Veteran Cluff Eyes New North Sea Portfolio
20.12.2015

Veteran Cluff Eyes New North Sea Portfolio

Veteran Cluff Eyes New North Sea Portfolio

In the 1970s Algy Cluff was one of the pioneers who the North Sea for oil & gas exploration.

In the interim between then and now he went off to build mines in Africa and Asia.

But he’s back and building a portfolio of North Sea assets once again.

This development stems in part from Cluff’s assessment a couple of years ago that the gold price was headed for a fall.

He couldn’t say so then, of course, as he was still heavily tied into Amara Mining (LON:AMA), which has several million ounces of the stuff.

But when he left Amara (then called Cluff Gold) the gold price was already off its highs.

It subsequently dropped by a further US$500 or so to its current price of US$1,079 per ounce and shows no sign of bouncing back.

So if not gold, then what?

Natural gas was the new thing to be in, reckoned Cluff.

And he built his new company accordingly.

As it stands, Cluff Natural Resources (LON:CLNR) has two strands.

One is a portfolio of underground coal gasification (UGC) projects in UK coastal waters.

The other is a portfolio of 11 natural gas prospects and plays in the southern North Sea.

The coal projects have been mired up in misconceptions about fracking and whether it should or should not be allowed, and whether the techniques that Cluff intends to employ do or do not constitute fracking.

They do not, says Cluff, sipping on a glass of lager in Langan’s, one of his favourite London haunts.

But that hasn’t prevented the Scottish government implementing a moratorium on the development of UGC projects and thereby stymying what Cluff reckons could ultimately have added around £12.8bln in gross value to the British economy, including 7,500 new jobs.

Cluff’s got UGC projects in England too, but until this autumn the Scottish Kincardine project had looked the most promising.

But never mind.

Sometimes sentiment turns one way and takes a while to turn back.

The gas in the southern North Sea is conventional and as such shouldn’t come up against any sort of politically-charged opposition.

The question here is: will these prospects prove economic?

After all, it’s no secret that the North Sea is not the investment destination it once was, what with the oil price slump and an apparent lack of interest on the part of the UK Treasury in providing investment incentives.

But Cluff’s been here before.

He knows the territory, and he knows only too well it’s premature to write off the North Sea just yet.

“There is a tremendous opportunity for companies to re-invent themselves in the North Sea,” he says. “It’s a good time to be in the business.”

Indeed, with the big money pulling out, the chances of decent medium-sized assets coming onto the market at reasonable prices have never looked brighter.

A company like Cluff Natural Resources, which is already established in the area, might make a natural home for assets being off-loaded by a distressed seller.

But that’s in the future.

For now, Cluff is busy firming up the foundations of what it’s got.

The company announced that the best estimate for unrisked gas initially in place across four of the most prospective license blocks in the southern North Sea amounted to 233 billion cubic feet (bcf).

Further work is likely to deliver additional gas initially in place, particularly in the neighbourhood of Centrica’s (LON:CAN) recent discovery at Pegasus West.

“We’d like to have a big portfolio of North Sea resources and exploration,” continues Cluff.

“I formed this company to buy production. But at the time it was all too fully valued.”

That’s not the case so much now, and Cluff is clearly itching to add to what he’s got, given the set-back with UGC.

Source: www.proactiveinvestors.co.uk

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