AED Oil Limited

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On March 12, 2010, AED Oil Limited (AED), the Melbourne-based oil exploration and development company, announced that it has completed the acquisition of AED South East Asia Limited. AED South East Asia is formerly known as Nations Petroleum (SE Asia) Limited (Company) from a subsidiary of Nations Petroleum Company Limited (Nations), through its wholly-owned subsidiary company, AED Oil Investments Pty Ltd.

This latest exciting news comes hot on the heels of AED’s March 4 acquisition of Nations Petroleum (Rombebai) BV and Nations Petroleum (South Madura) BV.
Within this acquisition comes a 50 per cent operating interest in the oil and gas Production Sharing Agreement (PSA) for Block L in Brunei; an oil asset in the advanced stage for drilling, slated to begin with a first well in mid-April.

IRJ looks back over the founding, growth and extraordinary development of this oil player and lines up the plans in place for both the new Brunei assets and AED’s already-established portfolio.

AED: Beginning with Puffin

Listed on the Australian Stock Exchange back in May, of 2005, AED chose wisely with its first project, the Puffin Oil field, just off the north-west coast of Australia in the Bonaparte Basin of the Timor Sea. The company selected Puffin, which appeared in the Oil Megaprojects list in 2007 for its well-known oil producing characteristics, its relatively shallow waters, being within Australian territorial waters and its proximity to likely markets. Just two years later, on October 6 of 2007, oil production commenced at the project, further affirming the company’s focuses and timely approach to bringing on its explorations.

In March 2008, AED entered into a joint-venture agreement selling a 60 per cent interest of the Puffin and Talbot oils fields to Sinopec International Petroleum Exploration and Production Corporation (SIPC), China’s second largest oil company. Under this agreement, SIPC operated the Puffin and Talbot fields through its wholly owned subsidiary, East Puffin Pty Limited.

Today, AED remains with a 40 per cent equity interest in the AC/P22, AC/L 6 (the Puffin Field) and AC/RL 1 (Talbot) permits located on the project.
“As a result of the funds received in transacting the AED/SIPC joint-venture, AED now has the financial capacity to continue to develop the Puffin and Talbot fields and to seek additional interests in the Asia Pacific region,” the company says.

AED’s exploration permit for this 40 per cent interest spans the Puffin horst and the adjacent Swan Graben, covering 11 graticular blocks, with a total area of roughly 890 square kilometres.

Following initial production of October, 2007, using two horizontal wells known as Puffin-7 and Puffin-8, the project is reportedly operating at a production rate of approximately 6,000-10,000 barrels per day (bpd).

The AED way

On March 16, 2010, AED released its financial results for the half year ended on December 31 of last year. It reported that the company has continued to build, strengthen and restore the value of the organization with the successful implementation of a number of its corporate strategies:

• Diversification–the diversification of its interests with investments in the Asia Pacific region with a portfolio of high quality assets now acquired in Brunei (Block L) and Indonesia (Rombebai and South Madura);
• Capital Management–effective working capital management has remained a priority, with the balance sheet strengthened via the restructuring of the existing convertible notes and by successfully obtaining two new financing facilities subsequent to December 31 of 2009. Cash has been managed with a prudent and conservative approach to capital expenditure and investments
• Puffin Field–operationally the focus for AED has been the decommissioning of the FPSO and further geophysical and geological evaluation of the Puffin Field with the aim of establishing new exploration drilling targets and the preparation of a revised Field Development Plan for the Puffin and Talbot fields.

While given the big news with Brunei, it is hardly surprising to see that the financial report is very positive. It is also encouraging to see that AED continues to maintain an active and astute interest in Puffin. The global span of the company has drastically increased, and the due care and attention to each of its assets has been mirrored throughout each new acquisition. Diversifying its assets with these new investments in Brunei, Indonesia and South Madura has bolstered the company balance sheet and has new financing facilities and internal cash reserves in place to commence initial expansion into South East Asia.
Defining the company’s focus for the coming six months, AED says it plans to deliver the “next phase of growth” by:

• A two well on-shore drilling program in Brunei commencing in April 2010;
• A one well on-shore drilling program in South Madura commencing in April 2010 and;
• Ongoing geological and geophysical assessments of the drilling opportunities in Rombebai and on the Puffin Field.

There is certainly a lot of new ground to cover, but this is the company to do it. AED has already cemented itself to be capable of big things during its five years since inception, and it looks like the big picture just got a great deal bigger.

www.aedoil.com