“We are pleased to be able to move from a position of tight cashflow control to the careful consideration of growth options,” John Barr said.
() noted the recent recovery in crude prices, to around US$40 per barrel, and highlighted that its business is underpinned by low operating and development costs.
“The board is now considering how best to grow the business over the next year given the improved oil price backdrop,” the company told investors.
Growth opportunities include the Stanley and Greater Stanley areas in Texas which are being prioritised and pursued on the basis of minimising both operating and capital costs.
It noted that the intended sale of the Welch asset, in Texas, for US$300,000 and has received US$60,000 non-refundable deposit. The transaction is slated to complete in July.
The company continues to sell other non-core assets, whilst evaluating opportunities to fit its strategy and growth criteria.
“The Mosman board acted quickly and decisively in March in order to manage costs,” said John Barr, Mosman chairman.
“We are pleased to be able to move from a position of tight cashflow control to the careful consideration of growth options.
“We are now evaluating potential opportunities which include being involved in two workovers and one or two new wells in the coming months.”
Stockbroker SP Angel described it as a comprehensive trading update noting that it underlines managements considerable focus on maximising production whilst retaining a prudent approach to capital discipline.
“Against a challenging sector backdrop, Mosman has successfully monetised one of its projects,” said analyst Sam Wahab
“Whilst the Welch oil field is producing and has development potential, the ranking of projects in the Strategic Review announced earlier this year identified better growth assets at Stanley and Greater Stanley.
“The capital from the sale of Welch will facilitate investment in these growth areas, as well as providing working capital at a time when cash flow is adversely affected by the low oil price.”