Mosaic terminates talks with mystery investors

CONFIDENTIAL discussions between Mosaic Oil and potential investors have been cancelled, the company said today.

In early August, the company announced it had received an unsolicited approach from a potential investor, which led to subsequent expressions of interest from other potential investors. A month later, the company told the market these negotiations were continuing.

But chairman Dr Don Stammer said Mosaic cancelled the talks to “clear the decks” to re-focus on developing its oil and gas interests.

“We are a public company and if any investor wishes to talk with us we will accommodate that within set time frames in the future,” Stammer said.

“But our focus will be on achieving the gains for shareholders from delivery of the strategy outlined at the recent Annual General Meeting.”

He said Mosaic's full attention was now on its core activities and it was preparing to drill up to four significant wells early next year.

In addition, the company was preparing to introduce new joint venture partners into the Surat-Bowen Basin to accelerate exploration and development of existing discoveries, it said.

Mosaic also aimed to diversify into new petroleum provinces by acquiring acreage with material impact.

Mosaic has budgeted A$7.6 million for next year’s development and expansion. Subject to rig availability and, in some cases, joint venture approval, the company expects to:

•Complete the drilling of its Waggamba-1 horizontal well (MOS 100%). Late this month, the Ensign Rig 44 will condition the current bore hole in preparation for the horizontal drilling. Management is now finalising negotiations to secure the Mitchell 151 rig to start drilling in the second half of January.

•Drill a Churchie well (MOS 49%) to test the Rewan gas potential following a substantial gas flow from a nearby well in an adjoining licence.

•Carry out an extended flow test of the Rockhampton High-1 (MOS 100%) oil discovery.

•Participate in drilling the Hurricane-2 oil appraisal well on Western Australia’s North West Shelf (MOS 6%).

•Drill a Bainbilla (MOS 83.3%) stratigraphic gas play with significant hydrocarbon potential in Tinowon and Rewan sands.

•Conclude negotiations with domestic and international parties vying for farm-in rights to Mosaic’s Downlands and Downlands East fields (MOS 71%-83% in PL 119) and in the Bainbilla Block of ATP 471P.

•Acquire new 2D and 3D seismic and perform facility upgrades to increase hydrocarbon reserves and oil, gas and LPG production.

“We have budgeted for all these activities while maintaining over $6 million cash reserves for other opportunities that may arise through 2006,” Stammer said.

“Now that Mosaic has steady and long term income, we can expand and grow the company in a controlled way to bring greater returns to shareholders.”