Nautical Petroleum plc is an independent hydrocarbon exploration and development company listed on the London AIM. The company's mission is to acquire, develop and add value to discovered heavy oil, initially on the United Kingdom Continental Shelf.

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Download Nautical 2007 Annual Report

Hardman & Co. Research note

Indeed oilwatch - could get very interesting in the coming months.

Hardman Sept 2007 note on NPE :

http://www.hardmanandco.com/Research/Nautical_Sept_190907.pdf


Recent Oil Barrel article :

http://www.oilbarrel.com/news/article.html?body=1&key=oilbarrel_en:1190712032


25.09.2007

Heavy Oil Specialist Nautical Petroleum Has Built a Substantial Portfolio of Prospects, Now The Fun Begins - The Drilling

London AIM listed Nautical Petroleum has built up a substantial portfolio of prospects in the UK Continental Shelf, in southern France and the East Irish Sea. A heavy oil specialist, it lists seven discoveries and development prospects in the UKCS and France amongst its assets as well as some low cost exploration opportunities.

It has taken twenty-four months to get from there to here in terms of assembling the portfolio, but the company has now announced some definite dates for drilling.

First out of the traps is an appraisal well to test the Kraken prospect on the companys 9/2b licence. Kraken was discovered in 1985 and tested oil in the Heimdal sandstone, with the best estimate contingent resources totalling 53 million barrels (23.9 million barrels net to Nautical). Nautical farmed out an interest to Korean SK Corp early in 2007, under which part of its costs are carried. The Byford Dolphin rig is due on location late in September and is scheduled to spud the well in mid-October.

Following the drilling on Kraken the rig will then move to block 9/11c to appraise the Mermaid prospect. Nautical has completed extensive seismic work over this prospect, which has confirmed a robust pinch out in the Maureen horizon. Best estimate prospective resources totals 129 million barrels of oil.

The company has recently completed a second farm out. Silverstone Energy will acquire a 10 per cent interest in the North Sea Block 9/11c. Earlier Nautical farmed out 40 per cent to Celtic Oil so it retains 50 per cent of the prospect. Nautical will have its share of the costs fully carried for a substantial proportion of the drilling; thereafter it will bear a reduced share of the costs above a certain fixed level.

In France, Nautical is preparing for an appraisal well on the Grenade prospect during Q4 2007. This well will then lead to testing in the spring of 2008 to confirm production. Nautical has a net interest in 2.8 million of best estimate contingent resources on the Grenade prospect in the Aquitaine basin.

Nautical will also commence a site survey of the Selkie prospect which contains net best estimate prospective resources of 13.2 million barrels of oil, ahead of a planned well in early 2008.

We have reported earlier on progress on one of Nautical key properties, the Mariner field. This holds the record of being the most heavily appraised undeveloped field in the North Sea. There have been a total of seven appraisal wells and in flow tests over 650,000 barrels have been produced. Gross 2P reserves have been put at 82 million barrels and Nautical owns just under 27 per cent of the field. Chevron was the operator and had been perceived by Nautical to be dragging its feet over development of the field. However Chevrons interest and operatorship has been taken over by Norsk-Hydro, with the likelihood that development will now take place earlier than the 2010 date originally envisaged.

In parallel with this drilling activity, Nautical is to commence seismic acquisition over block 3/27a and 9/2 b to firm up drilling locations over the Hyrda prospects. The company will shoot closed spaced 2D seismic, which will be reinterpreted into a 3D model of these leads.

Outside of the UKCS, Nautical has developed a significant position in the East Irish Sea following the 24th Licensing Round, the results of which were announced in February 2007. The company secured Blocks 113/29c and 113/30, which Nautical will operate as a traditional licence. Block 113/29c contains the Merrow Prospect, which contains proven oil and gas migration in the Ormskirk, Triassic and Collyhurst sandstones. Merrow is a large prospect with best estimate prospective resources of 123 million barrels of oil or 393 bcf of gas, located at 2 levels. Seismic data is currently being reprocessed, following which Nautical will decide on its drilling activity.

Commenting on all this Steve Jenkins, Chief Executive of Nautical said: The commencement of drilling marks a step change in activity for the company, and we are now in an excellent position to confirm potential oil reserves of over 100 million barrels of oil, in addition to confirming prospectivity of a further 100 million barrels of oil.

Our presence in the North Sea, Irish Sea and Europe confirms our leadership in heavy oil, which following the offer by Norsk- Hydro for Chevrons interest in the Mariner Field, underlines the increased interest by major companies in these undeveloped resources.

Heavy oil has not always been popular. It has a low recovery rate. It is difficult and expensive to extract and has usually been sold at a 10 to 20 per cent discount to Brent crude. As a result it is a resource that the UK North Sea, at least, has been sparsely exploited in the past, even although it is known to be available in abundance. Continuing high oil prices have begun to transform the situation.

