14th Jan 2015 11:46
LONDON (Alliance News) - Mosman Oil and Gas Ltd said Wednesday it is trying to take advantage of the cost reductions for exploration offered by the low oil price and said it is to formally lodge its takeover bid for MEO Australia Ltd soon.
"The directors view is that the current drop in oil price is not sustainable for an extended period of time, and the oil price will ultimately improve. In the near-term the oil price brings benefits such as cost reductions for exploration," it said in a statement.
"The current oil price brings both challenges and opportunities. We have taken appropriate action including shifting the exploration focus to larger oil prospects and the new Murchison permit," said Executive Chairman John Barr.
Mosman is looking to continue exploring three new permits it has secured in New Zealand. It is currently carrying out research on the sites in preparation for the formal permit, which will take effect on April 1.
In the near-term, the company is planning on flow testing the Cobden Limestone at Cross Roads-1 in February, and finalising drilling locations for larger and deeper prospects in the Petroleum Creek and Taramakau permits.
Once the targets have been identified at the Petroleum Creek and Taramakau permits, Mosman will drill additional wells during the year, it added.
It also will drill one well in the Murchison permit and continue technical work on permits in Australia, said the company.
"The Murchison project may be commercialised by gas-fired power generation and supply to the South Island electricity market, which is not affected by low oil prices," said Barr.
Mosman also has received an unsolicited approach from an unnamed company which wants to farm in on one of the company's permits in New Zealand. Discussions are ongoing and the directors have said it may be a means of "maintaining a strong level of activity, whilst preserving cash in the current market."
In addition, Mosman recently met the chief executive of MEO Australia Ltd to discuss its takeover bid. In December, Mosman said it would make a takeover bid to fully acquire Australian Securities Exchange-listed MEO Australia in an all-share deal after Neon Energy Ltd pulled out of its own bid to acquire MEO.
Mosman will lodge the bid documents shortly and said that public documents indicate MEO had around AUD10 million in cash at the end of 2014. MEO holds a series of permits located mainly in Australia and New Zealand.
"The Mosman board continues to believe the combination of Mosman and MEO will make a strong, well-funded company," said Mosman.
Mosman shares were down 5.7% to 5.78 pence per share late Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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