Oil Production Update Pacific Asia Petroleum, Inc. (Amex: PAP) – Oyo Oil Field Production Success

We received an oil production update today from Frank Ingriselli, the President and CEO of Pacific Asia Petroleum in regards to the Company’s oil production at the Oyo field offshore Nigeria.  To recap from our initiation report from January this year, PAP is acquiring 60% ownership of the field in a transaction that is on track to close end of this quarter.  This field came on stream in December last year and they just sold their first cargo of oil last week of approximately 1.0 million barrels. 

We are very excited about the potential oil production of the Oyo field.  With a daily oil production of around 20,000 barrels a day, which we believe will increase to 25,000 per day in the next several months, the oil field will provide the Company with substantial profits.  The operator of the oil field is Eni S.p.A through its affiliate Nigerian Agip Exploration, which is a leading international operator and has been involved in Nigeria since the 1960’s.  PAP will net around 30% of the profit after deducting the operating costs.  We estimate that the cost per barrel to be between $35 and $40, which at today’s price at close to $80, makes the operation very profitable.

With a current market cap of a little over $200 million, we would recommend investors starts building a position.  This is still a relatively unknown story and when the transaction closes end of this quarter, we expect the Company will get a lot of attention and interest.  In addition to the Oyo field, the Company has several oil and gas projects ongoing in China that will provide PAP with strong potential revenue stream for several years.  See our initiation report HERE for further details.   We see this as an exciting story moving forward.

Substantial international press has been generated relative to the Oyo field.  Below are a few Internet links.

http://www.eni.com/en_IT/media/press-releases/2009/12/2009-12-15-eni-starts-production-oyo-field-nigerian.shtml

http://finance.yahoo.com/news/Oyo-Oilfield-Begins-bw-1923489226.html?x=0&.v=1

http://www.prnewswire.com/news-releases/first-oil-from-oyo-oilfield-79310197.html

http://www.businessdayonline.com/index.php?option=com_content&view=article&id=6479:camac-signs-purchase-and-sale-agreement-on-oyo-oilfield-with-pacific-asia-petroleum&catid=67:oil&Itemid=307

To learn more 

http://www.joenoelstocks.com/category/stocks-covered/pacific-asia-petroleum-inc-pap/