ebr to soar-bullitin

EBR fans might have missed this article. It gives a good summary of the companies up coming programmes. Doesn't mention the Uley graphite mine which may get sold off soon (90% leaving EBR with 10%) for $1.5 mil


A capital raising to fund seven exploration wells should help one oil junior soar to new heights. By David Haselhurst.

One of our oil hopes, Eagle Bay Resources, will be well cashed up soon to fund its share of a seven-well drilling program. It will share in five holes in the Cooper Basin in central Australia and two eagerly awaited wells in Bass Strait. Better, most of the money to be spent is being put up by farm-in partners on tenements held by Eagle Bay (ASX code: EBR).
A prospectus to raise $5.12m was lodged with the Australian Stock Exchange last week as a new, state-of-the-art, Norwegian-built drilling rig was due to arrive in Brisbane to undertake the Cooper Basin program. As revealed earlier (B, February 22), Eagle will make a one-for-three non-renounceable issue of shares at 9¢ each, with a free option. The shares are trading “cum” entitlement until March 17, although any readers tempted to buy in should first confirm that with their broker.
Veteran geologist and Eagle chairman, Tony Rechner, originally envisaged a somewhat smaller capital raising. I hear, however, that aggressive Perth broker Patersons Securities pushed for a share placement at the higher price of 11¢ ahead of the proposed issue. That way, Eagle has raised more cash and Patersons’ clients will participate in the rights issue.
Eagle secured late last year a 1745 square kilometre petroleum exploration licence (PEL 182) on ground that Santos was required to relinquish on the under-explored northern margin of the Cooper Basin in the north-east of South Australia. The ground covers the shallower Eromanga basin and the deeper Cooper, both of which contain multiple horizons where oil and gas may be trapped. Final granting of the title is subject to native title agreement, which the company expects soon.
Eagle has farmed out a 49.9% interest in the block to Audax Resources, which must spend $4.75m drilling three or more wells and complete a technical review. That review has identified 11 targets and highlighted three major areas for the proposed drilling of five wells beginning in mid-2005. They comprise three oil targets, a gas target and a development well dependent on the success of the earlier targets.
Oil, at a price of $A67/barrel, can be trucked to a Santos pipe head and sold for a net of about $A50/barrel. Top priority will be three oil plays at depths of 2900m to 3000m. They are designated as Prospect G, with an assessed 1-in-3 chance of locating 15m barrels of oil; K, with an assessed 1-in-5 chance of 8m barrels; and D, a 1-in-5 chance of 6m barrels.
Eagle has a 50.1% interest free-carried by Audax (49.9%) for $4.5m of the cost of the first three wells, and has budgeted $1.2m for its share of completing all five wells. Audax has also covered its corporate back.
Drilling will be undertaken by White Sands Petroleum, a part-owned subsidiary of the listed Bounty Oil and Gas in which Euro-American investors hold an interest. To secure the Norwegian rig, Audax lent White Sands $US1m and will be repaid $US1.25m on completion of the five wells. White Sands is also meeting 20% of the drilling costs to earn 10% in the block from Audax’s equity. As a further lay-off, Bounty has an option to buy 5% out of Audax’s equity if it agrees to pay for 10% of the drilling costs.
While these Cooper Basin plays add up to potential company-makers, the more sensational hopes are in the Bass Strait. Financier Bill Wyllie, with nearly 10%, controls Eagle’s biggest share block. Wyllie earned his interest 4½ years ago when he funded a well, Northright 1, near the north-east corner of Eagle’s Bass Strait block VIC/P41. The well was dry. With low oil prices, a minimum of work was done for the next three years. During that time, OVM-Esso recorded some $6m worth of seismic that overlapped another of Eagle’s Bass Strait blocks, VIC/P47. The seismic came at no cost since it adjoined Esso ground.
Last year, as the world oil price surged, cashed-up suitors came knocking on Eagle’s door seeking deals. As a result, it reduced its equity in VIC/P47 to 25%, after farming out to Moby Oil and Gas (35%) and Bass Strait Oil Co (40%). Eagle was then free-carried through the $5.75m drilling of the Moby 1 well late last year.
Moby 1 came in as a gas discovery with an assessed proven and probable reserve of 60 billion cubic feet and possibly as much as 136 billion cubic ft. Eagle has budgeted $2m for its share of the planned Moby 2 development well due mid-year. The discovery is only 6km east of an under-utilised Santos sub-sea pipeline, and could be connected at an estimated cost of $10m in a two-month timeframe.
Excised from the VIC/P47 block is an area called the Gilbert block, where Lakes Oil’s recently-listed spin-off Gippsland Offshore Petroleum will spend $5m drilling the Gilbert No 1, probably in July. Eagle retains 10% of this excision.
In block VIC/P41, in which Eagle retains 25%, Bass Strait Oil (45%) and Moby Oil (30%) have completed a 575km 3D seismic survey, which should generate new targets over the next six months.
Highest ranking is the Kipling feature, with a potential recoverable resource of 118m barrels of oil and 820 billion cubic ft of gas – all on trend with the operating Kipper field. A well is planned for late this year.
Eagle had 158 million issued shares and net remaining cash of $2.6m. Patersons took a placement of 12.72m shares to raise a gross $1.399m. The one-for-three will raise a further $5.12m. That will take Eagle’s total cash bank close to $9m, or enough to fund its proposed activities for at least two years.
The issue is underwritten by Kefu Underwriters, a company associated with financier Bob Vagg, to the extent of $4.7m. Directors will sub-underwrite $1.5m, and the balance has been taken by Patersons for its clients’ entitlements. Both underwriters will collect a 5% fee.
Following the raising, Eagle’s issued capital will be 227.75m shares plus 28.47m options exercisable at 12¢ by March 31, 2006. If the shares fly on any discovery, holders of the options will get an extra sweetener. For upon exercise, they will automatically be granted a further option exercisable at 15¢ a couple of years out.
The Speculator, with 30,000 Eagle Bay shares, will certainly take up his entitlement to 10,000 new shares before the issue closes.

Holding
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