Meet Australia’s newest onshore oil and gas producer: Bass Oil

Australia’s energy sector has a new onshore producer: microcap Bass Oil (ASX:BAS).

The move to producer comes after the acquisition of assets from Beach Energy (ASX:BPT) and Cooper Energy (ASX:COE), effective as of the start of August. 

The acquisitions have been in the works since May this year, and Bass Oil is now finally at the stage of getting its last formal registration with the energy regulator. 

Bass Oil now boasts acreage of 2,259km² overlying the prolific Cooper Basin hydrocarbon province. Not only does this make Bass Oil Australia’s newest onshore producer, but one of the largest Cooper Basin landholders to boot. 

With the land firmly in the company’s pocket, it intends to get straight to work recompleting the Worrior-11 well, located in the basin’s Worrior oil field, now owned and operated by Bass. 

$9m in revenue on the cards

The company expects the recompletion of the well to boost production from its current rate of 75 barrels of oil per day (bopd) to between 300-500bopd. 

Even with Brent crude oil prices having dropped below USD$100/bbl on the back of a Chinese factory activity slowdown, the company still stands to make up to $9m in revenues over the twelve months following production upgrades. 

What about gas? 

As Bass boosts oil output from Worrior, it is also seeking to develop the Kiwi gas deposit, also located in the Cooper Basin. 

In mid-June, Bass Oil launched its feasibility study for the Kiwi acquisition, noting at the time Australian gas prices were up 250%. 

Between mid-May and mid-June, wholesale east coast gas prices approached $800 per gigajoule (before pricing mechanisms.) Shortly after, AEMO intervened in the Australian gas market. 

And now, Bass Oil is the beneficiary of overhead macro trends again. This week, the ABC noted Australia is projected to experience a severe gas shortage through 2023. 

In June, Bass Oil noted: “the increasing price [of gas] significantly enhances the likelihood of Kiwi Gas Discovery commercialisation…[Bass] has accelerated its gas development and exploration.”

While it remains to be seen, Bass expects the Kiwi deposit to boast up to 24 billion cubic feet of gas. 

Currently, Bass Oil is underperforming, compared to the energy index (XEJ). But with a potential 24bcf of gas, and $9m worth of oil: are investors overlooking Bass?