18

Pex Publications Pty Ltd

ACN: 59 077 704 146

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