Wanna Bet? (PSE: BSC)

On February 12, 2013, Basic Energy Corporation (PSE: BSC) disclosed a Joint Venture with Petrosolve Sdn BHd (Petrosolve) of Malaysia for the identification, exploration, development, management and operation of oil wells. [1] BSC and Petrosolve established Grandway Group Limited (Grandway) where BSC will have 70% participating interest. [2] On May 27, 2013, BSC disclosed that Grandway Group Limited registered Basic Energi Solusi (BES) as a 95% owned subsidiary in compliance with Indonesian laws. [3] On June 26, 2013, BES acquired from Petrosolve 10 rights to manage oil wells in the Central Java area of Indonesia. [4]

What made this interesting is that Central Java, Indonesia is very rich in onshore oil. [5] With BSC’s resources and experience in oil extraction operations, optimizing the production of the oil wells covered by the acquired rights from Petrosolve could be a profitable venture.

 Possible Contribution of the Venture to BSC’s Value

The probable reserve information regarding the rights acquired by BSC was not yet disclosed but we could range it from 100,000 to 1 million barrels of oil. Below is my calculation:

BSC1

Depending on the probable reserve of oil on the rights acquired, the Joint Venture could contribute P.02 to P.20 per share in the value of BSC.

The most conservative option is to wait for the probable reserve to be disclosed and act accordingly.

Source:

  1. Joint Venture with Petrosolve Sdn BHd re: identification, exploration, development, management and operation of oil wells, http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-1425_BSC.pdf
  2. Establishment of joint venture company with Petrosolve Sdn Bhd, http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-2309_BSC.pdf
  3. Approval by Badan Koordinasi Penanaman Modal of Indonesia of registration of investment in PT. Basic Energi Solusi, http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-4324_BSC.pdf
  4. Agreement with Petrosolve Sdn Bhd of Malaysia re: acquisition by PT Basic Energi Solusi of rights to manage oil wells in Central Java area of Indonesia, http://www.pse.com.ph/resource/disclosures/2013/pdf/dc2013-4324_BSC.pdf
  5. Indonesia’s Texas? Rural Java braces for oil boom, http://www.reuters.com/article/2009/08/10/us-indonesia-oil-idUSTRE57903420090810

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell. Read more in the ABOUT page.

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