White Nile loses £0.4m

22/12/2005 Robert Tyerman

Phil Edmonds' Southern Sudan-focused oil and gas play White Nile lost £394,000 last year and expects to drill soon.

Controversial White Nile raised £9 million at 10p from RAB Capital, Artemis and others ahead of last February's AIM float and later tapped the market in July for £7 million at £1, ten times the price of the earlier fundraising. Attracting the attentions of super-bear Simon 'Evil Knievel' Cawkwell, the shares hit 147.5p in June before slumping back to 58.5p by September.

White Nile has 60 per cent of Southern Sudan's 67,000 sq km Block Ba project, paid for by issuing shares equivalent to half of its own enlarged equity to Southern Sudan's state oil company, Nile Petroleum. Edmonds and development chief Andrew Groves contend that previous research and mapping by other groups shows the western part of Block Ba lies on an extension of the 'production fairway' of the Mugland Basin, an area whose hitherto explored portion contains proven oil reserves of 1.2 billion barrels and estimated oil-in-place of more than 10 billion barrels.

Unfortunately, French oil giant Total has a competing claim to Block Ba, awarded by the Sudan government in Khartoum before the then Southern Sudan rebels won their present autonomy. White Nile argues it has security of tenure and is supported by the Southern Sudan government, while friends of Edmonds have suggested a handsome bid from the French could solve the dispute.

In July, White Nile clinched a two-year joint study agreement with the government of neighbouring Ethiopia to study 70,000 sq km in the 'Southern Rift Basins', next to a large block awarded to Malaysia's Petronas. The company had £15 million cash at year end.

At 99p, valuing the company at £314 million, White Nile shares offer potentially exciting prospects if everything goes to plan, but these are coupled with significant risks on several fronts: geological, commercial, legal and political.