If punts on oil and gas are your game, you might do worse than look at Columbus Energy Resources. Never heard of it? Well, that’s the point of this column: to spot the promising minnows you may have missed. Columbus used to be called LGO and was part of the mini-empire of David Lenigas. He of the supposed Gatwick Gusher.
We all know Lenigas is investment Marmite. But if you’re in the camp who can’t stand him, don’t worry. He’s out. New management arrived in May, headed by Leo Koot, a whackily-named Dutch oil and gas man whose career at Shell taught him everything from working on rigs to developing prospects in Namibia and Malaysia.
Koot’s not just a Big Oil operations guy. Since leaving Shell in 2000, he’s launched a business supplying kit to oilfields and another operating old North Sea fields for the majors. He’s also built from scratch a $2.5 billion, 65,000 barrels-a-day North Sea empire for the Abu Dhabi National Energy Company.
Incidentally, Abu Dhabi also sent him to Iraq to get an “elephant” field in Kurdistan up and running. All was fine while Isis was 35 miles away but when US troops went in to protect the Yaziris, it became a full-on war zone. Koot evacuated his 250 staff and tried to retire. Three months later, he was back in the game.
The Columbus play is about prospects in Trinidad. The first is an oilfield known as Goudron. It’s shallow, which usually means poor quality. But in this case, Koot says, it’s good enough to put straight in your Volvo diesel. That suggests there must be a deeper, high-quality reservoir feeding it. Goudron was producing 325 barrels a day when Koot arrived in May. Partly thanks to techniques he learned in the North Sea, that’s now 450 and set for 550 by year end.
The second Trinidad play is in the South West peninsula, which sits in the vast East Venezuela oil basin. The geology looks good, says Koot, but Columbus’s leases are relatively unexplored. To fix that, he has just raised £3 million from Schroders, £1 million from an open share offer, and £100,000 from management.
There are huge risks in backing oil minnows, particularly with crude prices relatively low. The unexplored nature of the South West peninsula will put many off. Fair enough. Also, in January, the Spanish government allowed its longstanding licence to lapse. That left Columbus writing down £7 million and paying costs of €50,000-€70,000 a month while it negotiates a renewal. Frustrating.
But with Koot in charge, and Schroders’ backing, Columbus is one for punters to consider.