MPE commences drilling Tulainyo Gas Discovery

By Zachary Graves. Published at Nov 22, 2017, in Small Caps

ASX gas explorer, Magnum Gas & Power Limited (ASX:MPE), today announced that it has commenced drilling at its Tulainyo 2-7 gas appraisal well in northern California’s Sacramento Basin.

The Ensign Rig 587 is now onsite. In the past 24 hours, the rig equipment has been tested and pre-spud safety procedures have been carried out. The well is planned to a total, measured depth of approximately 1,700 metres (5,600 feet), and drilling operations are expected to take less than one month to complete.

The Tulainyo Gas Discovery structure is a well-defined large anticline, with up to 91 square kilometres closure. It has a strong surface expression, gas seeps, and gas has been encountered here during historic drilling.

MPE’s 60% owned subsidiary, Gas Fields LLC, is earning up to 33.33% (20% net) in the Tulainyo Gas Project via a joint venture with the project operator, California Resources Production Corporation (NYSE:CRC), a subsidiary of a NYSE-listed company, which is California’s largest natural gas producer.

In 2015, CRC produced 44 million cubic feet of natural gas (or 7,000 barrels of oil equivalent per day) in the Sacramento Basin, which could supply all the homes in the City of Sacramento for nearly two years.

MPE’s other partner is Cirque Resources LP, a private company based in Denver, Colorado, led by two-time Wildcatter of the Year, Peter Dea.

Based on current prices, this project has a potential in ground value of US$6 billion, of which MPE has the ability to earn $1.2 billion.

It should be noted though that MPE is a highly speculative stock, high risk stock and investors should definitely seek professional financial advice if considering this stock for their portfolio.

California only produces a sixth of its annual gas demand, and is expected to import 98% of its natural gas requirements by 2025. Given this, if MPE manages to strike large, commercial gas quantities at its appraisal well in the coming weeks, it could stand to emerge as a significant disruptor in terms of these uneven supply-demand dynamics.

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.

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.

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