Asset Summary:

Oman Block 31 (50% Indago, 50% RAK Petroleum)
Jebel Hafit: estimated at 1 billion boe. Al-Jariyal-1 presently being drilled - originally due to complete in 160 days (9 July). Drill problems and raised costs announced 11 July. 21 Sept announced that drilling had reached 3600m (target depth 5900m) and was expected to penetrate the objective reservoirs towards the end of Q4 2007. Drilling problems and delays to cost additional $2M. 2D seismic results "encouraging". 28 Dec announced that drilling progressing slower than expected and costs increased to $25M for Indago alone. Now expected to hit target depth in Feb and test by end of April 2008. 4 Feb - Announced that well had reached 5131m, then encountered high-pressure, high-temperature salt water, disabling drill string. Assessing damage.

Oman Block 47 (50% Indago, 50% RAK Petroleum)
Hawamel-1: Estimated 61 million boe. Gas shows during drilling. Currently suspended pending horizontal wellbore testing (unlikely that standard testing procedures would achieve a commercial flowrate). New 2D seismic results "encouraging". Zad - 1 on the Adam prospect will be drilled after Al-Jariya with same rig. Evaluating seismic with a view to refining the prospect inventory.

Oman Block 43a (50% Indago, 50% RAK Petroleum)
Evaluating seismic with a view to refining the prospect inventory.

Cash
$54 million at 30 June 2007

After sale of many assets to RAK Petroleum, Indago is now an exploration company.


Click to enlarge work programme


Useful Links:
Indago Portfolio Overview
Sep 06 : Investor Presentation
Sep 06 : Interview with Peter Sadler, CEO of Indago Petroleum
27 Sep 06 : Interim Results RNS
8 Nov 06 : West Bukha-2 secondary target success RNS
21 Nov 06 : West Bukha-2 primary target success RNS
5 Jan 07 : Conclusion of West Bukha testing, Hawamel-1a exploration
10 Jan 07 : Oil Barrel Article - Indago Petroleum Enjoys Further Success On Block 8 Offshore The Sultanate Of Oman In The Middle East
Feb 07 : Al-Jariyal-1 spudded and "encouraging" seismic progress
13 Feb 07 : Oil Barrel Article - Indago Petroleum Goes For A High Impact Exploration Well Onshore The Sultanate Of Oman
Mar 07 : West Bukha info from Heritage Oil
7 Mar 07 : Potential Transaction RNS
11 Mar 07 : Oil Barrel - Little Fish In A Big Pond: AIM Juniors Finding Their Feet In The Middle East
14 Mar 07 : RNS - Disposal Of Assets (special dividend, share consolidation)
15 Mar 07 : Indago Presentation On RAK Petroleum Deal
1 May 07 : RNS - Indago response to rapid share price movement, plus drilling progress update
11 July 07 : RNS - Drill problems, $8.2 million cost increase and delays to reach target depth
21 Sept 07 : RNS - Interim Results
28 Dec 07 : RNS - Slow Progress And Increased Costs At Jebel Hafit
4 Feb 08 : RNS - Jebel Hafit update - Salt water encountered, drill string stuck

I've updated the header with today's info.

Disappointing news for holders. Not unexpected, as has been discussed on here in the past.

Good couple of days for the MMs. Hope some of you made a few bob on it too.

Have been reading some of the irrationally exuberant postings on advfn from yesterday and this morning. Glad we've got more sensible posters on here.

A few posts on AFN were quite informative for those wanting to know a little more to aid their research. So they are copied below for reference info :


Sharesure - 28 Dec'07 - 11:47 - 1162 of 1175

The Nomad forced the RNS because of the sp movement. The reaming & sleeving has apparently been completed. Next is the forward seismic ie at the drill bit.(2-3 days work) That might prompt another RNS next week if leaks in info from Oman prompt more sp movement. After that the next RNS - 5-20 days - is on finding, or not finding, any oil or gas.
As for some posters that think supporters of IPL are trying to spin on 'bad news,' push off elsewhere, there are plenty of other stocks.

