Interesting political and economic times. In the US, Trump continues to refuse to concede, until, it appears, he can negotiate behind the scenes a blanket immunity from prosecution deal which includes the individual States. A Presidential pardon, which is dubious anyway if he’s pardoning himself, covers only Federal offences, not the charges which may result from the active criminal investigation into his and his family’s business dealings currently underway in the State of New York. Despite the noise, at the end of the day, the GOP isn’t really going to bin American democracy to save Trump and relative normality will resume with the inauguration of President Biden in January. Printing by the Fed will continue as usual.
The UK has still not agreed a trade deal with the EU and businesses have no idea what the arrangements, if any, will be come 1 January 2021, a date now just 27 working days away. I reckon an extension to the “implementation” period may be on the cards, albeit suitably and euphemistically renamed (“ratification” phase perhaps). Behind the rhetoric, I’ve often wondered what the benefits of Brexit actually are. Businesses in meetings with Government have been told to seise the opportunities of Brexit, to which they have responded that there aren’t any, hence the “fuck business” line from Ministers.
The benefits for some though are now starting to come into sight. Post Brexit, the UK no longer needs to comply with the general restriction imposed by the EU on the size of government deficits, plus it is no longer unlawful for the Bank of England to directly fund government spending. This is prohibited for EU members, but it is now possible for the UK to fund the deficit by creating money. Previously, the Bank of England created money to buy assets (quantitative easing). Now it can create money to fund government spending - and there’s going to be a lot of that (think “Green Industrial Revolution” for example). We get a hint of what’s to come from the PPE procurement exposures. Those close to the current Government are going to be enormously enriched I suspect.
On to the companies, I said last Sunday that next up at 88 Energy (88E) would be a placing, and that was announced on Tuesday, A$10 million at 0.33p. However, the set up here is different to before. The farm-out agreement is not yet signed and the drill is not yet fully funded. 1.67 billion placing shares will be admitted to trading on Friday.
Another one where I expect a placing is Block Energy (BLOE), who are starting to ramp up the hype. It’s one that I warned about several times before and investors who ignored me incurred horrendous losses. The last pre-placing promotion was based on lies, so I’d suggest exercising extreme caution here.
Pantheon Resources (PANR) also announced a placing, raising $30.2 million at 31p. This does fully fund their upcoming Alaska well, which the company aims to drill in the first quarter next year. It has big numbers, but so does PANR’s existing market capitalisation, which was standing at nearly £200 million at close of business on Friday - and that’s before the new placing shares are admitted.
PetroTal (PTAL) is another that I’ve warned about frequently, all the way down from over 30p. It’s now 7.6p, at which level it’s capitalised at £62 million. However, if they can start delivering through the Northern Oil Pipeline as discussed in last week’s third quarter 2020 financial and operating results, it’s possibly not too expensive now at this level.
Parkmead Group (PMG) announced preliminary results for the year ended 30 June 2020. What always smells with this one is the director self-dealing. Nevertheless, cash balances are £25.7 million compared to a market cap of £32.7 million and there are 2P reserves of 45.7 million barrels of oil equivalent. There’s also a move into renewables on the land in Scotland purchased from the Chairman’s wife.
Bahamas Petroleum Company (BPC) announced an operational update. They’re now “one month out” to Perseverance #1. Funding, however, is dependent on the conditional convertible notes and I wonder if this line of finance actually can only come by selling shares into the market. It’s one to keep a careful eye on.
Lekoil (LEK) announced the sudden resignation of its Nominated Advisor, Strand Hanson. If no replacement is announced by 7 a.m. tomorrow, their shares will be suspended half an hour later. Absent the appointment of a replacement Nominated Adviser within one month, the admission of its AIM securities will be cancelled.
My reporting last Sunday of the Union Jack Oil (UJO) @UnionJackOil account being suspended for violating Twitter rules provoked quite a reaction. Indeed, one self-styled “independent” oil analyst/blogger came on later in the day, apparently rather the worse for wear, forgetting to mention that he in fact takes payment from the companies to say positive things about them. Watch out for this one: the last time I looked, his “bucket list” (of the shares of the companies paying him most?) was down by around 80%. Back channel communications from the company indicated the management was concerned about what their PR might have posted and therein lies the problem with UJO: the crowd of characters swarming around it.
Today, I’m finishing off the edit of the second edition of “UNDERSTANDING THE LONDON SPECULATIVE MARKETS and THE SECRETS OF HOW TO PROFIT FROM THEM” which includes some interesting new material. Its intention is to be educational, as with my blogs, public and private. Hopefully, what I write can help protect you from being scammed and get you thinking about how you actually can make money in these unconventional markets.
A complimentary copy in electronic format will be sent out in the next week or so to all private blog subscribers, existing and new, so if you’d like to read the book, try out a trial subscription to the private blog, details of which are at https://www.oilnewslondon.com/oilman-jim
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The author may hold one or more investments in one or more of the companies mentioned so this post cannot be viewed as independent research. This post does not constitute investment advice or a recommendation to buy or sell and may be incorrect or outdated.