Mosman could be buying another US asset

Oil exploration, development and production company Mosman Oil and Gas updated the market on its operations on Wednesday, having purchased three producing projects so far in 2017.

The AIM-traded company said its strategic objective continued to be that of identifying opportunities which would provide operating cash flow, and had further development upside in conjunction with adding value to the company's existing exploration permits.

It confirmed three producing projects had been acquired in 2017, demonstrating that the company was moving forward effectively in achieving its objectives of building a “significant” production operation.

The board said it was important to note that the company’s first US acquisition, Strawn, had already tripled production and was now cash flow positive.

Mosman's technical director Andy Carroll was currently in the US, the company confirmed, and would visit all three producing US projects in Texas and Oklahoma in the course of the next week.

The board also spoke of new business opportunities in the United States, explaining that on completion of the recent Welch acquisition it had stated its “immediate operational focus” was on the three producing US projects and continuing to focus on adding value to its existing exploration permits in Australia and New Zealand.

However, other potential production acquisitions remained under ongoing review, Mosman added.

“Due to the high quality of the new business opportunities presented to Mosman recently, this emphasis has now been reviewed, particularly in the US,” the board said in its statement.

“In evaluating these new producing opportunities, Mosman is carefully looking to balance the risk, reward, human resources and funding requirements in respect of all opportunities currently under review in order to optimise shareholder value.”

As a result, the company's technical director would undertake further due diligence on specific new business opportunities while he is in Texas and Oklahoma.

The board said it was “not possible” to provide further information due to deal uncertainties and confidentiality requirements, although it pledged to provide further details in due course “at the appropriate stage”.

“Mosman continues to make progress in expanding its three US producing operations in Texas and Oklahoma in the active execution of our business plan,” said Mosman chairman John W Barr.

“Encouragingly, Strawn production is now steady at 15 to 20 bopd and is cash flow positive net of lease operating expenses.

“A similar approach will be utilised at Welch where Mosman is also the operator.”

Barr said the board was continuing to evaluate additional producing projects on strict criteria and, given its existing producing operations, it had been introduced to “a number” of new business opportunities in the Texas and Oklahoma region.

“[These opportunities] would allow Mosman to benefit from expanding its existing activities into a regional hub that would have the potential to deliver operational, general and administrative synergies over time.”