Oil Man Jim Company Oil & Gas Podcast, Mid-Week Blog, 19th February 2020

Lansdowne Oil & Gas (LOGP), which I mentioned at the weekend along with its Barryroe partner, Providence Resources (PVR), announced its placing: £488,000 at 0.6p.

Now, their target is to complete a farm-out deal within the next six months.  LOGP is trading at a valuation of 8 cents per contingent resource barrel, so there’s scope for a significant re-rating if the farm-out comes about.  Same of course for PVR too.

 

 

From here, some may think that the commentary is a little negative, but that’s purely a function of the companies which have issued news so far this week.  I’ve no agenda here, no position in any of them and no financial interest in their outcomes; I’m simply commenting on what I see.  If you have a problem listening to opinions different to your own, then perhaps you should switch off now.  Let’s start.

Sound Energy (SOU) announced that the anonymous UK private company which was previously touted as the purchaser of their assets doesn’t have the funds.  No surprises there for readers or listeners.  I said in November last year that their “sale” announcement then had been drafted to make people think the sale of the Morocco assets was a certainty in order to help associated parties sell their shares.  It really is a stinker with the same old people promoting it for money all the way down.  SOU is now down to around just 3% of the price it was when I first started warning about it.  Now the same guy, running it who managed to destroy investors’ capital in Echo Energy (ECHO) too, is off to “rescue” Ascent Resources (AST) Per the RNS this week, that starts by wiping out the equity of existing shareholders.  Next will come the paid promotion from the usual crew, maximum further fundraising, and substantial losses for those foolish enough to believe them.  For the sake of completeness, ECHO announced yet another non-commercial gas discovery this morning.

Sound’s still got plenty further to fall compared to Anglo African Oil & Gas (AAOG), which now is around just 1% of the price it was when I first started questioning it, but coming up to take its place is Zenith Energy (ZEN) which I said last weekend must now be the worst company on the market.  This one really consumes cash fast.  Some companies are criticised for doing two or three fundraising exercises a year; ZEN now appears to be doing two or three a week.  I suggested at the weekend that people should have a look at the accounts and pointed out on Monday that per the cash flow statement, all the cash raised appears to go in foreign exchange/currency losses!  Which raises the question of what is this company really up to?  It’s now desperately trying to grab cash every way it possibly can.

More on Predator Oil & Gas (PRD), which announced its fundraising last Friday.  There appear to be a lot of the usual social media pumpers in the placing (who will be looking to flip) and it also should be noted that completion of the placing is conditional on approval by the FCA of a prospectus.  This will include a Competent Person’s Report in respect of the Company’s interests in Morocco, Trinidad and Ireland and it may be prudent to await that.

PetroTal (PTAL) generates controversy.  There’s a group of investors (many of the same ones as in RBD and UOG) who consider it one of the best investments ever; others question the decline rate (which of course the first group deny).  PTAL issued a 2019 year-end oil reserves and operational update this week, touting large increases in reserve numbers (which is usual when drilling), but no mention at all of the declines, which are obvious from the company’s own announcements.  One of the people promoting it, who has put up a one-page website, says he’s done an intensive fundamental analysis and produced what’s claimed to be a 130-page “report” which can be accessed for $239; unfortunately it’s not all quite as simple as they think.  Perhaps read the RNS announcements at the start when PTAL openly disclose decline rates.  I’m not saying it’s that bad a company, just not what some of the more hyperbolic posters are claiming.  It’s back to where it was price-wise before the big number announcements, which the market now appears not to be giving too much credence too.  For capital gains from this point, there are much better companies out there.

As I’ve said before, fundamental analysis is not the most important thing with these small caps anyway, critical is to understand how the finance and promotion side works.  That’s why I know what’s going on at these companies and where they’re likely to go.  People ask how I know this stuff.  It’s simple, I’ve 40 years experience in the markets from both sides of the fence.  If you’re interested in knowing my trading ideas, go to https://www.oilnewslondon.com/oilman-jim

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.


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