PVR, LOGP, AAOG, BLOE, ADL, MSMN, NTOG, PXOG, IOG, CER, CLNR, EOG, MATD, AMER, MAU, UKOG, UJO, RBD, EME, CORO, SOU, ECHO, 88E, PANR, RKH, UOG, ZEN, VGAS, TXP, CASP, PPC, OEX, DGOC and ADME
Plenty of interesting news last week. Providence Resources (PVR) and Lansdowne Oil & Gas (LOGP) announced the receipt of the Barryroe site survey permit, unfortunately the funds from China have still not arrived, so yet another backstop extension was announced too. The financial situation for PVR is now dire. Unless the funds are received on Monday, the company will need to put in place alternative financing arrangements in order to provide it with sufficient working capital beyond the end of August. It's going to be a big week for PVR and LOGP.
Anglo African Oil & Gas (AAOG) announced an operational update. They have identified two drilling rigs with slots available this year and are evaluating offers from both companies. News of a rig being contracted would galvanise interest, however, remember that the recent "investors" (Riverfort and YA II) have 109 million shares to sell. For the sake of completeness, the court in the Republic of the Congo has lifted the seizure order. Presumably they used part of the placing monies to pay SMP.
Another controversial company, Block Energy (BLOE), announced that preparation has begun at West Rustavi well 38z. Of more interest to investors, they also are preparing a set of FAQs to provide stakeholders with ready answers to common enquiries. Hopefully, this will include numerous unanswered questions from shareholders regarding what appear to be false statements in their April RNS announcements concerning production and cash flow from their 16aZ well (see multiple comments in previous blog posts). Absent clarification of the "confusion," I think the only way forward for BLOE will have to be with a new CEO.
In contrast, Andalas Energy & Power (ADL) has turned itself into a model of clarity and honesty, announcing their BTN14 well "is now producing 450 barrels of total fluids per day including 4.5 bopd, representing a slightly better figure than the company would have expected at this stage." Honesty is unlikely to save ADL though, since they have to pay all the work-over costs in return for a share of the incremental production and this first work-over has only succeeded in reducing production of that well from its previous 20 bopd.
Confirming the impossibility of making money from these type of companies, Mosman Oil & Gas (MSMN) announced the spudding of Stanley-3. The cost of this drill is $325,000 and MSMN has a 14.85% working interest, resulting in an investment of $48,262. The returns from this can never even begin to cover a plc overhead burden of around $1,500,000 a year. The last half-year report shows a gross profit of $38,477 from all their wells, and that's before deducting $730,767 expenses. The same applies to other small oil/investment companies such as Nostra Terra Oil & Gas (NTOG), Prospex Oil & Gas (PXOG), etc. While funding pleasant lifestyles for their directors and professional advisers, they are simply never going to make a return for their shareholders.
Back to more serious undertakings, Independent Oil & Gas (IOG) announced the spudding of the Harvey appraisal well. In the event of success, farm-out partner, CalEnergy Resources (CER) is likely to exercise its option to acquire 50% of the Harvey licences. In this case, CER will pay an additional £20 million to IOG and a £0.95/MCF royalty on all of CER's life-of-field net gas production from Harvey (equivalent to £61.3 million if Harvey produces IOG's 129 BCF best estimate prospective resources). That amounts to more than IOG's current £65 million market capitalisation. Harvey has a 63% geological chance of success.
Again in the North Sea, Cluff Natural Resources (CLNR) announced an operations update for licence P2252. Licence operator, Shell UK, has commenced a 3D seismic survey. The survey is expected to take approximately two weeks, however, final results following data processing are only expected to be received in Q3 2020. Meanwhile, offshore Ireland, Europa Oil & Gas (EOG) announced the award of Frontier Exploration Licence 4/19 containing the Inishkea prospect, with estimated gross mean un-risked prospective gas resources of 1.5 TCF and a one in three chance of success. EOG continues to await a farm-in decision from "a major oil company."
Petro Matad (MATD) announced the spud of the Red Deer-1 exploration well and an update regarding the Heron-1 well. The Red Deer-1, targeting a 48 MMBO mean prospective recoverable resource, is being drilled with a different rig, DXZ1. The DQE rig 40105 now is on standby at Heron-1 pending resolution of MATD's legal right to use the land. There is no indication from the company as to how long this may take. With a standby cost for the rig of $12,000 a day and winter coming up, this is a big setback.
Amerisur Resources (AMER) announced an update on the strategic review and formal sale process. Multiple parties have now agreed to participate through the signing of confidentiality agreements. Currently 18.9p in the market (well above the initial 17p offer from Maurel & Prom (MAU:Paris)) I suspect an acceptable offer is going to have to be in excess of the last placing price of 25p. The company has strongly advised shareholders to take no action in respect of their shares until completion of the formal sale process.
