JOG, IOG, RRE, AMER, MAU, PVR, LOGP, RKH, UOG, MSMN, TOM, HNR, RMP, DGOC, RRL, SEY, PPC, AAOG, UJO, RBD and BLOE
Jersey Oil & Gas (JOG) started the week, announcing the award of three North Sea blocks in the 31st Supplementary Offshore Licensing Round. The award includes the Buchan oil field and the J2 oil discovery. The acreage is estimated to contain more than 100 MMBOE discovered mean recoverable resources plus in excess of 300 MMBOE identified mean prospective resources. The share price responded positively, rising 153% on the week.
Independent Oil & Gas (IOG) started the week announcing the Thames Reception Facility acquisition and a Harvey appraisal well update, then finished the week by announcing the farm-out of 50% of its Southern North Sea assets (except the Harvey licences) to CalEnergy Resources (CER). Superficially, it looks like a good deal for IOG, who will receive a £40 million initial cash payment, up to a £125 million development carry plus a capped royalty on CER's interest. CER also have the option, within three months of the Harvey appraisal well completion, to farm in to 50% of the Harvey licences in consideration for an additional £20 million cash payment plus an uncapped royalty.
However, CER will receive 20.2% of IOG's Phase 1 revenues up to a cap of £91 million and IOG has to repay the LOG debt, thus despite the farm-out, IOG's shares are still trading below the 20p per share offer from Rockrose Energy (RRE) made and rejected earlier this year. RRE itself also was in the news, returning from suspension at more than twice its pre-suspension price and closing the week at £18 per share. There is significant potential further upside here. Hannam&Partners for one have calculated a risked NAV of £37 per share.
Amerisur Resources (AMER) received a takeover bid worth 17p per share from Maurel & Prom (MAU:Paris). The offer was immediately rejected by the AMER board of directors. Trading at 17.5p, a higher offer would appear to be expected. In the meantime, Providence Resources (PVR) and Lansdowne Oil & Gas (LOGP) made the now weekly announcement of the backstop extension. One day perhaps the funds from China will arrive.
Rockhopper Exploration (RKH) announced the disposal of Abu Sennan in Egypt to United Oil & Gas (UOG) for a consideration of $16 million. The 22% working interest produces 813 BOEPD net, generating revenue of $6.2 million in 2018 and a loss of $2.2 million. UOG shares now are suspended since the transaction is classified as a RTO and will return to the market along with a placing to help fund the deal. What is important about this transaction in my opinion is that it will put in place a strong foundation stone for UOG which will make further deals and licence awards much easier.
Amongst others, Mosman Oil & Gas (MSMN) announced an Australian exploration update, TomCo Energy (TOM) announced a field test update, Highlands Natural Resources (HNR) announced final results, Red Emperor Resources (RMP) announced its quarterly activities and cashflow report (it still has A$5.6 million cash), Diversified Gas & Oil (DGOC) announced a trading statement and conditional asset purchase agreement, Range Resources (RRL) announced a company update (plus a return to trading following the termination of acquisition negotiations), Sterling Energy (SEY) announced results for the six months ending 30 June and President Energy (PPC) announced new offtake arrangements.
Anglo African Oil & Gas (AAOG) announced the holdings of Miton, Riverfort and YA II. If they are going to sell these above 5.2p and make a profit, then the shares will need to be pushed up to at least 7p. Expect to see increased activity and exhortations to buy on social media and particularly the chat boards. Union Jack Oil (UJO) announced a West Newton update, containing the operator, Rathlin Energy's communication to local residents. This caused some initial concern until it was appreciated to whom this document was addressed.
There was significant feedback in relation to the comments in the last blog regarding Reabold Resources (RBD). Some from the overly emotionally involved. Others from those who want to dig deeper. The first issue with RBD's California deal is that the ownership of an earn-in agreement (no cash was paid for it, the consideration is the undertaking to do certain work on the leases) was transferred to an offshore company, which was immediately sold to RBD for £3 million, including the issue of 12.86% of RBD's equity to an unnamed seller. This is a most unusual transaction.
The second issue is the choice of operator. RBD chose an office services company, Integrity Management Solutions, with no prior experience of oil and gas operations. The resume of its President, Dero Parker includes no qualifications or details of actual experience (anyone can buy old seismic data and say they used to own "oil and gas assets" - a few hundred dollars of mineral rights would suffice). All highly unusual, since the norm would be to engage an established oil and gas operator, of which there are many.
The third issue is that no meaningful details of the leases or production are reported. All normal disclosures of acreage numbers are missing from RBD's RNS announcements and no actual sustained production numbers are reported, even a year after production supposedly commenced at "Monroe Swell." The unqualified Mr. Parker certifies everything, including the reserve calculations. The lack of knowledge is demonstrated by him describing the drilling of proved, undeveloped locations as "discoveries." RBD appear to have dispensed with the normal involvement of qualified professionals. This is extremely unusual and indicates the deal would not survive independent third-party evaluation. Regarding Sunset Exploration, with whom the earn-in agreement was entered, little is known about this company other than that all of its wells, except two, are plugged and abandoned.
As expected (see previous blog posts), reality hit Block Energy (BLOE) hard when the company announced the resumption of production at West Rustavi. For the first time production was stated in bopd (barrels of oil per day) rather than bbl/d (barrels per day) as previously. In fact, the well is only producing 295 bopd and the previous 1,100 bbl/d rate appears to have been mainly water. The company's paid PR was aggressively touting a thousand barrels of oil per day production to investors, who bought the shares up to 17.5p. Did BLOE never think they should correct that?
