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PVR, LOGP, Malcy, CHAR, UKOG and Upcoming Drills

Main news last week was the Barryroe farmout involving Providence Resources (PVR), Lansdowne Oil & Gas (LOGP) and a Chinese consortium.  However, to quote Malcy "this deal is by no means a clean farm-out by traditional standards and lack of comment from TOR [Tony O'Reily] is worrying."  Closing of the deal is not expected until Q3 2018 and "is conditional on completion of all ancillary legal documentation required to implement the terms of the FOA, and is subject to the approval of the Minister of State at the Department of Communications, Climate Action and Environment and the approval of the Chinese government."  I do not think there is any rush to buy here.

Chariot Oil & Gas (CHAR) announced the result of its open offer.  The outcome was disappointing (only £1.8 million of the £4.4 million worth of shares on offer at 13p were taken up), but not surprising since the placing had already taken the shares down to the offer price.  Now trading below the placing and open offer price of 13p, the shares at this point in time are a pure gamble on the outcome of the RD-1 well in Morocco which has already spud.

UK Oil & Gas Investments (UKOG) released its annual accounts last week plus an update on Broadford Bridge.  No new drills until 2019 and it will not be able to raise the necessary funds until the outstanding £5.25 million convertible loan has cleared.  One to avoid for the time being in my opinion.

I referred to Malcy's blog above and another one worth mentioning is Upcoming Drills which, as its name implies, lists all the upcoming drills.  There are many more of these drills than most people think, but what struck me is that whereas virtually all the companies tout the most optimistic reserve estimates possible, the majority are quite shy about stating the chances of success.  Are the boards of these companies really embarking upon drilling programmes or entering into participations in drills without knowing the risk factors?  If so, they should be dismissed.  If not, and they do know the chances of success, then why are they unwilling to communicate this information to their shareholders?

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The author holds 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.

Note: No investments in the companies mentioned today.

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