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sandlab - 28 Dec'07 - 16:55 - 1168 of 1175

I have been out most of the day so now catching up on posts. FWIW, my take on events so far.
- Whether the RNS is good news or bad depends on your starting position. More delays and more cost is hardly good news but it was flagged here so not unexpected. BTW, I have an estimated day rate for the rig of about $160k (split between the partners). It is a great pity we do not get weekly updates as one sees with most ASX shares. If investors had known that the well was only at 4650m the speculative excess of the last 24 hours would/should have been avoided, except that is for those who really have no interest in the technical details.
- The Nabors crew have done well to get to this depth when other rigs in the general area have failed under similar, shallower, conditions. Chert stringers can be a bitch to drill through. Having said that, they still have 20% of the target depth to drill and a lot can go wrong at these extreme depths and conditions. In fact, the major problems should come in the last 20%, not the first section! The reservoir seal is the Fiqa formation so chert may continue to present a problem for some time yet.
- I am a bit disappointed that gas shows did not trigger off yesterday's rise. The jebel is seeping gas and condensate at several locations so I would have expected some mention of gas shows at depth, just as almost every other well drilled along the mountain front has found. There was no mention of gas in this morning's RNS. That may have been deliberate but they did mention gas at shallower depths in an earlier RNS. Seems odd to me.
- What was it that kicked off the sharp rise yesterday? If there are any more of these I might finally take a position here and sell into the momentum spikes. Crazy herd mentality.
My main information source in the area, who confirmed last night that there was nothing in the UAE rumour mill, is leaving the area in January. It is going to get more tricky for me to separate fact from fiction from now on :-(

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Sharesure - 28 Dec'07 - 18:25 - 1169 of 1175

sandlab, they have apparently had gas kicks all the way down and did break off drilling to fit a blow out preventer. Yesterday's rise was apparently because of some loose talk in Oman which made the AIM authorities compel IPL to issue today's RNS otherwise they were not going to say anything yet. Although some seem to think that the next 1300m is still very difficult I don't think the company share that view. They have finished reaming and sleeving and from this depth on it is a question of doing drill bit depth seismic over the next couple of days and then working out where to aim in the structure. All of this is general knowledge to anyone who cares to ring the company (in my case it cost me a lunch!) although it is probably not too wise to distract them from doing the day job.
From now on it is a case of waiting - we either halve our money very quickly if there is a dry well or the sp goes up very fast. I believe the company view is there is no middle ground.

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muffinhead - 28 Dec'07 - 19:04 - 1170 of 1175

Sandlab my source in Abu Dhabi advised recent work has focused on setting the casing to the current depth which is a major achievement and safety first issue.

RAK now can push on for the final leg to resevoir depth.

The gas shows referred to at shallower depths are still there, its just that we are at deeper depths at this late stage. Mentioning gas shows in todays statement would have only fueled already raised expectations.

If RAK has been setting casing to this level, further seismic testing has confirmed resevoir issues ( which may explain part of the recent delay) but as you rightly point out RAK still has to get there and the rns advised it will be a few weeks.

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muffinhead - 28 Dec'07 - 19:32 - 1171 of 1175

"In all regards, the geological aspects of the well remain consistent with the pre-drill prognosis"

Strange thing to say at this stage with 1300metres to go and 4600metres completed

Pre drill prognosis was for an earlier finish

Maybe now comfirmation of geology after further seismic tests and the prognosis refers to the resevoir structure.

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muffinhead - 28 Dec'07 - 19:42 - 1172 of 1175

"Current estimates suggest the well should be at total depth before
mid-February 2008"

So drill rate approx 10metre/day for last 6 weeks from 4300 to 4600

New drill rate 40metre/day for next 6 weeks from 4600 to 5900 TD

Statement from new CEO seems to imply they are expecting rapid progress now that cemented casing is in place and the geology is confirmed.

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sandlab - 28 Dec'07 - 22:19 - 1173 of 1175

muffinhead, Sharesure - don't go away, you're hired.

OK, what did you mean by "forward seismic" and "drill bit depth seismic". To me forward seismic would involve creating a synthetic seismogram, or do you mean a sonic and/or a VSP? "drill bit depth seismic" - are they shooting a look ahead VSP at this level or some sort of simple uphole/downhole/check-shot type of well-shoot. Seems a bit too early for that unless they are trying to tie poor seismic into the geology above 4650m? Still, a look ahead VSP would make sense if they don't have a really tight fix on seismic depths. They do have poor seismic above the reservoir...hmmm...maybe they are...maybe the "geological aspects of the well remain consistent with the pre-drill prognosis" is just hot air.

