I said on Sunday that a lockdown was a virtual certainty, but the stock market would stay open and both were confirmed on Monday evening by the Government and the FCA.
So now we have millions of people at home with not much to do and the allure of the speculative markets on their computer screen.
The FCA moratorium announced at the weekend regarding the publication of results is interesting. Essentially, the Coronavirus crisis could result in many companies ceasing to be “going concerns” and extra time is needed for auditors to assess matters fully.
Oil and gas companies that have so far announced delays are RockRose Energy (RRE), IGas Energy (IGAS), SDX Energy (SDX) and Gulf Keystone Petroleum (GKP), All are potentially now in for significant reassessments.
On to companies that did announce meaningful news in the first couple of days of the week:
Hurricane Energy (HUR), which has already released its preliminary unaudited results for the year ended 31 December 2019, 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.
UK Oil & Gas (UKOG) announced that it has filed a planning application with the Isle of Wight Council for the appraisal drilling and flow testing of the Arreton oil discovery, which is a geological analogue of the Horse Hill oil field, containing calculated aggregate gross P50 oil in place of 127 million barrels. It makes for an interesting addition.
Petro Matad (MATD) announced an operational update. They’re progressing the Block XX exploitation licence application and a new CPR increases the total mean un-risked in-place oil resource potential of the Heron structure by 20% to 194 million barrels. Reservoir stimulation studies indicate significant improvements in the recovery factor are possible and the Heron development base case has increased to 33 million barrels recoverable. Challenge is whether they will actually be able to get any further work done this year with the current Coronavirus situation.
Pantheon Resources (PANR) announced upgraded resource estimates: the shallowest horizon now is estimated to contain 1.8 billion barrels of oil in place and a P50 technically recoverable resource of 483 million barrels of oil. Will they be able to achieve a farm-out is now the question.
Tlou Energy (TLOU) issued a response to prevailing financial market conditions. Main point is that directors are reducing their salaries by 50%. I can see this becoming prevalent. No one in this environment is going to invest funds to pay six figure salaries for directors of loss making companies. They’re all going to have to get real now. If they genuinely believe in it, work for free with options.
Regal Petroleum (RPT) announced the acquisition of another licence in north-eastern Ukraine with claimed but unverified reserves under the Ukranian classification system of approximately 38 million barrels of oil equivalent. The Company envisages that the development plan will include the commencement of a new well within the next 12 months, with drilling and completion operations expected to take up to a further 12 months.
Plus Gulf Keystone Petroleum (GKP) mentioned already, announced an operational and corporate update too. Despite delaying release of its results, it confirmed that “at current production levels, the Company covers all operating, general and administrative costs and interest payments with a Brent price of around $35 per barrel.” Production currently is around 38,000 barrels of oil per day and the balance sheet is strong with cash of $154 million at 23 March and no debt repayment until mid-2023. Current market capitalisation by comparison is around £140 million.
There were other announcements from Anglo African Oil & Gas (AAOG), Ascent Resources (AST) and Zenith Energy (ZEN), but I’m not sure that, other than the comedy aspect, there’s that much interest anymore in what are openly non-viable companies.
What there is interest in is the new Special Trading Course and I’d suggest that you at least read the details about it at https://www.oilnewslondon.com/trading I’m confident it will be of significant benefit to you.
I’ll also be running through what I think are the oil stocks with the greatest current potential in the private blog on Friday morning. There are a couple, rarely mentioned on social media, which I believe are really good. Information about that is at https://www.oilnewslondon.com/oilman-jim
Contact me on Twitter @Oilman_Jim
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