Categories: Energy
Topics: General Energy

East West Petroleum (TSX-V: EW) CEO David Sidoo Gives an Update on Drilling Program in New Zealand

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of East West Petroleum (TSX-V: EW)(OTC: EWPMF), Mr. David Sidoo. David, thank you for joining me this afternoon.

David Sidoo: Gerardo, thanks for having me on. I'm glad to update everybody on East West and a few other things too.

Gerardo Del Real: Well, it was important for me to have you on because you just had a news release out last week that I wanted to get the details on. You started the 2017 drilling program in New Zealand. You also have a well in Romania that hopefully you can update us on. But let's talk about New Zealand. Can you fill in the details there, David?

David Sidoo: Sure. We just commenced our operation on our 8th well that we're drilling in that basin there, in the Taranaki Basin in New Zealand. We've drilled seven holes, wells before that. Primarily, most of our production, Gerardo, is coming from the Cheal E wells and we started to drill on April 26th, Cheal-E8 well. We started, we're down to about halfway down right now. We're getting our reports everyday. Things are going on budget and on time. We're drilling to about 2,100 meters of total depth. The gross well cost will be about 3 and a half million New Zealand, about 3 million US. We expect to take another 10 days before we reach TD. So far, everything looks pretty good right now. We own 30% of that asset so we'll pay 30% of that cost. Most of our production right now is coming from there.

We've also, this is the same area, Gerardo, that we have the water flood that we initiated about a month and a half ago. That's going quite well. We're injecting water into the entire reservoir. That's going to help advance the production of Cheal-E1 through 7. So I'm hoping by in the next month and a half, two months we see a big production number, higher than the 180 to 200 barrels that we're producing right now, get up to a larger number and start giving us a little bit more cash flow in that Cheal E area. But that's primarily where we're getting most of our production from.

Following the Cheal-E8 well, we're going to be drilling in Cheal-D1, an exploration well there targeting an undrilled oil pool in the northern part of the PEP 54877 permit that we have. The D1 well is going to be a new well pad that we're going to build there. We're constructing that right now. The rig that we're finishing at Cheal-E8 will move over to spud the well that we're going to be drilling at Cheal-D1 on July 2017. So this is a news flow we're going to start to have. We're going to talk about the next two to three weeks, what the testing is like on our well in Romania which has commenced this week.

We'll have results from our Cheal E well. We'll have results from our Cheal-D1 exploration well after July and then later on in the fall we'll have news on how the water flood enhanced our production. So we'll have some good news flow finally coming from East West Petroleum on all fronts.

Gerardo Del Real: Excellent. Just to tie it all in, the drilling that's going on now, how long is that expected to take, David?

David Sidoo: The drilling that’s right now that's happening on Cheal-E8, that started on the 26th. It takes about 20 days to get to the planned depth of 2,100 meters. So we've got probably another 12 to 14 days left one that, 14 days I would say.

Gerardo Del Real: Excellent. You said the cost of that well was approximately US $3 million. What does the balance sheet look like right now? I know you're fully funded obviously for the program but what is that looking like right now, David?

David Sidoo: Our balance sheet as I mentioned to you before, 6 and a half million dollars, 8 million cash in cash equivalent. We've got some securities that we own in other companies that we're slowly liquidating which would give us about eight million in cash. We've got our Capex and our Opex is all covered. We're not burning any money on any kind of overhead or salaries or anything like that. So any type of money we're spending right now, Gerardo, we're going to spend $900 to a million dollars US on this Cheal-E8 well. We've got plenty of money in the bank right now to deal with that. We've got some, if we do enhance our production with our water flood, we're going to add to our balance sheet and not take away from it.

Gerardo Del Real: Excellent, excellent. Well, that sounds like a very busy second half of the year. I encourage everybody to go to East West Petroleum's website which is eastwestpetroleum.ca. You still have a tiny market cap. Where does that stand, David? You have a lot of catalysts for the market cap and the cap position that you have.

David Sidoo: Yeah, you got a 85 million shares that you're trading, what are you trading at, 12 cents, Gerardo?

Gerardo Del Real: Correct, Canadian.

David Sidoo: I mean, it's crazy. It's $10 million market cap. We almost have that much money in the bank. I think the real catalyst on the company is going to be obviously the increase in production in New Zealand that's going to give us some nice cash flow. But the enhancement of that well program that we're going to be drilling and testing in Romania is going to be very key. That's 11 more wells that we have to drill in those assets that we picked up. If this well, we test 6-8 different zones and if those are successful, we can drill another four, five wells step out wells off that first one on the same path and now we got ourselves a real company builder.

Gerardo Del Real: Absolutely. Well, I know there's a lot of patient shareholders with fingers crossed and hopefully we can have you back on once those results start trickling in there, David.

David Sidoo: For sure. For sure. I'd love to come on give everybody some good news. But you're right, everybody's been very patient with us and I know some very big shareholders who are looking forward to those results in Romania.

Gerardo Del Real: Well, you mentioned that Romania has the potential to be a company maker and you've obviously done that before. You know how to grow companies. You know how to monetize assets and obviously it's an exciting time. Again, with the market cap, I encourage everybody to go to the website and get familiar with the East West story. David, thank you for your time.

David Sidoo: Thank you, Gerardo. I appreciate it.