Red Sky Energy (ASX:ROG) Director Clinton Carey talks Oil & Gas with Finfeed.com
Red Sky Energy (ASX:ROG) is progressing a countercyclical portfolio-building strategy amidst the current weakness in crude oil prices.
The company is picking up assets on the cheap, and is betting on the oil price to go up again, just like it always has in the past.
As the oil price rises, ROG will be well placed to take advantage.
In an interview with Finfeed.com, ROG Managing Director Clinton Carey gave his insights into the company’s strategy, which is focusing on acquiring high quality acreage that is already in production.
By completing a series of key acquisitions of oil and gas assets in the US, ROG hopes to build a high value portfolio of assets at bottom of the cycle prices.
Earlier this year, ROG completed the acquisition of the Cache Oilfield in Montezuma County, Colorado in the US.
As a demonstration of its intended growth strategy, ROG acquired its 50% interest in the oilfield by issuing 1.37 billion fully paid ordinary shares, priced at $0.001. Alongside the acquisition, ROG completed a capital raising of $1.74M via the issue of 1.74 million fully paid shares, priced at $0.001.
According to Mr. Carey, ROG is only looking at acquiring assets with “immediate production potential” and is actively seeking “profitable oil fields for cents on the dollar”. He added that, “ROG is now fully funded, has all permits granted and will drill a new well at Cache before the end of the year.”
When asked about ROG’s plans over the next 12-24 months, Mr. Carey outlines two key focus points:
1. Drilling Cache’s first new well since the 1970s to increase current production to a forecasted 350 barrels of oil per day, and;
2. Continuing its search for profitable oil and gas assets in North America to add to ROG’s portfolio.
The core of ROG’s approach lies in focusing on conventional oil production that requires low acreage and simple drilling techniques. This will allow the company to progressively “reduce its cost price per barrel as production increases”. Mr. Carey said that “when oil was above $100 per barrel, non-conventional drilling was the way to go”. Before adding, “However, non-conventional drilling needs a lot of acreage and a lot more investment per barrel of oil produced.”
At this stage of the cycle, a low oil price helps ROG acquire new assets at a discount, drill new wells for a relatively lower cost and therefore achieve competitive savings compared to unconventional, high-tech and expensive oil producers.
If and when oil prices recover, Mr. Carey sees ROG well placed to take advantage based on the company’s strategy of acquiring producing assets only.
ROG expects to have a new well in production by the end of this year, and quite possibly, more US assets on its balance sheet over the coming months.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Longhou Capital Markets Pty Ltd (AFSL No. 292464). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.