Oilman Jim

Oil has been trading like a penny share, bagging at one point earlier in the week.  For the first time ever, the price even went negative for delivery.  It’s being hit from both ends with too much supply and too little demand and the worry is when will conditions stabilise.  Producers are cutting output, but the great unknown of course is the Coronavirus, which countries around the world have attempted to counter with varying degrees of success.  It will all stabilise, people will just have to adapt.  However that takes time and governments are hesitant to disclose what will be the necessary new rules until the population gradually adjusts.  It’s not really about politics (experienced doctors, scientists and civil servants are in charge), the political aspect just impacts the way it’s all presented, which unfortunately in some countries hasn’t been done too well. For shares it was another volatile week and many companies tried their best with news....

Another short week, but an interesting one.  Following on from my “success” in predicting the collapse of Block Energy (BLOE) , Anglo African Oil & Gas (AAOG) now has come to the end of its life it its current form, losing investors over 99% of their investment.  Ironic how I was attacked at the time for explaining what it actually was.  I always said the Tilapia field was worthless and the final proof was delivered by the announcement of its sale to Zenith Energy (ZEN) (including a claimed $5.3 million of receivables) for £200,000.  The clock now ticks down towards ZEN’s inevitable demise. Back to something more real,  Border and Southern Petroleum (BOR) announced final results.  Their farm-out process remains active, although they say progress has been impacted by current industry capital allocation constraints.  Cash balance at 31 December 2019 was $3.7 million and administrative expense for the year was $1.45 million.  A 25% cost r...

A short week, but plenty of interesting news.  Rockhopper Exploration (RKH) announced final results.  At 1 April this year, it had $21.9 million cash, having sold its Egypt assets, and is now focussed on the Sea Lion Falkland Island development.  Market capitalisation is £35 million; net assets per the balance sheet are $396 million. 88 Energy (88E) announced a large condensate discovery, unfortunately Premier Oil (PMO) viewed it as non-commercial and decided to exit.  That's the oil business and prudent traders don’t hold for the end result.  I highlighted 88E as a favourite several times around 0.7p and it more than doubled to over 1.4p.  As I've always said, it's critical to take profits, de-risk and never get greedy. Chariot Oil & Gas (CHAR) issued a strategic update.  They now intend to focus on monetising near term potential of the Lixus licence and maximising value for investors by developing a Moroccan gas b...

I know it can all look gloomy, but actually it's not.  The number one on the private blog list rose over 100% in 8 trading days.  It all just depends upon which shares you're in.  On to the news, and it’s been a busy week.  I3 Energy (I3E) entered into an option agreement to acquire Toscana, a Canadian company producing around 1,000 barrels of oil equivalent per day.  They say that the average breakeven price is $21.74 per barrel of oil equivalent, but what they don't disclose is that this oil sells for well below US prices.  It's a dog of a deal and I3E now has squandered its cash buying Toscana's defaulted debt, while it’s own debt remains outstanding.  Petrel Resources (PET) updated on its projects.  Good progress now appears to be being made with the issue of its Tamo 2A licence in Ghana.  I highlighted Petrel Resources as a favourite several times in the blog last year around 1p and it’s now 6p, having been as high ...

Another interesting week: RockRose Energy (RRE) issued an operations update.  Cash at close of business on 25 March 2020 was £287 million, of which £248 million was unrestricted.  They anticipate unit operating costs of around $30 per barrel of oil equivalent in 2020 and at least $50 million capital expenditure will be deferred.  Current market capitalisation is £85 million. Hurricane Energy (HUR) reconfirmed that it has a strong balance sheet, including $164.3 million of unrestricted cash at 18 March 2020 and is in a strong position to weather this current downturn.  However, it warned that should this change in the market environment persist, it is likely to have a material impact on their capacity to fund capital expenditure.  A further concern was the announcement on Friday that a crew member on the floating production storage and offloading vessel at the Lancaster field had been evacuated to the mainland for medical reasons and subsequently teste...

Interesting times.  Many say there should be a lockdown and some even think the markets should close.  A lockdown is a virtual certainty now and the Coronavirus is going to change society’s priorities massively.  The stock market will keep going, though, just as it did all the way through World War II, and the game there will remain the same, as it has through all the changes over the last few hundred years.  Just with a larger audience now, since in future most people will be in front of the computer working (or not) from home. Moving on to the oil and gas company news: 88 Energy (88E) announced drilling of the production hole is to commence imminently.  They say that “results from the logging while drilling phase of the program are expected to be announced after total depth has been reached and initial analyses have been completed, scheduled for early April.”  88E was a particularly strong performer on Friday rising 25% to 0.75p.  Perhaps s...

It’s been a busy week.  The oil price dropped into the $30s, which prompted a number of company announcements, some credible, some not.  The worst of them also took the opportunity to blame their misfortunes on the Corona-virus. Starting off, RockRose Energy (RRE) was hammered on Monday, "closing the gap" from its last pre-suspension price.  On Tuesday, it confirmed it was "debt-free with net cash of £272.1 million (equivalent to £20.75 per share)," more than double the current share price.  Jadestone Energy (JSE) confirmed "the business is resilient and expected to generate positive operating cashflow in 2020, even at oil prices below $30 a barrel."  In similar vein, Trinity Exploration & Production (TRIN) confirmed their "operating break-even has consistently been below $30 a barrel in all periods since the new management's measures took effect in 2016.” Caspian Sunrise (CASP) knows all about low oil prices.  Although restrictio...