The sting is in the tail for BLOE though. Between April and July, it never reported that production had been suspended. Given the size of the company, the impact on revenue/cash flow and, especially in light of the £12 million equity issue, BLOE should have notified the market. Price sensitive information appears to have been deliberately withheld and the company is in for a difficult time with AIM Regulation. I suspect there are many more problems still hidden.
Contact me on Twitter @Oilman_Jim
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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.
Independent Oil & Gas (IOG) started the week announcing the Thames Reception Facility acquisition and a Harvey appraisal well update, then finished the week by announcing the farm-out of 50% of its Southern North Sea assets (except the Harvey licences) to CalEnergy Resources (CER). Superficially, it looks like a good deal for IOG, who will receive a £40 million initial cash payment, up to a £125 million development carry plus a capped royalty on CER's interest. CER also have the option, within three months of the Harvey appraisal well completion, to farm in to 50% of the Harvey licences in consideration for an additional £20 million cash payment plus an uncapped royalty.
However, CER will receive 20.2% of IOG's Phase 1 revenues up to a cap of £91 million and IOG has to repay the LOG debt, thus despite the farm-out, IOG's shares are still trading below the 20p per share offer from Rockrose Energy (RRE) made and rejected earlier this year. RRE itself also was in the news, returning from suspension at more than twice its pre-suspension price and closing the week at £18 per share. There is significant potential further upside here. Hannam&Partners for one have calculated a risked NAV of £37 per share.
Amerisur Resources (AMER) received a takeover bid worth 17p per share from Maurel & Prom (MAU:Paris). The offer was immediately rejected by the AMER board of directors. Trading at 17.5p, a higher offer would appear to be expected. In the meantime, Providence Resources (PVR) and Lansdowne Oil & Gas (LOGP) made the now weekly announcement of the backstop extension. One day perhaps the funds from China will arrive.
Rockhopper Exploration (RKH) announced the disposal of Abu Sennan in Egypt to United Oil & Gas (UOG) for a consideration of $16 million. The 22% working interest produces 813 BOEPD net, generating revenue of $6.2 million in 2018 and a loss of $2.2 million. UOG shares now are suspended since the transaction is classified as a RTO and will return to the market along with a placing to help fund the deal. What is important about this transaction in my opinion is that it will put in place a strong foundation stone for UOG which will make further deals and licence awards much easier.
Amongst others, Mosman Oil & Gas (MSMN) announced an Australian exploration update, TomCo Energy (TOM) announced a field test update, Highlands Natural Resources (HNR) announced final results, Red Emperor Resources (RMP) announced its quarterly activities and cashflow report (it still has A$5.6 million cash), Diversified Gas & Oil (DGOC) announced a trading statement and conditional asset purchase agreement, Range Resources (RRL) announced a company update (plus a return to trading following the termination of acquisition negotiations), Sterling Energy (SEY) announced results for the six months ending 30 June and President Energy (PPC) announced new offtake arrangements.
Anglo African Oil & Gas (AAOG) announced the holdings of Miton, Riverfort and YA II. If they are going to sell these above 5.2p and make a profit, then the shares will need to be pushed up to at least 7p. Expect to see increased activity and exhortations to buy on social media and particularly the chat boards. Union Jack Oil (UJO) announced a West Newton update, containing the operator, Rathlin Energy's communication to local residents. This caused some initial concern until it was appreciated to whom this document was addressed.
There was significant feedback in relation to the comments in the last blog regarding Reabold Resources (RBD). Some from the overly emotionally involved. Others from those who want to dig deeper. The first issue with RBD's California deal is that the ownership of an earn-in agreement (no cash was paid for it, the consideration is the undertaking to do certain work on the leases) was transferred to an offshore company, which was immediately sold to RBD for £3 million, including the issue of 12.86% of RBD's equity to an unnamed seller. This is a most unusual transaction.
The second issue is the choice of operator. RBD chose an office services company, Integrity Management Solutions, with no prior experience of oil and gas operations. The resume of its President, Dero Parker includes no qualifications or details of actual experience (anyone can buy old seismic data and say they used to own "oil and gas assets" - a few hundred dollars of mineral rights would suffice). All highly unusual, since the norm would be to engage an established oil and gas operator, of which there are many.
The third issue is that no meaningful details of the leases or production are reported. All normal disclosures of acreage numbers are missing from RBD's RNS announcements and no actual sustained production numbers are reported, even a year after production supposedly commenced at "Monroe Swell." The unqualified Mr. Parker certifies everything, including the reserve calculations. The lack of knowledge is demonstrated by him describing the drilling of proved, undeveloped locations as "discoveries." RBD appear to have dispensed with the normal involvement of qualified professionals. This is extremely unusual and indicates the deal would not survive independent third-party evaluation. Regarding Sunset Exploration, with whom the earn-in agreement was entered, little is known about this company other than that all of its wells, except two, are plugged and abandoned.
As expected (see previous blog posts), reality hit Block Energy (BLOE) hard when the company announced the resumption of production at West Rustavi. For the first time production was stated in bopd (barrels of oil per day) rather than bbl/d (barrels per day) as previously. In fact, the well is only producing 295 bopd and the previous 1,100 bbl/d rate appears to have been mainly water. The company's paid PR was aggressively touting a thousand barrels of oil per day production to investors, who bought the shares up to 17.5p. Did BLOE never think they should correct that?
The sting is in the tail for BLOE though. Between April and July, it never reported that production had been suspended. Given the size of the company, the impact on revenue/cash flow and, especially in light of the £12 million equity issue, BLOE should have notified the market. Price sensitive information appears to have been deliberately withheld and the company is in for a difficult time with AIM Regulation. I suspect there are many more problems still hidden.
Contact me on Twitter @Oilman_Jim
Click "SUBSCRIBE" to receive posts by email
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.