Interesting first week. RockRose Energy (RRE) announced a year end trading update. Year end total cash was $370.7 million ($54.9 million restricted), more than the current capitalisation.
The market valuation of this company is very much a mystery. I first bought RRE around 130p and a few months later received a 150p per share return of capital, leaving me in for free. I said at the time it was financial alchemy, but so far it appears to be working. Average production in 2020 is forecast to be around 21,000 boepd, a 9% increase on 2019, and they continue to look at opportunities to make acquisitions. That’s the key to the next step up here.
Rockhopper Exploration (RKH) announced Heads of Terms with Navitas to farm-in to Sea Lion. This adds additional strength to the Sea Lion joint venture, which Rockhopper believes will increase the likelihood of a successful senior debt project financing for the Sea Lion Phase 1 development.
Sea Lion JV partner Premier Oil (PMO) announced its trading and operations update. 2019 production was 78,400 boepd. It’s also looking forward to drilling its first well in Alaska, which it describes as “potentially transformational” for Premier, whose own interest comes via a farm out from 88 Energy (88E). Premier also announced proposed UK North Sea acquisitions, which will add around 23,000 boepd production with development upside. The acquired assets are forecast to generate over $1 billion of free cash flow to the end of 2023, exactly the type of acquisition that RockRose is looking for.
Bahamas Petroleum Company (BPC) announced an update regarding their mutual fund set up to allow locals to invest. The fund has opened for receipt of initial subscriptions and the proceeds received from investors will then be utilised for the purchase of ordinary shares in Bahamas Petroleum. It will be interesting to see how this goes.
Reabold Resources (RBD) and Echo Energy (ECHO) issued drilling updates. They were both nothing announcements really, but the interesting question is why no disclosure by RBD of the California production numbers in any of their RNS announcements when State records imply material results? But the California deal has always been a curious one.
United Oil & Gas (UOG) and Prospex Oil & Gas (PXOG) issued announcements regarding the issue of an environmental approval in Italy. Both contain exactly the same facts, but look at the difference. One factual, one promotional. Now, which company comes over as more professional and credible? It’s something PXOG should think about, because the more hype contained in a RNS, the less believable it becomes.
Zenith Energy (ZEN) and Anglo African Oil & Gas (AAOG) announced a loan by ZEN to AAOG of £250,000 to keep it afloat. It’s essentially an advance on payments, but secured on the 20% AAOG retains under the ZEN deal, so it may be a prelude to them taking the lot. To finish the share price off for good, AAOG also is taking a convertible loan from Riverfort, who then will sell it down to nothing. The Board are saying that this is the best possible deal for the shareholders, so it’s perhaps no wonder that Brian Moritz is resigning.
Many more are entitled to be angry. What on earth were Miton doing with their investors’ funds in September, putting over £2.5 million into AAOG at 5.2p when the shares were trading significantly under that price and they were simultaneously entering into death spiral financing? I forecasted exactly what would happen at the time. Were Miton’s analysts really incapable of doing that? It looks bad. And why do Miton want Anglo African to do the deal with Zenith, which wipes out their investors’ equity in AAOG. Investors both direct and through funds are very much entitled to ask what exactly is going on here. Latest this morning is that a claim has been received by Anglo African relating to what appears to be the private business of the departed directors, Berwick and Sefton.
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