Solo Oil (SOLO) made an interesting announcement last week. It’s entered into a binding sale and purchase agreement to acquire a package of non-operated interests in natural gas fields in the Dutch sector of the North Sea.
The interests are in 14 gas fields and are mid-life assets with relatively low abandonment expenditure. The aim is a self-funding balance sheet going forward with follow on development potential funded by re-investment of free cash flow since it’s classed as a reverse takeover, it shares have been suspended and it will be possible to express an opinion more accurately once the admission document is published.
Another company aiming for North Sea production is Jersey Oil & Gas (JOG). Its shares came off sharply when it announced that Equinor had elected not to exercise its three-month option over a 50% equity interest in respect of the blocks containing the Buchan oil field and the J2 oil discovery. The interesting thing about this is that it was already obvious Equinor was not proceeding from the previous day’s announcement that JOG had by itself made development contractor appointments. They tried to stabilise the price with the announcement of an independent assessment of resource and valuation estimates showing technically recoverable oil resource volumes of 94.7 million barrels of oil net to JOG and a mid-case contingent resource valuation (NPV10) of its P2498 licence together with a valuation of JOG’s 18% share of the Verbier discovery of £791 million. JOG’s now reduced market capitalisation currently is around £40 million.
Reabold Resources (RBD) went through its usual placing drama, although a little more than usual since it was raising £24 million this time. I think what’s happening is happening because its placings are extensively forward sold and I very much doubt they could raise these amounts as actual investments.
Meanwhile, the fun and games continue at Bahamas Petroleum (BPC). Having failed to raise the necessary $20 – 25 million at a rumoured 1p, on Thursday it announced an open offer to raise £7 million at 2p, probably hoping that shorts would cover by taking the placement of the unsubscribed open offer shares. It’s now trading back under 2p, so it looks unlikely that either existing shareholders or shorts, if any, will be subscribing. My opinion remains unchanged. Wait until they are fully funded and look at them then.
Europa Oil & Gas (EOG) announced the final results. As expected they made a loss, but the important thing is they have sufficient cash to keep going and the numbers don’t really matter that much anyway, because it’s all about whether they can farm-out one or more of their portfolio of licences. Most interesting is Inishkea, where they are focusing on being in a position to drill at the earliest opportunity. They say they are in farm-out discussions with a number of parties, including a major oil company, with whom they previously announced that they had negotiated a farm-out. Who knows what the truth is here, but any farm-out by EOG would propel the shares significantly higher.
Amerisur Resources (AMER) announced a strategic review and an update on their formal sale. They say that multiple well-funded parties are engaged in the process. Revised bidding instructions have now been issued to interested parties, inviting firm proposals to acquire the entire issued share capital of the company. They are seeking to conclude the formal sale process before the end of the year. Trading just a penny over the previous offer level of 17p, it could be an interesting bet.
UK Oil & Gas (UKOG) announced that casing has been set and coring operations are underway at Horse Hill. The coring programme has been increased from three to a total of four 60 ft cores, covering the full 240 ft Upper Portland reservoir sequence. The first 60 ft core was successfully landed at the surface on Friday morning and operations to cut the second core are in progress, with the full programme expected to be completed next week.
The additional 60 ft core number 4 is in response to the receipt of a revised Horse Hill-1 petrophysical interpretation from Petroscale in Houston, Texas, which indicates that the field’s oil-water contact may be significantly deeper than previously recognised.
If correct, the deeper oil-water contact would increase the field’s oil in place and recoverable volumes, potentially significantly beyond those previously reported. UKOG holds an 85.635% interest in the Horse Hill oil field and Alba Mineral Resources (ALBA) has an 11.765% stake in Horse Hill too. The two companies have significant upside. Both the HH-2z Portland and the HH-1 Kimmeridge well are expected to be put into long term production by the end of 2019.
Finally, Falcon Oil & Gas (FOG) announced the spudding of the Kyalla 117 N2-1 appraisal well in Australia. There are now seven companies currently drilling. In addition to FOG, UKOG and ALBA mentioned above, there’s Petro Matad (MATD), I3 Energy(I3E), Coro Energy (CORO) and Empyrean Energy (EME). All are worth keeping an eye on, since all will offer trading opportunities.
In other news, Nostrum Oil & Gas (NOG) announced an update on well 41 testing and licence extensions, Columbus Energy (CERP) announced updates on its Saffron Well, Spain and the Inniss-Trinity IPSC, Trinity Exploration & Production (TRIN) announced Trinidad and Tobago budget highlights, IGas Energy (IGAS) announced a board change, Serinus Energy (SENX) announced an operational update, Regal Petroleum (RPT) announced an Ukraine update, the appointment of a new broker and results of the MEX-119 well, Zenith Energy (ZEN) announced well C-37 production increases and confirmation of a B+ with positive outlook rating, Predator Oil (PRD) announced an update on pilot enhanced oil recovery, JKX Oil & Gas (JKX) announced a quarterly operations update, Cadogan Petroleum (CAD) announced a trading update, Caspian Sunrise (CASP) announced BNG Monthly Production Numbers, Upland Resources (UPL) announced a directorate change, Rockhopper Exploration (RKH) announced a Abu Sennan transaction update and United Oil & Gas (UOG) announced an update on its UK and Egyptian asset transactions.
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