But it is not just the high oil price, which has changed the position. Nautical owns specialised equipment that allows it to test oils with an API down to 10 degrees and has access, through Quadrise Fuels International, to new proprietary technology that converts these heavy oils into a fuel for power generation adding between US$3 to US$7 to the value of a barrel and meaning that the oil can sell at a premium rather than a discount to Brent crude.

Some 160,000 bpd of heavy crude is now being produced from the UK waters. Steve Jenkins argues that Nautical itself could be producing 30,000 bpd in five years time. We shall see.

New Edison note out. They comment that presently the shares appear significantly undervalued. :

You can download the full 8 page report on the link below.

http://www.edisoninvestmentresearch.co.uk/research/category/Nautical%20Petroleum

"Sep 28 2007 Primed for revaluation

Nautical Petroleums recent operational and farm-in announcements have provided clear indications of the high potential and reduced risk associated with its discovered and near-term exploration prospects. The StatoilHydro-operated 450m (110MMBO) Mariner oil discovery has the makings of a high value asset providing strong cashflows. This is complemented by four near-term high impact drilling opportunities in the UK North Sea. Through attractive farm-in deals the company has been able to minimise costs and, as a result, is fully funded for its current exploration programme.

Research type: Review"

http://www.abcmoney.co.uk/news/282007142484.htm

.......................................Nautical Petroleum PLC earlier this week signed a farm-out agreement with Silverstone Energy, whereby Silverstone will acquire a 10 pct interest in the North Sea Block 9/11c.

Nautical will retain a 50 pct interest as operator and Celtic Oil will retain a 40 pct stake.

Under the agreement, Silverstone will pay 20 pct of the costs of drilling the imminent vertical exploration well on the Mermaid prospect, scheduled to be spudded in late October 2007.

While the company's present exploration and appraisal commitments are covered by farm-outs and the current cash position, in the longer term, debt finance is expected to play a significant role in funding the developments, according to Tony Alves of KBC Peel Hunt.

The analyst points out that the shares are at a discount relative to his 13 pence a share Core NAV estimate, which itself has potential to grow strongly on successful drilling over the next 12-18 months.

On the results front, Alves expects year to June 2007 pretax losses to narrow significantly -- to 1.7 mln stg from 7.2 mln.

Meanwhile, Hardman & Co's cash flow models value Nautical's core discovery portfolio at 16.2 pence a share which, with the risked exploration prospects, rises to 26 pence a share.

Nautical's autumn drilling programme is now set to begin in earnest and Hardman expects a raft of news flow in the next few months with drilling at Kraken, Grenade and Mermaid.

The drilling at Kraken is effectively appraisal work. If successful, Grenade should provide useful cash flow, but it is a small component in Nautical's portfolio, Hardman points out.

The material event for investors this autumn will be the drilling at Mermaid. Should the well prove the discovery post farm-out, Hardman estimates it will add 47 mln stg to Nautical's core asset base.

On success, this would bring Hardman's core value up to over 20 pence a share with an overall valuation of 30 pence a share.

The corporate research outfit predicts year to June 2007 pretax losses of 1.6 mln stg......................................................

Dear cynic.

The obvious reason to chuck some money in here was because I could buy and range trade between 7p and 9 p quite happily now averaging 3.86p per share.

Not sure how long I will stay in, but every little helps as they say in Sainsbury's.

Not sure what they mean but there you go.

Heavy oil extraction can be a problem but as you will know NPE think they have a much more efficient way of extracting a grater percentage than others due to new technology.

We will see, meantime next new drill round to start very soon could earn me an even better average.

http://www.investegate.co.uk/Article.aspx?id=200710020701519300E

Nautical Petroleum PLC
02 October 2007

Nautical Petroleum plc
('Nautical' or 'the Company')

Final Results
for the 12 month period to 30 June 2007

Nautical Petroleum plc (AIM: NPE), the independent E&P company focused on the
development of heavy oil assets in the UK and Europe, today announces its Final
Results for the 12 months ended 30 June 2007 and gives notice for the convening
of the Annual General Meeting ('AGM') of the Company to be held at Hesperia
Hotel, 2 Bridge Place, London SW1V 1QA on Wednesday, 11 December 2007 at 12.00 noon.

HIGHLIGHTS

Nautical's strategy over the last 24 months as an early mover in the heavy oil
sector has been to build a world class portfolio of quality resources at low
cost. The imminent drilling of its first 3 wells next month marks the beginning
of a new phase and will place the company in an excellent position to confirm
potential oil resources of over 100 mmbo:

Portfolio Activity

Success in all 24th round applications: 4 licences (3 traditional, 1
promote) with 2 discoveries and 1 firm well.

Completed the farm-out to Celtic Oil Limited to share risk and cost on 5
wells and seismic, including the Kraken and Mermaid Wells.

