Neon announced an agreement with Italian based global oil and gas major Eni today for its offshore Vietnam oil and gas project, following Under the Radar's Fairfax column focusing on hot small caps last Friday.
This company is almost as big as BHP with a $90 billion market cap (BHP is $99 billion).
This means confirmation of an oil and gas major taking on the operating function and spending serious $$$ - in the region of $75 million, according to Johan Hedstrom.
Eni will get 50 per cent of the two licences in return for the spending.
The bottom is that this increases the confidence that both projects will get drilling in the first quarter of next year, and it exposes Neon shareholders to significant upside. The gas prospect in block 105 is almost 14 trillion cubic feet. To give you an idea, the original North West Shelf project went ahead on a similar sized resource and has delivered many billions for it s stake holders.
In the oil block (120) the venture has two prospects. It has a prospect with upside of 1.3 billion barrels, and a second one at 1.7 billion barrels.
Just to remind you this company is fully funded with an producing oil field in North San Ardo, California, and has just announced positive results at its Paloma Deep prospect, also in California.
Hedstrom has a 90 cent valuation on the company.