The tiny Irish stock on the brink of landing 'the first' post-sanction oil deal in Iraq. Ref 'Fleet Street Letter' 12-04-04..

Thanks Tokyo yet another fantastic post, good to see you back.

Thanks Tokyo. Your post is worth printing out and pinning it on the wall to sustain us through the ups and downs to come.

Thanks for that Toyko, interesting read.
Second RNS next week?

wilbs

Hope everyone is not giving into temptation - patience is a virtue but will be seriously rewarded.... Anyone any news on how long DH staying to trying and sort out PSA?

Hope everyone is not giving into temptation. What at 76p bid.

well quite a few sales this morning albeit small.....

From oilbarrel.com today ....

Petrels Patience Rewarded In Iraq As It Wins Subba/Luhais Redevelopment Contract
Its been a long time coming but AIM-quoted Petrel Resources has at last been awarded the service contract for the redevelopment of the Subba and Luhais oilfields in southern Iraq. This is a real coup for the Irish oil minnow and rewards many years of patience and hard work.

Weve been working on this for six years and weve been though four different governments in that time, managing director David Horgan told oilbarrel.com. Under this new government the whole atmosphere has really changed and they are desperate to increase production and get more projects signed up.

The aim of the project, understood to be the largest brought to tender in the country, is to increase production from the fields from under 50,000 barrels per day (actually thought to be running at around 25,000 bpd at the present time) to 200,000 bpd and 100 million cubic feet of gas per day within three years.

Petrel will act as a cash contractor on the US$197 million engineering, procurement and construction project. Some of the cash will be upfront and placed in an escrow account (to be released to suppliers of bespoke equipment, for example) with the remainder paid in tranches as key milestones are reached.

The terms are not ideal: most oil companies prefer production sharing arrangements to manage their risks and ensure a bigger slice of the upside. For now, however, service contracts are all that are on offer in the volatile country, although this could change further down the line. In terms of working capital, Petrel would prefer to debt finance the project to reduce the equity dilution for shareholders, said Horgan.

The 200,000 bpd production target is reckoned to be very do-able from what is reckoned to be a billion barrel resource, a number that could be a major underestimate.

We would love to drill the deeper horizons, said Horgan. All of the reserves and production are from the shallow tertiary reservoirs but the really large fields in the region, across the border in Saudi, are from the Mesozoic, which has not been drilled at all in this area.

Theres no doubting Iraqs geological attractions to oil prospectors. Politics, sanctions, war, security and religion, however, have taken their turn in recent years to depress production and, post-war, curb new investment: Petrel, for example, appeared to lose out on the Khurmala Dome and Hamrin oilfield redevelopment tenders last year due to political expediency (although the company has yet to receive official confirmation about the status of these projects).

Yet it seems the company has now triumphed with the award of the Subba/Luhais contract, which Petrels chairman John Teeling has described as the biggest and the best of the three tenders to date. Horgan added that it was pleasing to see the ministry went for the best technical bid rather than the big name bid.

Indeed, it is a sign of its standing in the troubled country that Petrel has been asked to organised a seminar for 15 of the oil ministrys top financial experts to look at issues such as production sharing arrangements and how to deal with pre-war contracts.

This is, of course, an issue very pertinent to Petrel itself. The company holds a now suspended pre-war contract for the highly touted Block 6 in the Western Desert. It had been fearful its position there would be displaced under the new regime.

There were rumours that pre-war people would be out of favour but no-one has tried to displace us and the fact they were prepared to give us their most high profile development project shows the government has no issue with us, said Horgan. Its been a huge relief.

In fact, the company is already hoping to sign a technical operating agreement for another exploration area in Iraq. This area is hot both in terms of exploration and in terms of security at the moment, said Horgan. However the first six months would be spent reprocessing seismic and the like.

For now, the company is busy mobilizing resources to get to work on Subba and Luhais. Security issues in this area, while still requiring attention, are far more manageable. This is the place to be, said Horgan.

Down to 78p today

Hi wilbs,
i`ve not been to see the canaries yet, although it will be easier to get tickets this year!!. I`m sure you will be around in Nov., just think +, still not bought back in just yet, still think there is some downside to come IMO.
Dexter

Dexter01 - check out FYB, a few e-mails from DH about being delighted on both fronts, i.e. S&L AND Jordan.

Weekend press + Jordan announcement coming, pretty sure the isn't much of a downside before it starts to head North!!!(hope you are able to get in though)

Here is the e-mail for those without access

just got this ultra quick response from DH (emailed him earlier this evening) which replicates what OwtOrNowt found on the other side.

I am now very, very excited........












