Australia and UK-based Global Petroleum says it is seeing progress on its bid to gain blocks in the Adriatic Sea, but that the company is making cost reductions reflecting the low oil price and its lack of progress making an acquisition to grow its portfolio.
Global's permit applications in Italy cover four contiguous blocks in the southern Adriatic offshore Puglia, adjoining the median line with Albanian waters. The Adriatic has seen significant renewed interest by the oil and gas industry with licensing rounds being held in both Croatia and Montenegro and significant recent discoveries onshore Albania. The company's applications are progressing towards approval of the environmental impact assessment (EIA) documentation, which was originally submitted in mid-2014. EIA approvals have recently been granted by the Italian authorities to other exploration and production companies with long-standing licence applications in the offshore Adriatic, and the company regards this recent development as very encouraging for the progress of its own applications.
In Namibia, where the company holds an 85% participating interest in offshore Blocks 1910B and 2010A, the Initial Exploration Period of the license was extended by one year to December 2015 in return for an additional work program, involving further modelling using both seismic and gravity data. The company intends to enter into discussions with the Namibian authorities regarding future exploration in the Blocks.
The company has decided to withdraw from its application to extend its Juan de Nova permit in the Mozambique Channel, due to lack of progress on the permit and its relative technical ranking compared to other interests and opportunities.
The company has held detailed discussions with various parties with a view to concluding an acquisition of assets which would add significant near-term value. Global has noted a more realistic view recently on the part of asset or corporate vendors, and believes that the company will be able to execute a transaction on terms that deliver good value to shareholders.
The company has started a program to reduce its corporate costs in response to the lower oil price environment and the time it has taken to find a value enhancing acquisition. As a result of its cost review, the board is implementing a substantial reduction in corporate costs, including a significant reduction in the cash element of the compensation of the board and management.
Global's CEO, Peter Hill, says: "We have taken steps to reduce our cost base to reflect the current market environment. On the acquisition front, I believe that the wind is now blowing more favorably in our direction and that it is now more likely that we will be able to make an acquisition at realistic prices which will deliver value to our shareholders. However, we remain extremely selective and are pleased that previously unrealistic expectations by vendors have modified as we have held discussions, and are now at levels where we are more optimistic of concluding a value-creating transaction.
"Our Italian permit applications cover acreage which we believe holds excellent potential and it is pleasing to note the progress being made towards licence awards by Global and other companies. I look forward to reporting further progress on our initiatives later in the year."