UK Oil & Gas (UKOG) announced the acquisition of a further interest in Horse Hill. Their net share of the oil field and surrounding licences increases to 85.635% via the acquisition of Tellurian's 35% interest. £5 million of the £12 million consideration is in cash, which is being financed by a £5.5 million convertible loan from Riverfort and YA II. The presence of these two is not generally good news, but UKOG has a huge investor audience and, with the excitement of the upcoming horizontal well, buying should easily overcome their selling which is limited to £3 million per quarter.
Union Jack Oil (UJO) announced a West Newton A-2 update. Rathlin, the operator, has mobilised a wireline unit and associated equipment to the well site, which will conduct logging within the cased well bore prior to the main phase of the testing operation. Reabold Resources (RBD), a minority shareholder in Rathlin, also announced the spudding of the Iecea Mica-1 well in Romania and news on the capital reduction. No update regarding their production numbers in California though.
Also a "client" of the same US oil deal promoter as RBD, Empyrean Energy (EME) announced final results. Their "1 TCF" Dempsey well in California has had to be shut in due to water ingress, although numbers on their China prospect look promising and drilling at the Indonesia project is planned for Q4. The latter project involves Coro Energy (CORO), which is under common control with Sound Energy (SOU) and Echo Energy (ECHO). All are best avoided in my opinion (see multiple comments in previous blog posts).
88 Energy (88E) announced an update regarding its Icewine conventional farm-out in Alaska. Their preferred bidder has paid $500,000 for exclusivity until 31 August. This is starting to look promising. Pantheon Resources (PANR) announced the opening of its data room and commencement of the farm-out process. Subject to completion of a successful farm-out, PANR seeks to drill a minimum of two wells in Winter/Spring 2019/2020 (most likely one at Talitha and one at Alkaid/Phecda), with production possible in 2020. It appears we may see more Alaska drilling activity quite soon.
In other news, Rockhopper Exploration (RKH) and United Oil & Gas (UOG) announced an Egypt update, Zenith Energy (ZEN) announced an update on debt financing, Volga Gas (VGAS) announced a drilling update and production report, Touchstone Exploration (TXP) announced the spudding of COHO-1 and notice of interim results, Caspian Sunrise (CASP) announced monthly production numbers, President Energy (PPC) announced H1 group management reporting and an operational update, Oilex (OEX) announced the acquisition of two suspended licences in South Australia and Diversified Gas & Oil (DGOC) announced interim results.
Finally, ADM Energy (ADME) concluded the week by announcing at market close on Friday an offer via PrimaryBid.com. No amounts are mentioned, so basically they'll take anything they can get. The funds are being raised for general working capital purposes (i.e. to pay themselves), not to acquire an asset. Investors in this company thought there was a billionaire sheikh in charge, but obviously not. A good reminder that on AIM, things are rarely as they are presented.
Anglo African Oil & Gas (AAOG) announced an operational update. They have identified two drilling rigs with slots available this year and are evaluating offers from both companies. News of a rig being contracted would galvanise interest, however, remember that the recent "investors" (Riverfort and YA II) have 109 million shares to sell. For the sake of completeness, the court in the Republic of the Congo has lifted the seizure order. Presumably they used part of the placing monies to pay SMP.
Another controversial company, Block Energy (BLOE), announced that preparation has begun at West Rustavi well 38z. Of more interest to investors, they also are preparing a set of FAQs to provide stakeholders with ready answers to common enquiries. Hopefully, this will include numerous unanswered questions from shareholders regarding what appear to be false statements in their April RNS announcements concerning production and cash flow from their 16aZ well (see multiple comments in previous blog posts). Absent clarification of the "confusion," I think the only way forward for BLOE will have to be with a new CEO.
In contrast, Andalas Energy & Power (ADL) has turned itself into a model of clarity and honesty, announcing their BTN14 well "is now producing 450 barrels of total fluids per day including 4.5 bopd, representing a slightly better figure than the company would have expected at this stage." Honesty is unlikely to save ADL though, since they have to pay all the work-over costs in return for a share of the incremental production and this first work-over has only succeeded in reducing production of that well from its previous 20 bopd.
Confirming the impossibility of making money from these type of companies, Mosman Oil & Gas (MSMN) announced the spudding of Stanley-3. The cost of this drill is $325,000 and MSMN has a 14.85% working interest, resulting in an investment of $48,262. The returns from this can never even begin to cover a plc overhead burden of around $1,500,000 a year. The last half-year report shows a gross profit of $38,477 from all their wells, and that's before deducting $730,767 expenses. The same applies to other small oil/investment companies such as Nostra Terra Oil & Gas (NTOG), Prospex Oil & Gas (PXOG), etc. While funding pleasant lifestyles for their directors and professional advisers, they are simply never going to make a return for their shareholders.
