Oil explorer drilling in Central America.. Belize .




Floated in the Summer on the AIM.
http://www.nwoilgas.com/

Valued at �5mill that includes � 3 mill cash...4.75p to buy..I hold.

New World chief says first well could be a "game changer"
12:27 pm by Ian Lyall Preparations are underway for drilling in Belize.
The pace of progress shows no sign of letting up at New World Oil & Gas (LON:NEW).

The past 15 months have been a whirlwind of corporate activity and exploration that means the group is days away from spudding its first well on the highly prospective Blue Creek project in Belize.

Success here could be a “game changer”, according to chief executive Bill Kelleher.

The first significant news emerged earlier this week – not from Belize, but Denmark - as independent study assigned an increased chance of success for its Danica Jutland project in the south-west of the country.

The updated competent person’s report, compiled by RPS Energy and based on the latest 56 kilometres of 2-D seismic work, put the figure at one-in-five for the Jelling and Harboe prospects, up from one-in-eight.

It also pointed to a 134 million barrels of oil equivalent resource worth US$1.22 billion, based on the Jelling, Harboe and Jensen prospects and assuming an 80 per cent working interest in Danica Jutland.

However the numbers still only include the three of 10 prospects or leads identified by New World.

From an investors’ perspective the Danica-Jutland update, important as it is, serves merely as the appetizer with the main course being that first exploration well on Blue Creek.

The total P50 resource here is 329 million barrels of oil equivalent with a net present value of over US$8.1 billion.

Work on the first prospect is expected to get underway late this month, or early next and it will take around 45 days to drill down to 7,000 feet.

New World will then compile and interpret the data that will decide whether this first Blue Creek prospect is completed for test production.

Kelleher said it will require three to four weeks of “sustained testing” in order to determine the reservoir performance and commercial viability of the well.

The information will also allow the New World chief executive and his team to put together a cumulative cashflow forecast that will determine the ultimate value of the well.

This could then pave the way for an extended well test and early oil production sales.

New World has already received “expressions of interest” in buying the crude at West Texas Intermediate prices, Kelleher reveals, which means the group could be generating cash from oil sales by early next year.

“If we have sustained production and meaningful volumes per day, this turns into a game changer for us,” said Kelleher.

The next step will be then to determine just how many more wells can go onto the block, and New World will also be conducting a 3D seismic programme.

At some point in the process – perhaps in late in the fourth quarter to early first quarter 2013 - the drilling rig will move over to the next location, West Gallon Jug.

The group has mitigated the costs of the drilling process by sealing an innovative deal with drilling contractor ThermaSource, which effectively halves the cost of its first three wells.

In return ThermaSource receives a 5 per cent stake in each of the wells, though at this stage only two have been permitted.

Hitting commercial oil will allow New World to consider some form of reserves-based lending, which will minimise the equity dilution.

It will also negate the need to give away a huge tranche of the project to bring in a partner to fund development – which traditionally might be the other option.

“We are looking at what our options are to limit dilution and with regard to debt financing. This is not outside our reach,” Kelleher said of the reserves-based funding.

Of course all of this overlooks the huge potential of Danica-Jutland.

This consists of two onshore licences covering just over one million acres of south-western Denmark that is prospective for oil and gas in the Zechstein carbonates and Triassic sandstone intervals.

Completion of the latest seismic programme earns the group a further 12.5 per cent working interest in D-J, taking New World’s holding to 25 per cent. It can take this figure to 80 per cent by drilling two wells.

The next phase is to shoot 3D seismic, before beginning drilling sometime in the second half of 2013.

“We won’t drill until we complete the 3D survey. There’s one, possibly two Triassic intervals where we have seen a seismic response to gas for which at this time we have selected drilling locations for,” said Kelleher.

For any company of New World’s size and ilk, funding is a key issue.

Broker Shore Capital reckons the group is fully funded to drill two wells in Belize following the £8.5 million share placing earlier this year.

In-the-money warrants also have the potential to yield proceeds of up to £8.7 million, it added.

“We are fully funded through the balance of this year for Belize and we fully paid for our seismic in Denmark,” Kelleher confirms.

The share price is up 150 per cent in the past year, reflecting the incredible progress it has made.

However, even this elevated valuation probably doesn’t (Kelleher might say definitely doesn’t) encapsulate the company’s true potential.

Shore Capital assesses New World’s “risked” net asset value to be 40 pence a share.

Analyst Craig Howie said: “Although New World remains in the exploration phase, it has progressively de-risked its projects and delivered key milestones in line with the planned timetable.

“We believe that drilling could inject renewed momentum into the share price.”

Spud.

Not right now Mitzy.. Lunch time perhaps -):

Lol Stan.

Into the first week of drilling.

fingers crossed.

Not the best of weeks..

Nope but next movement could be up! and big time...

Whys that sky..?

New World Oil & Gas tipped as a Buy in Red Hot Penny Shares this month ahead of November's scheduled drilling results....it is suggested that one should consider a 12p buy limit....with a 12 month target of 30p...normal market size 30k.

Thats a very large turnover today 11 million shares all due to penny shares.

Red hot penny shares gives an update today.

Due to the recent placing at 9p there is a big stock overhang.

Good time to jump in.......great prospects....!...

Thanks RF, but not for me.

Three wells in Belize plus Danish acreage.....small market cap...

As Proselenes is ramping things up...I thought : two can play at that game,... so pourquoi pas moi ?....

more gas rf???

Not unless I eat some more varieties Balerboy !..oil apparently.....and well...well...well...three holes in the ground !....results from first well targeting 90 million barrels due mid-november.....plus two spuds after this one and drilling in Denmark next year...well funded....low market cap....and low sp at the moment...

and getting lower.,.

Might be worth picking up some now regardless of first well result...just has to be a sharp rebound ...so whether you are in for the whole campaign or not....sp probably has to rise .....