MEC Resources ramps up news ahead of a busy 2018

Published at Jan 23, 2018, in Small Caps

ASX junior MEC Resources Ltd (ASX:MMR) provides select energy and mineral exploration companies with development and exploration funding, with a view that the early stage of a junior exploration company potentially offers the most exciting growth opportunities.

Given the current climate surrounding the East Coast gas crisis, which attracted plenty of air time and political rhetoric in CY2017, this seems like a good time for MMR to be making its mark in gas exploration. The gas crisis has not only driven prices up, it has put a national focus on securing domestic sources of gas for the country’s East Coast.

MMR has had an impressive start to the year in terms of positive news, with the developments so far focused on its investee company, Advent Energy Ltd. MEC holds a 47 per cent interest in the unlisted oil and gas explorer.

Advent Energy presently holds an 85 per cent interest in PEP11, offshore Sydney Basin, and 100 per cent interest in EP386 and RL1 in the onshore Bonaparte Basin. PEP11 lies adjacent to the NSW coast, and is believed to comprise large structural traps that, in the words of the company, “provide an opportunity to potentially discover significant volumes of natural gas to supply the challenged east coast gas market and contribute to national energy security”.

It should be noted that MMR is an early stage play and anything can happen, so seek professional financial advice if considering this stock for your portfolio.

A term sheet (announced end of last year) has been agreed between Advent Energy, Bounty Oil and Gas NL (existing PEP11 JV partners) and RL Energy Pty Ltd — whereby RL Energy may earn 10 per cent in PEP11 by funding the completion of a proposed 2D survey up to a capped amount.

PEP11 plan gets environmental tick of approval from NOPSEMA

Earlier this month, MMR announced that the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) had formally accepted the PEP11 Baleen 2D HR Seismic Survey Environment Plan.

With this in place, Advent Energy will now commence mobilisation of equipment and preparations to undertake the 2D survey set to be funded by RL Energy.

Those preparations will be communicated to the market via an anticipated ASX announcement. This news surrounding the accepted Environment Plan follows hot on the heels of MMR’s news a week prior regarding the granting of an extension for PEP11.

PEP11 extension granted

MMR provided an announcement in early January advising the market that the National Offshore Petroleum Titles Administrator (NOPTA) had formally approved investee company Advent Energy’s request for an extension to the term of PEP11.

The term of PEP11 now concludes in February 2021. This permit extension provides some reassurance to MMR that the forthcoming 2D seismic survey, planned for early 2018, will be performed and that the PEP11 title is in good standing.

Commencement of detailed operations planning and the mobilisation of necessary equipment can now occur, thanks to the aforementioned approval of Advent’s Environment Plan. The PEP11 minimum commitments are now as follows:

Advent energy exploration permits

Source: MEC Resources

MEC Chairman Goh Hock stated: “This is another fantastic step for Advent Energy and the exploration of the offshore Sydney Basin. These are excellent developments to commence 2018 on a very positive note, and we look forward to further progress during the year.”

But the good news does not stop there.

New share placement to bring in $300,000

Yesterday, MMR announced it had raised A$300,000 (before costs) through a placement to sophisticated and professional investors for the placement of 14,285,714 ordinary shares at an issue price of $0.021 cents per share.

The price represents a discount of approximately 5 per cent to MMR’s closing price on 11 January 2018. Panthea Capital managed the placement.

The $300,000 will be used by MMR for a range of purposes, but primarily to assist MEC investee, Advent Energy, in developing work programs and undertaking preparatory works for activities in EP386 and RL1 in the onshore Bonaparte Basin, including well intervention activities as previously advised. These activities may also assist in progressing discovered resources.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). 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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