Agreement signed to farm-out 10% interest in Mermaid to Silverstone
Energy Limited

Significant evaluation of portfolio to de-risk prospectivity:

Mermaid well targeting 129 mmbo best estimate prospective resources

Kraken well to firm up 53 mmbo in best estimate contingent resources

Grenade well to firm up 12.6 mmbo best estimate contingent resources
ahead of planned production in 2008

Imminent activity to include:

Extensive seismic and drilling programme through to the end of 2008

Continued expansion of portfolio through acquisition and licence
round awards

Nautical now has:

. 13 UK licences (17 full and part blocks) and 1 French licence. Nautical
operates 9 of the UK licences.

. Eight discoveries on the portfolio

. 22 mmbo probable reserves; 56 mmbo contingent resources; and a further
97 mmbo prospective resources.


Financial & Corporate

Resourced for imminent drilling and seismic activity

Cash balance of 8.9 million at 30 June 2007

Loss of 0.4 million

Commenting on the results, Steve Jenkins Chief Executive of Nautical said:

'Our skills in heavy oil - and knowledge of the potential of the UKCS is leading
us to work with many multinational oil companies who appreciate the underlying
value of this un-utilised hydrocarbon potential.'

'Nautical has built a world class portfolio over the last three years, with low
risk prospects and discoveries, which will spearhead our drive to secure
reserves - ahead of imminent production in 2008.'

Good to be on board for the medium term in my opinion.

http://business.timesonline.co.uk/tol/business/markets/article2578332.ece

Tiddler to watch

Keith Morris, an analyst at Evolution, believes that Nautical Petroleum, the explorer for heavy oil, up 1p to 11p, could triple its share price in the coming months if drilling is successful in three wells in the North Sea. Oils presence in the region is well-established and costs are spread among third parties. He has a target price of 17p.

Another nice move higher as a bit more awareness gathers following today's Times tip.

Yep.

Sometimes it pays not to have a jaundiced eye on little E&P's.

This is a case in point.

Oct 3rd Hardman Update :

http://www.capmarkets.com/ViewFile.asp?ID1=77476&ID2=176141281&ssid=1&directory=12925&bm=0&filename=Nautical_Oct07.pdf


.

That's some Hardman update. I read most of their analysis and monthly reports and this comes across incredibly well in my opinion.

On a nice little rise today, long may it continue.

Broker has a 17p target for where NPE are now, with the potential for over 30p should the coming drilling come out good. Means its presently undervalued and the high impact upside is not presently in the price - which makes the perfect play for the keen eye imv.

Nice 500K buy at 13.23 (above the offer which is 13p).

More talk on Edison report dated today of high potential and reduced risk with discovered and near term exploration prospects.

Price continues to get squeezed now as we head to broker 17p target

Well, I have to say this is another good one for me, I have tightened my stop behind the sp just a little now but I dont thinkl it will drop back anyway.

http://www.growthcompany.co.uk/recommendations/260487/spate-of-drillings-makes-nautical-a-buy.thtml

Spate of drillings makes Nautical a buy - BUY

Companies: NPE 05/10/2007


Heavy oil specialist Nautical Petroleum has done little wrong since it came to market two and a half years ago, having lifted its discovered oil base nearly all in the North Sea to around 120 million barrels. But, by parking a large chunk of its equity with a hedge fund, it has saddled its shares with a recurrent seller whenever they have reached the low to mid-teens.

Now, however, the shares should have a clear run as Nautical, fronted by chief executive Steve Jenkins and chairman Ian Williams, engages in the most active drilling programme of its short life. Three wells are to be drilled in the space of around three months. Two will test the Kraken prospect in the North Sea and the Grenade prospect in south-west France. But the third is the biggie. This, it is hoped, will prove up the North Sea Mermaid prospect, which is thought to contain 129 million barrels of oil.

Nautical has just farmed out a ten per cent stake in Mermaid to Silverstone Energy, which, in return, will bear 20 per cent of the drilling costs. Nautical retains 50 per cent in the field and remains the operator.

Taken together with other exploration and development work now planned, Nautical hopes to prove up attributable reserves of more than 100 million barrels and confirm the prospectivity of a further 100 million.

In a recent note on the company, Hardman & Co put a net present value of 26p a share on the companys core and exploration portfolios. If the Mermaid well proved up a discovery, it said, that figure would rise to over 30p. Meanwhile, the shares have picked up a touch over recent weeks, but to just 10.25p.

One other recent development has been positive for Nautical. Chevron has found a buyer for its dominant stake in the North Sea Mariner field, where Nautical has a 26.7 per cent interest. Nautical is in no position to accelerate the development of Mariner, but the new buyer, the merging Norwegian entities Norsk Hydro and Statoil, are expected to get moving on Mariner early in the new year. Under various scenarios, Nautical could up its stake in Mariner, so the latest development is bullish in the extreme.

Nauticals shares have a neglected look to them. The market capitalisation of 110.5 million looks anything but realistic. I reckon there is at least 50 per cent upside on a six-month view, more over the long term.

Thanks Papal for the growthcompany update. Makes good reading and ticking higher again this morning. Exciting times ahead.

Yep, looks that way :)