When Alex Archila joined Houston-based Madagascar Oil Ltd. in 2006, going public was still a distant step in the company's evolution. Today, the company remains private, but that hasn't robbed it of any financial opportunities, he said at the Private Capital for Energy forum in Houston, sponsored by COSCO Capital Management and Oil and Gas Investor. Madagascar Oil has raised $196 million for heavy-oil exploration in Madagascar. Its business plan is unchanged since formation: to exploit the oil-sands reserves of the island nation of Africa's east coast. Its capital sources include Credit Suisse, Touradji Funds and various New York- and U.K.-based hedge funds to hunt down more than 10 billion barrels in possible and probable reserves. There has been no rush for an IPO since the company is still trying to stabilize its assets, Archila said. Oil-sands projects are "huge monsters," he added; while working in the Canadian oil-sands patch, the task required some 8,000 workers. It can take anywhere from $7- to $15 billion in upgrader construction costs. "Capital costs have been going wild for the past few years, and for the oil sands, more so." Madagascar Oil's capital providers play a very active role in the company: both Touradji and Credit Suisse have representatives on the board. Touradji presented itself as a capital partner through Jefferies & Co., which was Madagascar Oil's financial advisor. This and the other money "that came into the company realized these assets needed work and this wouldn't be a quick in-and-out." For more on this, see the August issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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