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

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.

ValueMax, a lot will depend on any wild swings before news, if the MM's attempt to take out long and short stop loss positions by swinging wildly before any news, then they can quite easily, if you're on margin you might be forced to make calls or close, before the news comes out..........a lot will depend on how the MM's play this now.

The way I see it, real shares are just that, no pressure to sell, no margin to pay, sit and wait patiently, if AJ-1 fails, then just wait for Zad-1.

However, each to their own, variety is the spice of life.

In it's former guise as Novus Petroleum, Indago entered into a deal with Darcy Exploration whereby Darcy would introduce potential assets to Novus/Indago in return for the option to take a 25% stake in any asset which Novus/Indago purchased over the next two years (2003 - 2005). Darcy took up their 25% option in several assets. Today, those assets belong in part to Leed Petroleum, an AIM company. This morning they announced that their present drill has produced "compelling evidence that the primary target sand will be commercially productive and should exceed pre-drill expectations."

Sadly, Indago did not retain any interest in those assets following the hostile takeover of Novus in 2005, so I've created a new thread specifically for Leed Petroleum if anyone is interested.

Tricky to pick a %age stop loss which is going to be effective.
Down 5% today which may have been enough to trigger a tight stop.
If bad news comes then I can't see a non-guaranteed stop being good enough.

hmmmm obviously ValueMax coment is not the reason of this 5% drop today, HARRYCAT I am far from selling yet, even if there is some bad news, it might be some delay, they still didn't reach deep enough to say ifs something there or not...