South Pacific appoints technical team for PNG project

Published at Sep 27, 2016, in Energy

South Pacific Resources is a very high risk stock. Getting mining projects up and running in countries such as PNG is no simple feat for political and social reasons, and there may be challenges ahead. You need to fully inform yourself of all factors and information relating to this company before engaging with it.

South Pacific Resources (ASX: SPB) has engaged Tamarind Management Sdn Bhd, a private oil and gas company based in Kuala Lumpur to provide support in developing its recently acquired license reservations in PNG.

Importantly, Tamarind has substantial experience in developing assets in that region and is headed up by high-profile personnel that have had past experience with leading energy services groups such as Schlumberger.

As well as having extensive technical and commercial experience, the group was previously backed by Blackstone Energy Partners LP with a capital commitment of US$800 million to facilitate exploration of oil and gas opportunities in Southeast Asia.

The agreement which is subject to ASX and shareholder approval involves a minimum cash outlay, dependent on a capital raising event and with an incentivised share option scheme based on the achievement of key development and corporate milestones.

On this note, Tamarind will be allotted 20 million options structured on progressive terms to align with the achievements of significant commercial and technical milestones. These milestones are dated between 12 months and 36 months and will be determined by the group’s share price achieving share price levels up to 15 cents per share with exercise prices ranging between 8 cents and 15 cents per share.

Remember that share prices do fluctuate and past performance should not be taken as an indication of future performance. Caution should be exercised in assessing past performance if considering this stock for your portfolio.

This arrangement clearly aligns the performance of SPB’s management and its technical team with the interests of shareholders, and as such should be seen as a positive development.

The company’s shares opened 10% higher on Tuesday morning, perhaps indicative of this development receiving a tick of approval. However, they are still shy of the 9.5 cent mark struck in mid-July after the company announced that five unconventional oil and gas reservations had been awarded in PNG, effectively securing 75,000 square kilometres of highly prospective acreage.

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Discussing developments leading up to the recent acquisition of license reservations, SPB director, Dominic Martino said, “SPB has achieved a leading prospective unconventional oil and gas acreage position in PNG following a number of years of technical assessment and engagement with stakeholders in the PNG oil and gas sector”.

Receipt of the license reservations occurred following the introduction of a new Unconventional Oil and Gas regime in PNG in February 2016.

Ian Angell, Chief Executive of Tamarind anticipates that the group’s experience in PNG and its wider oil and gas capability should leave it well-placed to maximise the longer term value of the prospective unconventional acreage held by SPB.

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.

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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.

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