This research report was written by Fundamental Research Corp., which has paid The Globe and Mail to distribute its research to our readers. The following text is excerpted from the report:
Permex Petroleum LP is proposing to raise up to $20-million to acquire producing oil and gas projects across North America.
The target regions are Kentucky, Tennessee, Texas, Ontario, Alberta and Saskatchewan.
The LP intends to hold a medium risk portfolio of producing oil and gas projects, with potential for enhancement of production through development.
The LP has already identified two projects for acquisition – one in Kentucky and the other in Ontario. The two acquisitions total $9.2-million.
The project in Kentucky is currently producing at approximately 101 net barrels of oil equivalent per day or BOEPD (15 per cent oil). This project also generates approximately $770,000 in annual revenues from the pipelines and equipment it owns. As the LP does not have an exclusive option agreement with the seller, we identify the project in Kentucky as Project A throughout this report, for confidentiality reasons. The Ontario project (Reef) is not producing at this time, but has the potential to be in production with enhanced oil recovery (EOR) techniques on already drilled wells.
The LP was formed by N.A. Energy Resource Corp. (ERC) – a Vancouver-based private oil and gas company formed in 2010. ERC also manages another fund, Kentucky Petroleum LP, which was also formed in 2010.
Management receives an annual management fee of 0.5 per cent of the fair value of assets. It also receives 50 per cent of the profits remaining after investors are paid out a 8-per-cent preferred return.
We believe Project A offers the LP an opportunity to attain exposure to low to medium risk, stable cash flows, at a reasonable valuation.
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