As for the rest...Now I think I see why moderately heavy buying has continued after the RNS. I'm going to check with another contact I still have in Oman.

EDIT: Thinking about this, if they are shooting check shots or VSP they are unsure of the velocities and they may have the migration velocities wrong (did they do migration, probably not with such bad data) but anyway they may be unsure about the time to depth conversion. Or maybe they just want to clean up the seismic picture with a good VSP stack - that would make sense. I guess my money is on an offset VSP.

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PapalPower - 29 Dec'07 - 02:34 - 1176 of 1176

Some good discussion there. From the very rough info there is, as below - you can open the link in a new window or tab and the picture will come, we can expect the first reservoir to commence around 5050m to 5100m, which means they have to drill about 400m to hopefully get into the first potential reservoir.

http://miranda.hemscott.com/ir/ipl/images/media/images/geological_drawings/Jebel_Hafit_Al_Jariya-1_well.jpg

If they are to start drilling again say 2nd Jan (allowing time for further down hole seismic and deliberation, you'd expect them to be into the first reserovir at best by 12th Jan, at worst by 22nd Jan, IMHO.

Done a lot of reading just then, and it appears that the Upper Fiqa is indeed highlighted as rich in chert bearing intervals, due to the rapid process under which it was formed. The Lower Fiqa (Lower Shargi) is not mentioned as chert rich, and was formed at a slower rate than the Upper Shargi and Upper Fiqa it so seems. Owing to this slower process at which is was formed there is much less chance of any chert. The Natih target zone is beneath the Fiqa, and with the Upper Fiqa now drilled through, apart from the HPHT (High Pressure High Temperature) aspects of the drill, it would appear the Lower Fiqa is going to be much easier to drill than what they have been drilling for the past 6 weeks. This may explain why the company is confident now of a quickened drilling rate, and reaching TD before mid-February.

Many of the posters on advfn read a RNS like their daily horoscope, picking out hidden meanings to suit their own positions and past arguments. Many posts are misleading and swamp the few decent posters. I much prefer this site.

The "Mean" estimate for the targets at AJ-1 is 1 Billion BOE (1 BBOE) recoverable which is nett to IPL of some 500 MMBOE (500 "million barrels of equivalent" as we are talking gas condensate here, the nett figure being 50% of the total, due to IPL having 50% of this prospect).

There is considerable upside potential on that, hence the mean recoverable estimate is 1 BBOE, and hence you get the WbD estimate of between 10 to 15 a share for IPL (being their take is between 500MMBOE to 750MMBOE based on mean 1BBOE and high figure of 1.5BBOE.)

There is of course still serious risk, the drill might not get to TD, and the reservoirs might not flow, or might contain nothing, so the downside is still very much present until good news flows.

WdB comment in Q1 07

"Following the sale of its production assets, the company has just paid a 60p dividend and consolidated the shares on a 1-for-5 basis. It has a 50% interest (partner RAK Industries) in three blocks in Oman and UAE. The company is currently drilling the Jebel Hafit prospect with mean unrisked potential of one billion boe. This is a very deep well which spudded on 29th January and should reach target depth at the end of June. The company currently has US$56m of which $26m is committed to its projects. A failure at Jebel Hafit would probably see the shares fall to around 37p but a success could produce upside of between 10 and 15 per share. We expect to see the shares rise prior to the results of the current drilling because the risk/reward is so compelling."

You can view the WbD comment here :

http://www.esnips.com/nsdoc/e9d8cfa2-94c2-49e5-ae39-ebadb213bd95

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Mirabaud are more conservative with the "unrisked" potential, going only for 330MMBOE and unrisked upside of 1244p (12.44) from AJ-1, however again, both the WdB note and the Mirabaud notes were written before the recent big spike in oil prices.........

