Exploration Insights by Robert Tyerman

American oilman Bill Kelleher, ex-luminary of Russian oil giant Yukos who helped found fallen AIM star Victoria Oil & Gas, enthuses about his present venture, New World Oil & Gas, now primarily focused on projects in Belize in Central America and Denmark.

Having raised £6 million, the company has identified four oil leads and prospects at Blue Creek in Belize and is looking at natural gas and condensate prospects in Denmark.

Funded, says Kelleher, until the second quarter of 2012, New World expects to drill next summer in Belize and in late 2013 in Denmark. Also looking in central Africa and Papua New Guinea, New World shares have halved to 4.38p, but could well repay a punt for investors prepared to be nimble.

Meanwhile, Victoria Oil & Gas itself, now steered by seasoned sector player Kevin Foo, has secured £9.5 million at 3.25p for its key Logbaba gas project in Cameroon and hopes to start production later this year. Victoria claims a net present value for Logbaba of $676 million (£422 million) and, also owning the West Medvezhye project in Siberia, with an estimated 1.4 billion barrels of oil equivalent, offers speculative recovery prospects at 3.25p, provided oil and gas do not lose their attractions altogether.

Potash play
Entrepreneurial duo Phil Edmonds and Andrew Groves are backing African Potash, which raised £4.16 million at 5p for its AIM float, with another £1 million seen as coming in. Hardly universal City heroes, Edmonds and Groves, active in resource-linked corporate ploys around the African continent, hold 15 per cent each of the enlarged company, as it probes potash assets and businesses, primarily in Congo-Brazzaville (not the Democratic Republic of Congo) and Ethiopia.

In the worldwide drive to increase crop yields, potash provides the prime source of potassium fertiliser. Prices soared from a long-term $100 (£65) a tonne to $900 a tonne in 2008, before the recession knocked them back down again.

Lately, the company says prices have rallied to $490 a tonne and the omens look favourable for long-term growth, despite global economic uncertainties. Though potentially volatile, the shares could repay a strong-nerved medium-term punt.

Strategic thinking
Australian iron ore play Strategic Minerals says its acquisition Ebony Iron’s Cobre tailings project in New Mexico has a 1.57 million-tonne resource at a grade of 61.7 per cent. Strategic floated on AIM in June and bought privately owned Ebony for an initial £10 million in shares with another £5 million due if a 200 million-tonne resource is confirmed.

The shares are not dear at 12.25p.

Sell-offs boost Regal
Regal Petroleum has turned a $3.8 million (£2.4 million) interim loss into $603,000 profit after selling Romanian and Egyptian interests. Once run by controversial tycoon Frank Timis and now controlled by Ukrainian conglomerate Smart Group, Regal hoisted pre-tax losses 11-fold to $10.2 million in the six months to June on turnover down from $15.9 million to a mere $204,000, but made almost $10.8 million on selling Regal’s Barlad concession in Romania and its stake in Egypt’s East Ras Budran concession.

With the backing of Smart Group, linked to oligarch Vadim Novinsky, Regal has overcome a gas production ban in the Ukraine prompted by environmental and regulatory issues. The company now sells gas there at prices 48 per cent higher than last year.

Smart Group paid 38p a share for 54 per cent of Regal, a far cry from the 509p reached in 2005 under Timis before the company’s much-vaunted Kallirachi well in Greece proved dry, but more than twice the 18.25p at which we recommended a punt last November. At 35p, partial profit taking looks prudent.