East West's partner NIS has unveiled eight intervals worth testing in the well. That will excite the market.

East West has cautioned that the well has not yet been declared commercial, nor have future exploration plans been formalized.

East West has about C$4.5 million in cash, which is less than half the market value of the stock.

NIS is controlled by Gazprom; therefore, NIS is a very desirable joint venture partner.

The 15% interest of East West in these wells covered by the agreement could be worth many times the current market value.

East West Petroleum (OTCPK:EWPMF) has a small interest of 15% in a potentially large discovery. Its partner, NIS, is paying all the costs at this time, so the financial risk to East West is nonexistent. Everyone is holding their lottery tickets, including the author, with bated breath. But the process has dragged on excruciatingly slowly. The NIS Q2 2017 report states:

The Тeremia-1000 well at the Ex-7 block is drilled through. Теremia-1000 well testing has been under way, two out of eight planned intervals are complete. The programme approval by the National Agency for Mineral Resources of Romania has been under way. The permitting process started for 3 exploratory wells Ех-7 (1 well) and Ех-8 (2 wells). The permitting process is resumed per blocks Ех-2 and Ех-3.

Meanwhile, East West Petroleum updated shareholders on Sept. 20, 2017, as follows:

Mr. David Sidoo, President and CEO, is pleased to announce that the Company's joint venture partner and operator has reported that testing of multiple intervals on the first well in EX-7 Periam block, in the Pannonian Basin of Western Romania has been completed with encouraging results for oil and natural gas.

The operator has advised that the initial results obtained during workover and testing will be analysed in NIS Scientific Center, which will decide if the well is to be declared commercial and what would be the next steps to follow. NIS will be funding 100% and fully carrying East West through the minimum work program of the exploration phase in return for earning an 85% interest in the blocks.

The East West Petroleum update does not name all the intervals, though the NIS update does. NIS is many times the size of East West Petroleum. The coverage by NIS on the progress of this well is very significant. Any positive progress that affects NIS has the potential to impact tiny East West Petroleum a great deal more. So, the stock has the potential to go back to levels not seen in years.

That said, readers are warned that the well has not been yet declared commercial and all that statement implies. Future exploration plans are not etched in stone. Future plans can be cancelled at any time. But there is some positive news that can get the rumor mill started. Concrete facts could be a month or two away. The stock could become very volatile.

(Note: The numbers below are reported using the requirements of the Belgrade, Serbia, exchange. The currency is a dinar with about 100 to the U.S. dollar.)

Source: NIS Website - Downloadable Fact Sheet

For reference purposes, NIS is the largest company on the Belgrade Exchange and is controlled by Gazprom, the giant Russian Energy company. Investors should look at the footnotes on the company website if they want more details. Reporting requirements and key measurements are very different from the U.S. However, the figures above give some idea as to the size of NIS. It is a substantial company that is controlled by an even more substantial company. Both companies operate in several countries.

NIS is a desirable exploration partner that is carrying East West through the preliminary exploration stages to earn about an 85% interest in the wells covered by the agreement. East West has a TINY MARKET CAP. It is really a shadow of its former self because the stock price has dropped tremendously. But as discussed in previous articles, the balance sheet is in great shape. The company has a steady income from its partnership with Tag Oil (OTCQX:TAOIF). East West is therefore in a great position to wait for the results of the joint venture with NIS. NIS will carry the company at the present time. So there are no capital requirements in the near future.

In the meantime, the joint venture with Tag Oil is showing some encouraging results:

Following the completion of the Urenui zone, Cheal-E8 naturally free flowed oil and gas on choke at an average rate of 318 boe/d over a four and a half day test. No water production was observed during the test.

The New Zealand joint venture has ongoing production and positive cash flow. This project provides the cash that East West needs to operate and fulfill its partnership obligations.

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