You can view the Mirabaud note here :

http://www.esnips.com/nsdoc/79db2b13-7142-4b2c-af7a-a745f1f567b2


If you want to feed in the latest oil prices, and top of the range estimates, you'll have the potential to go well over 20 a share, but thats getting a little too much into the realsm of dreaming for now. Success on the first drill would likely mean a further 3 drills to be done, to really get maximum recoverable from this potential, however, IMHO, IPL would not be part of that, as RAK would more than likely snap up the 50% of AJ-1 for 1000p a share equivalent and do it themselves, as the potential final upside is more that double that figure. IPL, with massive cash balances, can then go about further exploration. However, rather than running off too far, lets get back to reality and hope the drill bit continues its movement downwards smoothly, and strikes some large commercial reservoirs.

Just two more snippets - 100m/day progress is believed to be likely from now on provided no further unexpected hard sub-strata is encountered.
As for sp predictions - I won't make any as others have already highlighted the massive potential, other than to add that if this well does flow in the way IPL hopes, they also expect that they could receive an approach either to buy their stake in it (possibly from RAQ) or for the whole company - and for that there would seem to be a number of potential predators. The next fortnight should be really interesting - at last.

Thanks Sharesure.

Still some people appear confused over the 1 for 5, and how many shares are in issue in IPL now.

Everyone should note that now there are just 53.33 million shares in issue, after the 1 for 5 consolidation. Some feeds still incorrectly show the old figure of 266.65 million.

http://www.indagopetroleum.com/investinfo.asp

(If your content provider is still incorrectly showing 266m shares in issue for IPL, please contact them and inform them that their information is incorrect as there was a 1 for 5 consolidation earlier in 2007)



Why 10 a share on one drill ? Lets calculate using some figures :

Most such structures produce around 70% Gas and 30% Condensate.

Condensate would sell around Crude prices, Gas substantially lower.

Assuming 500mboe net to IPL and Gas $2, Condensate $10 in the ground

Value = (350m * $2) + (150m * $10) = $700m + $1500m = $2.2b

So success here after appraisals would be worth around 1.1 billion

Shares in issue now is just 53.33 million, so a pre-development price should be around 20 a share, so therefore on a basis of find only, 10 should be easily supported.

Now, if I really want to blow your mind away with valuations, try this :

In this report below, and I have not read it, however its content on this issue was described as such, that the Jebel Hafit structure does not, as per the earlier calculations, contain 500 MMBOE net to IPL which is then split down into 70%/30% for gas condensate, but in the article in the link below it says JH contains :

7 TcF of gas AND 1MMBOE total.

A valuation therefore is 3.5 Tcf Gas x 2$ and 500MMBOE x 10$ as the net share for IPL for their 50% stake.

Thats just too big for me to compute and it gets silly, so lets stick with the earlier one of 1000p a share on find, 2000p a share post appraisal pre development, and keep those fingers crossed that the drill finishes well and commercial flowing hydrocarbons are down there.


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Energy Intelligence: Oman Explorer Indago Targets Bukha Field, Mountain Fault Line

http://www.energyintel.com/DocumentDetail.asp?Try=Yes&document_id=194708&publication_id=31

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Thanks for ValueMax for the info on this :

ValueMax - 30 Jan 2007 08:23 - 39 of 257

Energy Intelligence: Oman Explorer Indago Targets Bukha Field, Mountain Fault Line

Needs a subscription (free trial) to view full article. It's a mix of research plus interview with Peter Sadler.

Key points from the article:
1) Jabel Hafit estimated to contain 1 billion barrels of oil PLUS 7 TRILLION cu ft of gas!
2) Indago planning at least four appraisal wells at Jabel Hafit.
3) Zad expected to contain 36 million barrels of oil plus 650 billion cu ft of gas. Gas may double if structure is similar to nearby Omani fields.
4) West Bukha 2 to cost $60 million to bring into production
5) West Bukha 2 condensate volumes 75% higher than anticipated per million cu ft of gas. (350 barrels vs 200 barrels in previous estimate)

Just bought in today the reward was too great for me to let this one slip.
Some truly excellent posts on here, it's been a pleasure to read them
Thanks to you all and best wishers for the New Year
Keith

Good luck Keith. The reward is great, well, potentially massive, but also so is the risk, and that must not be forgotten, for even at this stage the drill could have problems, or even if that is ok, then there may be no commerical hydrocarbons down there.......