Many thanks!
We are delighted with progress on both fronts.
DH

-----Original Message-----
From: xxxxx[mailto:xxxxx@xxxxxx.co.uk]
Sent: 09 September 2005 17:01
To: David Horgan
Subject: S & L

Dear David,

Congratulations on the success of S & L, I am delighted for you and
very pleased as a shareholder.
How did the Jordan PSA negotiations go? I hope they went well. Anyway
best of luck.

Steve

OwtorNowt found this, not sure where -

Indeed, it is a sign of its standing in the troubled country that Petrel has been asked to organised a seminar for 15 of the oil ministrys top financial experts to look at issues such as production sharing arrangements and how to deal with pre-war contracts.

This is, of course, an issue very pertinent to Petrel itself. The company holds a now suspended pre-war contract for the highly touted Block 6 in the Western Desert. It had been fearful its position there would be displaced under the new regime.


---------------


both must count as yet more positive news for Petrel

Petrel to make 16m profit on three-year Iraqi oil deal

11 September 2005 By Laura Noonan
Petrel Resources will make more than 16 million profit on the 160 million Iraq oil contract it announced last week, The Sunday Business Post has learned.

Petrel was awarded a three-year development service contract for two oil fields in southern Iraq. The company is hoping to boost oil production there from50,000 barrels a day to 200,000.

This is a huge deal, said David Horgan, Petrel's managing director. We will be producing more oil per day than Ireland's consumption.

Horgan said the deal would see Petrel expand its operations in Iraq from 12 people to several hundred. Most of the new jobs will go to Iraqis, Horgan said, but some skills are not available in Iraq, so a limited number of jobs will be created in Ireland.



The company's share price on London's Alternative Investment Market (AIM) soared by more than 134 per cent, to stg98p, last Wednesday, when news of the deal was announced.

Petrel chairman John Teeling, who holds about 3.6 million shares in the company, saw his paper wealth increase by more than 2.3million during the week, while Horgan, who holds about 2.7 million shares, made paper gains of almost 1.5 million.

Most of Petrel's share capital is held by institutional investors. When we announced it, I got several calls from institutions asking would we need further funding and how much notice would they have before we did it,' Horgan said.

Horgan said Petrel was also hoping to announce a very attractive exploration study agreement' in Iraq in the near future.

that sounds very promising 16m euro's and a "very attractive exploration study agreement" hopefully block 6.........a blue monday we hope!

Dear OwtOrNowt (always loved your user name especially in relation to PET)

Thanks for the link, you really are finding some gems in relation to PET. I'm hoping the market finally starts reacting to this news, now that we have a profit figure of 16m Euros - 10,815,564 pounds


10,815,564 pounds / 3 years = 3,605,188 pounds per annum / 58,215,150 = 6.2 pence (EPS)

EPS x P/E of 10 = 62 pence

EPS x 15 = 93 pence

EPS x 20 = 124 pence



This is of course only on the S&L contract alone, now we have news of further contracts in the near future from Iraq, and of course the PSA from Jordan, we should be seeing even further rises

Petrel certainly seemed to have arrived(2 years before any other European company, now is that money in the bank or what?), and at the current SP it is looking exteremly undervalued.

Perhaps even an P/E ratio of 20 is too small for a growth company with Petrel's potential


When we announced it, I got several calls from institutions asking would we need further funding and how much notice would they have before we did it,' Horgan said.

Horgan said Petrel was also hoping to announce a very attractive exploration study agreement' in Iraq in the near future.


As Horgan has stated that he would not like to dilute the company with further placings, Does this mean that the institutions wishing to jump on board will have to get the shares through the market????

They can have mine for 10 each!

Elvil has gone short on pet.

And finally to Lucian, I should at last admit that you have come up with a good idea. Perhaps, after all you might be able to splash out on that extra portion of jellied eels this weekend. In a surprisingly sober message on my answer phone young Miers suggests that I should short Petrel (PET) on the basis that its first deal is unquantifiable in value, that Iraq is a pretty risky place and that Petrel will surely be passing the hat around again at some stage. The diarist thinks that I am wrong which convinces me that I am right and that for once Lucian may have stumbled upon something useful. I am now short of the stock.

wilbs

Wilbs that is a worry in the short term. It's difficult to deny the logic of Evil shorting PET on the above basis. There doesn't seem to be much to stop it drifting cos that's what it does. However the next deal announcement will make it spurt upwards again. And as we all know you need to be either in for the long term with PET or be extremely light on your feet and trade it ruthlessly.

16m euros doesn't exactly set the world alight on its own. However it is at least something in the bag and shareholders can now settle back and await further developments......

Agree beasties. Hopefuly it wont be long till we hear about jordan and that will like you say, we will se a spurt upwards in the sp. I hope he gets stuffed like he did on wnl.

EK has big fat short on this one be carefull