Navitas jumps on positive Shenandoah report

Gideon Tadmor  photo: Uria Tadmor

Contingent resources in the project rose from 204 million barrels of oil to 281 million barrels.

The participation units of Navitas Petroleum (TASE: NVPT) are up 15% today on a heavy turnover in trading on the stock exchange. The company, which held an investors conference today, published a revised resources report on the Shenandoah project in which it has a 23.1% stake.

Navitas reported an increase in C2 contingent resources in the northern and southern sections of the project from 204 million barrels of oil to 281 million barrels (Navitas's shares is 65 million barrels). Navitas and the operator believe that commercial production in the project will commence in 2023. Navitas's share of the development costs will be $184 million.

The partnership also says that the 12% projected cash flow from the project, based on the initial development plan by LLOG, the project operator, reflects a NIS 420 million value for the partnership's share of Shenandoah.

Navitas acquired rights in the Shenandoah discover in March for only $1.8 million in cooperation with two of its partners in the Buckskin project: LLOG, one of the largest private oil companies in the US and a specialist in developing deep water oil assets, and the Blackstone fund.

The discovery was then estimated at 100-150 million barrels of oil (in three prospects) located at a depth of 1,770 meters in the Gulf of Mexico, 155 miles south of Louisiana. Six exploratory, evaluation, and verification drillings were conducted in the discovery area up until 2017 at an investment of $1.7 billion.

Navitas and its partners in Shenandoah took advantage of the bankruptcy proceedings of Cobalt International Energy to acquire the rights at a very low price, then filed a revised development plan for the reservoir. Shenandoah is northeast of Buckskin, Navitas's first project, in which oil production is slated to begin in July 2019.

Navitas searches for and develops oil and gas assets in North America. It currently has a partnership in oil assets in the Gulf of Mexico and Canada. Its share of discoveries in these areas amounts to 127 million barrels of oil.

Gideon Tadmor, who for many years headed the exploration partnerships controlled by Yitzhak Tshuva's Delek Group Ltd. (TASE: DLEKG), founded Navitas in early 2016. Despite great difficulty, he managed to complete two issues of debt and capital on the Tel Aviv Stock Exchange (TASE) in the summer of 2017, raising NIS 530 million for the partnership's activity. Most of the money was raised in a bond issue for development of Buckskin, which contains over 500 million barrels of oil (Navitas's share is 7.5%).

Since trading in the participation units began in early October, their price has soared by 163%, due among other things to higher oil prices. The fall in oil prices in October and November, however, pushed down the prices of the units by 30% from its peak, followed by a 32% rebound in the price. The partnership's current market value is NIS 570 million.

Tadmor said, "Development work on the Buckskin project is near completion, with production slated to begin in July 2019. Simultaneously with Buckskin, Navitas, together with its partners, is putting the Shenandoah project in motion, a real step forward that will add great value to the partnership."

Published by Globes, Israel business news - en.globes.co.il - on December 12, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Gideon Tadmor  photo: Uria Tadmor
Gideon Tadmor photo: Uria Tadmor
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