We highlight a few Oil & Gas AIM-listed companies that have been gathering shareholder attention lately. A couple have relaunched themselves, some have suffered major setbacks from past heights, while others have gathered pace and are looking to expand. One thing is for sure, life is never dull on the Alternative Investment Market (AIM).
Yes, this is a mixed bag with investors looking for a quick buck these days. It is achievable if you do your own due diligence, don’t follow the herd and don’t listen to the noise across social media. My personal experiences investing over the years, if it’s unloved – but the fundamentals add up, good management team in place, assets – cash positive with a structured road map, I will sit up and pay attention.
We take a look at what a few of the oil & gas listings have got to offer, with so many companies trading on the AIM platform these days. Over the past couple of years we have seen a healthy appetite for companies to list in the UK.
This is my take on what is happening and may be what you may consider is worth putting on your watch-list? First up on the Share Talk hit list to be highlighted:
Canadian Overseas Petroleum Limited “COPL” (TSX-V: XOP) Official List, and started trading on the London Stock Exchange’s main market April 28, 2016. The Common Shares are listed under the symbol “XOP” on the TSXV and under the symbol “COPL” on the London Stock Exchange.
The Mesurado-1 well (Block LB-13) is the stand out point here for holders who took a position in the IPO during 2016, but I will touch on that a bit later. Here are a few pointers about the company, timeline,s and what is happening today that has caught my attention…
Canadian Overseas Petroleum Limited : IPO
Oil and gas exploration and development company focused in the offshore West Africa. The Company holds a 17% working interest in Block LB-13, offshore Liberia, with ExxonMobil the operator holding an 83% working interest, where it expects to participate in the drilling of a deep water exploration well in late 2016.
The Company launched with all guns blazing and the retail/private investors liked the story from the start. The city institutes purchased and social media was alight with info, opinions, and forward-looking share prices.
The SP started to moved north in the following months. placing followed, yet was over subscribed… everything was falling in to place for COPL as a business.
On September 14 2016 the company announces its 50% owned affiliate, Shoreline Canadian Overseas Petroleum Limited (“ShoreCan”), had completed the acquisition of 80% of the share capital of Essar Exploration and Production Limited (Nigeria) (“Essar Nigeria”). Essar Nigeria’s sole asset is a 100% interest and operatorship of OPL 226 located 50km offshore in the central area of the Niger Delta.
Arthur Millholland, President & CEO, commented at the time:
“This is a great opportunity for our Company. It is a result of our efforts and of our partner in ShoreCan; the Nigeria-based Shoreline Energy International. It allows the Company to leverage its in-house technical expertise and expand its regional footprint to acquire a high quality oil appraisal and development asset offshore Nigeria. It will be an excellent complement to our current West African portfolio.”
Leading up to that announcement the SP was sitting around 6.67p and the markets reacted. By mid October the SP had passed the 8p mark and on October 24, 2016 the company had to responds to the volume increases due to news articles that discuss the Liberia asset. On that day the SP hit it’s highest point of 10.6p, an amazing rise from listing on the London Stock exchange in late April 2016.
Commenced drilling operations:
November 23, 2016 and the news release announces ExxonMobil Exploration and Production Liberia Limited, an affiliate of ExxonMobil, commenced drilling operations on the Mesurado-1 exploration well on November 22, 2016 utilizing the Drillship Seadrill West Saturn. The Mesurado-1 well is located about 50 miles offshore Liberia on Block LB-13 in approximately 2500 meters of water. The well, targeting oil in Late Cretacous sands is the first well operated by ExxonMobil offshore Liberia.
Come mid-December the SP was sliding as investors started to derisk with the share price falling below 8p. Sentiment leading up to the drill may have helped drive the SP north, but holding to touch down and risking everything is not for the faint hearted.
Arthur Millholland CEO. would comment later,
“The targeted Santonian sand sequence and thickness intersected was in accordance with COPL seismic interpretation. The Company believed the seismic data presented attributes indicative of hydrocarbons was correct”.
Reading between the lines you wonder who crunched (interpreted seismic data) the figures and gave COPL the impression they were in the correct location to spud the well back in November 2016?
December 19, 2016 Mesurado-1 Well Reaches Final Total Depth: Mesurado-1 well operated by ExxonMobil Exploration and Production Liberia Limited (the “Operator”), reached final total depth on December 17.
No hydrocarbons were indicated by the logging while drilling operations performed across the targeted intervals. As such the Operator has advised the Company that no further logging operations will be conducted and the well will be plugged and abandoned.
On the opening of the market in London that morning, the SP tumbled and hit a low of 1.63p and for all intense and purposes it looked like COPL had put all their eggs in one basket. The management team couldn’t understand how the seismic data presented attributes indicative of hydrocarbons, yet delivered a duster? It was back to the drawing board and COPL had to consider additional work on the 3D seismic over the Block.
