Wednesday, June 25, 2014

Geopolitical risk of Taipan

GlobalNewswire directs the tougher questions about the risks involved with the fine outstanding neighbors to their north, the Somali's. You know the one's who have a penchant for shiny new cargo ships and who go around killing soccer fans.

This is the reason I am not as long as I once was, you know things can unhinge pretty quick in Africa.

FP: The investment upside of TPN isn't hard to grasp. But let's not dance around. On June 15th, 2014 terror attacks by Somali extremists on Kenya's coast left 65 people dead. Can you provide background and context for these attacks and how it affects Taipan operationally?

Dumaresq: Sure, background first. In 2011 there were some raids from the south of Somalia into Kenya. The perpetrators came down into Lamu, took some tourists hostage, transported them back into Somalia, and demanded a ransom.

FP: And what was the Kenyans' response?

Dumaresq: The Kenyan military, in a joint operation with the Somali military, created a security zone inside Somalia so people couldn't just wander down into Kenya randomly and take prisoners. Radical Islamic factions in Somalia decided that they were going to use that as a lightning rod in their opposition to their own government in Somalia.

FP: So this latest incursion is a rallying cry for their interests?

Dumaresq: Apparently, and let's be honest. In Kenya you've got large borders that are difficult to guard -- not because of anything the Kenyan government's doing wrong, but just because of the lack of resources. Kenya and Somalia have migrant populations that roam around following wild stock, so it's difficult to police and to know who belongs and who doesn't.

FP: How does this affect Taipan on the ground?

Dumaresq: It doesn't. The Kenyan government recognizes the importance to its future, and is not going to allow anyone to interfere with the development of the petroleum industry. When we work on our blocks in Kenya we have large security details. Typically two to three hundred people on the seismic crew, and more than 100 staff doing security. That's factored into our cost of doing business. In Block 2B, we're planning to drill a well late in 2014. In Texas that well might cost $2 million. In Pakistan, where they also have security issues, it might be $10 - $13 million. For us in Kenya, it may cost as much as $25 million and a significant portion of that is for security. So, bigger upfront costs for a much bigger reward.

1 comment:

  1. Let's see what Dumaresq does with his other deal Coronet Metals (CRF-V). That could be a 10 bagger.


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