Mosman Oil and Gas moves onto bigger opportunities after Falcon success

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What it does

Mosman Oil and Gas Ltd (LON:MSMN) operates in the US and Australia with a strategy of expansion through organic growth (exploration of existing permits) and strategic growth (acquisition of new permits, mergers or takeovers).  

In the US, it owns 50% of the Falcon project in Texas among others, while in Australia it is the sole operator of an exploration project in the Amadeus Basin.

 

How it is doing

In March, the operator of the Falcon-1 well in East Texas reported a recent increase in water production alongside a fall in pressure at the well, so it had to reduce the wellhead choke size.

This has resulted in significantly lower reported oil and gas production rates at Falcon-1, the AIM-listed company said, and the operator plans to run downhole logs to gather more information in order to recommend an appropriate course of action.

Falcon-1 returned to gas and oil production on 21 February after freezing weather conditions in the state earlier in the month.

In the six months to end-December, Mosman reported total production of 34,569 barrels of oil equivalent (boe).

Of this, 9,871 net boe was attributable to Mosman, which is up from the 8,650 boe previously announced before receipt of additional production data on its Falcon and Arkoma projects in the US.

 

What the boss says: John Barr, chairman

“With drilling planned at Stanley, Champion and/or Challenger projects we anticipate further increases to our production in the coming months and have an objective to be involved in at least four new wells in 2021 subject to funding and other matters.”

 

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What the broker says

“Against a challenging market backdrop, the company successfully transitioned into a low cost, high margin producer, exiting the year with a transformed production profile,” said research house SP Angel in January.

“Recent positive news flow has seen Mosman’s share price rally over 30% year-to-date alone, however we believe there remains considerable running room in the stock for investors. We therefore initiate coverage with a ‘buy’ rating, setting a 0.42p/share risked target price.”

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