Nicely blue, with L2 now at 6 v 4 @ 68/73

Nice start to the new year, the spread just widening a little on the offer, maybe trying to slow the buying in the hope they get some sells
Its getting interesting now

Moving up nicely again, lets hope it continues :)

Just as a matter of interest, PP, what is your strategy if the news turns out to be bad? I know these have been a fovourite of yours for a long while, but a 'duster' is going to hit the sp pretty hard, imo.

Could be a fall to high 20p levels, but not worried at all, as the next two drills have upside of over 200p.........

They are fully funded already, so even if this one is a duster, it will not be long before Zad-1 is drilled, and that alone could deliver over 140p of upside.

So on a drop to 20p or 30p you suddenly then have potential upside to 140p and over........

Most of my shares are now "free ride" after the last rise and the special div, so I am not in any rush to sell, and will be happy to ride over any rough news.

Out of interest :

L2 is now 1 v 1 @ 74/78


On Line Limits are :

BUY 10K @ 76.67p

SELL 15K @ 74.55p

It's risen quite well over the last few days and although i have made a small profit i know it may be difficult to buy back in later, so with the small amount of shares i have it's worth the risk for me to stay in,
Thanks PapalPower

I agree with PP about the drop to high 20s if well is not commercial. This risk of that happening is still greater than the chances of a commercial well, so IPL is by no means a dead cert. Stoploss, or ideally guaranteed stoploss, is a good idea.

Upside potential remains good, risk remains high.

I think the good thing here is that most people still cannot compute the upside, and are perhaps thinking it can go to 100p or 150p on success, they really do not understand the potential here or the fact that on proving up, if they do, the mean potential figures for this well, that it will be worth very much more than that.

If the well is a success and there are commercial flows, and lets not forget the odds are still firmly stacked against it then truly on the mean figures estimated, the upside here is 2000p a share to IPL, after appraisal wells. A normalised figure post appraisal but on confirmation of commercial flow and estiamted size should be half that, and so this is why you get the 1000p upside on this one drill.

The thing with IPL is its well worth buying shares (real ones and not CFD or Spread Bet positions), as they are fully funded for two further drills.

This being Zad-1 with mean estimates of 140MMBOE, thats worth around 140p a share potential to IPL, and then the H-1 horizontal completion which at 60MMBOE is worth around 60p a share potential upside on mean figures. Zad-1 is a strong prospect, and H-1 is confirmed as gas bearing.

Therefore by holding real shares, if the ongoing AJ-1 well does fail and the SP does drop down short term to the high 20's, you still have around 200p potential upside from the other two drills, and Zad-1 will spud as soon as the rig is free from AJ-1.

Those with real shares will be able to hold through any volatility if AJ-1 fails, and then will be in a few months time exposed to the Zad-1 drill result and potential 140p upside.

This is why real shares are much more of a "safer bet" if you are going to speculate on IPL and the big AJ-1 drill. Those with margin positions by CFD or Spread Bet will not have the luxury of waiting a few months for more big upside, but will be hit with big margin calls.

Some people will try to talk this one down if AJ-1 fails, but you have to remember that Zad-1 is worth potentially 140p a share to IPL, and that the people talking this down will be wanting to buy in cheap ahead of Zad-1, which most people see as a very good chance of being successful.

There are others who want to buy in for AJ-1, however they are, unlike others, unwilling to risk their cash, and so are trying to wait for the RNS of any good news, and then rush to buy in. They are also trying to talk down IPL as obviously the more it rises pre AJ-1 RNS, it means on good news there is less and less gain for them.

Interesting this one, but I do feel, and in a ways its lucky, that most people really are unable to appreciate the potential of this big AJ-1 drill and what it could possibly mean for IPL on good news.

The chances of failure are still higher than success and that must not be forgotten, but for those willing to flirt with risk, and willing to be patient and hold through any rough times on the AJ-1 drill, and wait for the Zad-1 drill following, then buying a few real shares of IPL is worth a punt imv.

I disagree with your statement that real shares are better than spreads on this company. A long position with a guaranteed stoploss in place will restrict any downside from a non-commercial AJ-1. If an investor is interested in the potential of Zad, new long positions can be taken at a later date once the share price hits a lower value.

Additionally, spreads are better tax-wise than real shares, and this could significantly improve an individuals finances once their interest in IPL is complete.