Oil and gas junior companies: What's their end game?
Aroway Energy CEO Chris Cooper discusses junior oil and gas companies, the Keystone XL pipeline and the future of Canadian oil and gas, in an interview with OilPrice.com.
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As an example, Aroway just picked up a great producing asset in Saskatchewan for $10,000/flowing barrel. The market for similar assets in Saskatchewan at that time was about $40,000/flowing barrel. Companies need to exercise patience and do their due diligence. Not to mention kissing a lot of frogs to find these types of assets. They are out there.
James Stafford: A lot of North American juniors are hitting the riskier frontiers with all they’ve got these days—from Iraqi Kurdistan to Sudan, even Somalia. Why are they willing to take this risk and is it paying off?
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Chris Cooper: With higher risk comes higher reward, but I don’t think it is paying off in the broader sense. Sure, there are 2 or 3 juniors that have hit home runs, but more often than not a junior is going into those types of plays with only $5 or $10 million in the treasury and they blow this after drilling just one well. I have always believed there is great opportunity offshore, but the risks are lower and infrastructure and political stability in North America is in place. There is plenty of opportunity in North America.
James Stafford: Related to this, where do you see Canada’s oil and gas industry 10 years from now?
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Chris Cooper: I see the oil and gas industry in Canada continuing to grow with the advancement of new drilling techniques and new innovations in exploiting existing pools to increase the recoverability. We have a stable political system in place which enables business opportunity to grow in Canada.
James Stafford: We hear a lot about Alberta, but what kind opportunities are we looking at in Saskatchewan?
Chris Cooper: Saskatchewan is definitely open for business. The royalties paid in Saskatchewan are very low and the production opportunities are very good. We are actively looking for new opportunities in Saskatchewan.
James Stafford: Do you lend any significance to Canadian media reports that the Cabinet is reviewing some new legislation that would set stiff payouts for the oil industry for accidents?
Chris Cooper: Personally, I think it is part of the grand plan to help the approval process. My theory is that the Canadian government will lay out a plan for big fines and then push to have the pipelines approved. The construction of pipeline projects creates jobs and would be good for the economy.
James Stafford: Do you think this is simply a carrot for the protesters at a time when the Enbridge hearings are raising tensions?
Chris Cooper: There will always be protesters. (Related Article: Kenyan Oil, Hot and Getting Hotter: Interview with Taipan’s Maxwell Birley)