Start Scientific has assembled a deep bench of managerial talent to spearhead their sweet crude-focused international oil and gas exploration agenda, and ever since the May 2012 acquisition of Romanian developer Carpathian Energy – Companie Petroliera SRL, the company has been hard at work exploiting the development potential of the roughly 120k acre concession/lease portfolio of interests they picked up in the deal, consisting of prime Romanian oil and gas land spanning six existing fields.
The strategic importance of Romania (which joined the EU in 2007) should be abundantly clear to anyone following the heightened tensions with the Russian Federation over Ukraine and the obvious energy implications that this situation has for the EU. All of the fields in the company’s Romanian package exhibit characteristics that are well in-line with STSC’s operational strategy to grow and advance existing leasehold assets, applying the latest drilling technologies to untapped potential. Each field has significant undeveloped reserves and thus STSC is basically sitting on an extremely attractive, target-rich portfolio of geostrategically optimal acreage, amid a perfect storm of energy price fundamental/macro drivers.
Plans are to sink at least one well each (roughly $750k to $800k per well estimated) into three of the fields at Cozieni (600 acres, 80% WI, 64% NRI), East Ciumeghiu (800 acres, 80% WI, 64% NRI), and also the Calinesti field (11.4k acres, 100% WI, 80% NRI), which is part of the South Bucharest Block I-II concession, more commonly referred to as the Alexandria Block. While preliminary field evaluation has already been performed across all six fields via a joint American/Romanian engineering/geology team, more rigorous evaluation has subsequently been completed on the Alexandria Block in particular. That same rigorous analysis has also been done at Cozieni and on two of the other fields in the portfolio, Bordei Verde Vest (2.5k acres, 26.25% WI, 21% NRI, average estimated well cost of $1.4M) and Nadlac (800 acres, 26.25% WI, 21% NRI, average estimated well cost of $3M), where STSC will be participating in two new wells (one per site) alongside operator Amromco Energy, the biggest and oldest oil and gas development company in Romania. The sixth field, the Catrunesti (100 acres, 80% WI, 64% NRI), holds an existing well which is to be recompleted for a cost of around $375k. A complete repair/overhaul of the 18.6-mile pipeline on the Alexandria Block is also slated for completion at an estimated cost of around $1.5M to $2M.
Proven reserves look excellent across each of the targets, with the Calinesti-containing Alexandria Block alone representing an enormous amount of gas at 19B cubic feet, in relatively low production depths of around 2.4k feet (average net pay interval of around 25 feet). Cozieni holds some 3.5 BCF at even shallower depths of only 2k feet (25-foot avg. net pay), while the East Ciumeghiu holds another 1 BCF of proven reserves at depths of 4.5k feet (15 to 20 foot avg. net pay). Bordei Verde Vest holds some 1.2M BOE with depth and average net pay characteristics similar to the East Ciumeghiu, while the relatively small Nadlac holds around 7 BCF of gas, with 1.68M bbls of oil besides at depths of around 10k feet (considerably large 200-foot net pay averages though). Catrunesti contains another 50k bbls or so, at depths of around 5k feet (20-foot avg. net pay) and collectively among all the fields within STSC’s purview, we have clearly underdeveloped and largely undepleted targets that were never really utilized during the Ceausescu period, or since for that matter. Given extant recoverable oil reserve discoveries of some 6.7B bbls in Romania as a whole (5.8B bbls of which has been produced), estimates are that some 1B bbls remain at the very least. With an associated 12 Tcf of gas at least remaining, Romania is increasingly appearing to be a geostrategically de-risked alternative to Ukraine or elsewhere as a potential feed source for European gas markets. This is huge for STSC as gas prices and demand are set to continue to rise across the region. Carving off even a thin slice of the Gazprom pie in Europe spells big wins here for STSC shareholders.
The best part about the extensive Romanian position for STSC is that they have a nice, comfortable backdrop position in the roughly 1.56k-acre Pickens field in Mississippi as well. Pickens sits just 27 miles away from the very first oil field ever discovered in the state, the Tinsley field, which was first developed back in the 1930’s and, like the vast majority of fields in the state, produces from multiple reservoirs. The company owns a 25% WI in the Pickens (37.5% NRI), with the option to purchase an additional 25%. At similar well development prices as the company’s cheaper Romanian wells (around $800k) and with depths of roughly 4.3k feet yielding 50-foot average net pay intervals, the proven 600k bbls of reserves available at Pickens makes a nice secondary overall focus for STSC. With two other producing fields (Bentonia and Flora) only 21 miles away from Pickens, confidence is high that the geology here will prove exceptional from a production standpoint, offering up high-grade crude across an apparent Smackover structure, with concomitant exposure to Cretaceous reservoirs like the Eutaw Sandstone. Pickens is essentially a fault line trap that runs for roughly ten miles to the southeast, terminating in Alabama’s Gilbertown Field. The Pickens has produced over 20.4M bbls from the Eutaw Wilburn since initial drilling back in the early 1900’s, with another 2M bbls also having been produced thus far from the Selma Chalk, as well as another roughly 100k bbls of production from the Tuscaloosa and deeper (similar Pickens-style trapping mechanisms evident for both the Selma Chalk and Tuscaloosa reservoirs).
Needless to say, this up-and-coming oil and gas company has their work cut out for them, with enviable underdeveloped acreage in a geostrategic hotspot, as well as a sizeable, low-risk field just outside Jackson Mississippi to sink their teeth into. Investors will want to keep an eye on STSC for updated news and information in coming months as their operations develop further.
Learn more about Start Scientific by visiting www.startscientificoil.com
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