So why am I telling you all this? People have to understand the short history of “COPL” from listing on AIM and the position they faced after putting so much faith in one well at Mesurado-1. Basically it was back to the drawing board with the management team having to access the financial position.
December 19, 2016 Mesurado-1 RNS image above had one clue tucked away at the base of that announcement that caught my attention and kept COPL on the watch-list.
In January 2017 COPL listed securities, of 5,477,857 common shares to Trading in London of Shares valued at £0.0475 per Common Share. The 2016 Year End Results were released in March 2017 along with this update.
Arthur Millholland, President & CEO, commented:
“Whilst we were disappointed with the initial drill results from the Mesurado-1 well, we have been reevaluating alternative leads as we believe there remains upside potential. In addition to this, we remain focused on developing an attractive oil appraisal in OPL 226, offshore Nigeria, which is a highly prospective area in our opinion. We look forward to updating the market on the progress made at OPL 226 over the summer months.”
The May 2017, Reports Q1 2017 RNS update was released and Arthur Millholland, President & CEO went even further in to detail about the company 3D seismic data with these comments:
“Whilst we were disappointed with the initial drill results from the Mesurado-1 well, we have been continuing to re-interpret our 2,500 sq. kilometer LB-13 3D seismic data set by incorporating the drilling results into a new seismic interpretation. This involves a reappraisal of the seismic attributes previously interpreted to be possibly associated with hydrocarbons. Specifically the Company is evaluating whether the false hydrocarbon seismic response at Mesurado-1 is a local or a regional phenomenon. This evaluation is not one which can be accomplished in a short time, but should be completed late Q2 to early Q3 2017.
In addition to this, we remain focused on developing an attractive oil appraisal in OPL 226, offshore Nigeria, which is a highly prospective area in our opinion. The two Investment Banks we have engaged are experienced in financing African energy ventures. We look forward to updating the market on the progress made at OPL 226 in the second and third quarters.”
May 25, 2017 News of a placing was announced (I had watched the SP slide over the previous month), a Common Share Offering £3.25 million. The Company issue 650,000,000 new common shares (“Placing Shares”) at a price of 0.5 pence per Placing Share.
Management, including Arthur Millholland, President & CEO, representing approximately 3% of the existing share capital of the Company, and certain existing shareholders, participate in the Placing for an amount approximately equal to their proportionate current holdings in the Company.
This was looking like the fresh start “COPL” was financially secure, they can press forward for its oil appraisal and development project offshore Nigeria in OPL 226 held through its 50% owned subsidiary ShoreCan’s 80% shareholding in Essar Exploration and Production Limited Nigeria.
COPL provides management and technical services to ShoreCan and Essar Nigeria. The net proceeds of the Placing will provide the Company with additional working capital as they look to execute their business plan.”
The Company intends to use the net proceeds of the Placing to fund the Company’s ongoing general and administrative expenses which principally covers a full technical team including geologists, a geophysicist, reservoir engineers, a drilling engineer and in-house Counsel, which are approximately US$385,000 per month, as the Company seeks to progress its projects in West Africa.
[idz_button color=”default” size=”large” label=”COPL Investor Presentation” icon=”” link=”/oilandgas/copl/2zzz/” target=”_blank” type=”square_shape” class=””]
When you take in to consideration the cash burn of US$385,000 per month, straight away punters may be thinking dilution in the future? To be honest, this is the nature of the beat at the lower end of the AIM, for companies to thrive, they need cash. The one thing I have seen with “COPL” is that they have never had an issue raising funds.
The SP sits at 0.55p with the market makers opening up a spread of 20%, last placing remember was 0.5 pence per Placing Share. Lets look through 2017 and what “COPL” may have to offer investors.
- Placing Shares will be admitted on the Main Market 12 June 2017, so will the wise investors who are not in the placing sit back and watch?
- Will we see sentiment change, share price move once the new shares issued flow through the market?
- Debit package to fiance operations from main market institutes?
- Rig hot stacked (if COPL sign a contractual agreement, this would incur cost’s of $100,000 plus per day in cash burn – hot stacked is hiring on the spot market while a semi is in cold storage) an option for the company?
- New seismic interpretation – 3D seismic data should be completed late Q2 to early Q3 2017. Mesurado-1, 50 miles offshore Liberia on Block LB-13 (reappraisal of the original seismic).
- Nigeria – Appraisal* drilling operations are planned to commence in late 2017 as quoted back in December 2016 RNS? Will the management team deliver on its oil appraisal and development project offshore Nigeria – OPL 226?
*Appraisal drill: Think back to December 19, 2016 Mesurado-1, this was an Exploration drill, wild cat with a high degree of not striking oil. Appraisal drill is a different beast, the company knows they have oil, the question being, how much, is it commercially viable to extract versus cost per barrel.
On a closing note, for myself personally, with the news flow to come in 2017, early Q1 – Q2 2018, “COPL” is one that should be on the watch list. We will re-visit Canadian Overseas Petroleum Limited in the coming months and update our readers.
All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned