Oil newcomer targets AIM

Denver-based Direct Petroleum plans to raise £43m for exploration in Morocco and Bulgaria before listing on AIM.

Broker Williams de Broe is to handle the placing, which is likely to value the company at well over £100 million, though the exact placing price has not yet been finalised. Experienced oilman Edward Gendelman chairs the company and Richard Dana, former finance director of French oil giant Total's US arm, is finance director, with an operations team led by David Nelson.

Direct has a near-13,000 sq km onshore concession in Morocco, with an estimated 1.3 billion barrels, valued at a possible £525 million with oil at $40 a barrel (against today's $50 price) at a ten per cent discount rate. The company also has two licences in Bulgaria over 4,800 sq km, with an estimated 746 billion cubic feet of gas, valued at a potential £121 million.

Direct's other selling point is its ownership of exclusive worldwide rights (outside the former Soviet Union) to Acoustic Direct Detection (ADD HR). Devised in Russia, ADD HR can, it is claimed, significantly reduce the cost and risk of exploration by detecting at an early stage whether a well will prove dry or wet: spokesmen cite a 96 per cent success rate with dries and 74 per cent success rate with wets.