Back to more serious undertakings, Independent Oil & Gas (IOG) announced the spudding of the Harvey appraisal well. In the event of success, farm-out partner, CalEnergy Resources (CER) is likely to exercise its option to acquire 50% of the Harvey licences. In this case, CER will pay an additional £20 million to IOG and a £0.95/MCF royalty on all of CER's life-of-field net gas production from Harvey (equivalent to £61.3 million if Harvey produces IOG's 129 BCF best estimate prospective resources). That amounts to more than IOG's current £65 million market capitalisation. Harvey has a 63% geological chance of success.
Again in the North Sea, Cluff Natural Resources (CLNR) announced an operations update for licence P2252. Licence operator, Shell UK, has commenced a 3D seismic survey. The survey is expected to take approximately two weeks, however, final results following data processing are only expected to be received in Q3 2020. Meanwhile, offshore Ireland, Europa Oil & Gas (EOG) announced the award of Frontier Exploration Licence 4/19 containing the Inishkea prospect, with estimated gross mean un-risked prospective gas resources of 1.5 TCF and a one in three chance of success. EOG continues to await a farm-in decision from "a major oil company."
Petro Matad (MATD) announced the spud of the Red Deer-1 exploration well and an update regarding the Heron-1 well. The Red Deer-1, targeting a 48 MMBO mean prospective recoverable resource, is being drilled with a different rig, DXZ1. The DQE rig 40105 now is on standby at Heron-1 pending resolution of MATD's legal right to use the land. There is no indication from the company as to how long this may take. With a standby cost for the rig of $12,000 a day and winter coming up, this is a big setback.
Amerisur Resources (AMER) announced an update on the strategic review and formal sale process. Multiple parties have now agreed to participate through the signing of confidentiality agreements. Currently 18.9p in the market (well above the initial 17p offer from Maurel & Prom (MAU:Paris)) I suspect an acceptable offer is going to have to be in excess of the last placing price of 25p. The company has strongly advised shareholders to take no action in respect of their shares until completion of the formal sale process.
UK Oil & Gas (UKOG) announced the acquisition of a further interest in Horse Hill. Their net share of the oil field and surrounding licences increases to 85.635% via the acquisition of Tellurian's 35% interest. £5 million of the £12 million consideration is in cash, which is being financed by a £5.5 million convertible loan from Riverfort and YA II. The presence of these two is not generally good news, but UKOG has a huge investor audience and, with the excitement of the upcoming horizontal well, buying should easily overcome their selling which is limited to £3 million per quarter.
Union Jack Oil (UJO) announced a West Newton A-2 update. Rathlin, the operator, has mobilised a wireline unit and associated equipment to the well site, which will conduct logging within the cased well bore prior to the main phase of the testing operation. Reabold Resources (RBD), a minority shareholder in Rathlin, also announced the spudding of the Iecea Mica-1 well in Romania and news on the capital reduction. No update regarding their production numbers in California though.
Also a "client" of the same US oil deal promoter as RBD, Empyrean Energy (EME) announced final results. Their "1 TCF" Dempsey well in California has had to be shut in due to water ingress, although numbers on their China prospect look promising and drilling at the Indonesia project is planned for Q4. The latter project involves Coro Energy (CORO), which is under common control with Sound Energy (SOU) and Echo Energy (ECHO). All are best avoided in my opinion (see multiple comments in previous blog posts).
88 Energy (88E) announced an update regarding its Icewine conventional farm-out in Alaska. Their preferred bidder has paid $500,000 for exclusivity until 31 August. This is starting to look promising. Pantheon Resources (PANR) announced the opening of its data room and commencement of the farm-out process. Subject to completion of a successful farm-out, PANR seeks to drill a minimum of two wells in Winter/Spring 2019/2020 (most likely one at Talitha and one at Alkaid/Phecda), with production possible in 2020. It appears we may see more Alaska drilling activity quite soon.
In other news, Rockhopper Exploration (RKH) and United Oil & Gas (UOG) announced an Egypt update, Zenith Energy (ZEN) announced an update on debt financing, Volga Gas (VGAS) announced a drilling update and production report, Touchstone Exploration (TXP) announced the spudding of COHO-1 and notice of interim results, Caspian Sunrise (CASP) announced monthly production numbers, President Energy (PPC) announced H1 group management reporting and an operational update, Oilex (OEX) announced the acquisition of two suspended licences in South Australia and Diversified Gas & Oil (DGOC) announced interim results.
Finally, ADM Energy (ADME) concluded the week by announcing at market close on Friday an offer via PrimaryBid.com. No amounts are mentioned, so basically they'll take anything they can get. The funds are being raised for general working capital purposes (i.e. to pay themselves), not to acquire an asset. Investors in this company thought there was a billionaire sheikh in charge, but obviously not. A good reminder that on AIM, things are rarely as they are presented.
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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.