Another interesting week. I3 Energy (I3E) announced news which appears to have confused many. Key point is that the warrant and management option strike prices are being reset to the nominal value of I3’s shares (£0.0001/share), which means that the I3 equity is being deemed worthless. The Canadian acquisition and any future North Sea activity therefore is of academic interest only now to existing shareholders. You can perhaps see why a well-known group was pumping I3E so hard before the suspension, trying to get the stock away.
As expected the TomCo (TOM) “short squeeze” ran out of steam and the price has retreated significantly. Next up here will be a new placing. Let’s be clear, associated company Petroteq ($PQE $PQEFF) is a promotion. No one is expecting it to achieve commercial success. The purpose of its announcements is to sell shares. Any company doing “business” with it is the same. Mayan Energy (MYN) (now Attis Oil & Gas (AOGL)) is one example. There can be occasional trades in such shares, but they’re not investments, since holding long term would only result in losses. Same applies to TOM and all other companies involved.
I said on Monday that a placing was certain at Canadian Overseas Petroleum (COPL) and, lo and behold, one was announced on Tuesday morning. It’s had a good run since it terminated the equity sharing agreement and we’ve seen the same in recent days with UK Oil & Gas (UKOG), which also now is free to move with the convertible loan notes being redeemed. If you learn anything, it should be to avoid like the plague any companies with death spiral type financing. The only time to get into these is when the death spiral is ended. Another recent example is Predator Oil & Gas (PRD), which rose from 1.3p to over 4p once its convertible loan notes were cancelled. I explain everything about this, exactly how it works and how you can make money out of it in my new book, details of which are below.
Back to the news, Angus Energy (ANGS) are trying to get rid of their death spiral too and made a partial payment to Riverfort last week. They also announced their half year report and say they are confident that their efforts for the rest of 2020 will have a transformational effect. Let’s see.
President Energy (PPC) announced its audited Results for the year ended 31 December 2019 and say they look forward to rising to the challenges ahead. The shares closed on Friday at 1.5p, down nearly 20% from the recent 1.85p placing price, and down 40% from the 2.5p level, where it was being pumped by professional touts pre-placing. Note the names of those involved and be careful in future. Again, this is something I explain fully in the new book.
United Oil & Gas (UOG) announced a reserves upgrade, but it didn’t help the share price much. It’s important to understand that generating and buying production is easy, the hard part is getting profits down to the bottom line. Despite all the supposed good news from United, it is still trading under its last 3p placing price at which the Egypt production acquisition was financed.
Savannah Energy (SAVE), which announced a trading update, is another one like this. Once a promising exploration company trading over 40p, its drilling plans were cancelled by the CEO to make a Nigeria production acquisition. Some investors thought they were going to get rich, but after a financing at 35p, it now trades under 7p. Don’t fall for such propositions. These types of deals rarely work on the AIM and small cap markets.
I know a lot of people don’t like to hear any of this, but it’s the unfortunate reality of these markets. Generally, you’ll lose money investing in these companies, they’re for trading only – but some can be very good for that.
If you don’t believe me, take a look at the five year charts for a selection of these types of companies. The only times you want to be in them are for the short periods of time when they have the occasional large upward moves. Over time, you can only lose. But read the book, there’s actually some very good money to be made in these markets.
Back to the company news, IGas Energy (IGAS) announced an operations and cost saving update. In light of the recent oil price improvement, IGAS has decided to return nine fields to production and effect a reduction in the numbers of employees on furlough. Deltic Energy (DELT) (the old Cluff Natural Resources (CLNR)) announced its change of name. It is intended to symbolise the transition in the company’s main investments into a more operational phase following their farm-outs and ongoing partnership with Shell. Any impact from that of course is years away.
Zenith Energy (ZEN) announced it has ceased all oil production operations in Azerbaijan. After its failure there, field production personnel have been transferred to a division of SOCAR. It doesn’t appear that ZEN has any oil and gas assets now. In Kazakhstan, Caspian Sunrise (CASP) announced its annual report and financial statements. In the short term, they are focused on surviving the impact of the Covid-19 virus and until its full impact becomes clearer, they will continue to conserve cash. Meanwhile, in Kurdistan, Gulf Keystone Petroleum (GKP) announced that Jón Ferrier, its Chief Executive Officer, has decided to leave the company.
Ascent Resources (AST) announced its final results for the year ended 31 December 2019. They’re very proud of themselves, although they haven’t actually achieved anything yet and, based upon the individuals’ track records at other companies, are highly unlikely to do so. Lansdowne Oil & Gas (LOGP) also announced results for the year ended 31 December 2019. Unsurprisingly, they remain steadfast in their belief of the significant potential of Barryroe and are focused on unlocking its inherent value. Where this goes from here, though, depends entirely on the outcome of Providence Resources’ (PVR) farm out negotiations through SpotOn Energy.
88 Energy (88E) announced it now has a relevant interest in 79.84% of XCD Energy’s (XCD) shares and 79.22% of XCD Energy’s listed options. It’s extending the offer period until 13 July. Bahamas Petroleum Company (BPC) announced the completion of administrative formalities regarding its BPC Investment Fund. This will enable local people in the Bahamas to participate in the outcome of the project, and of course raise some money for the company.
Egdon Resources (EDR) has reached a settlement with Humber Oil & Gas regarding Biscathorpe. As a result, Egdon will hold a 35.8% operated interest in the PEDL253 licence. Union Jack Oil (UJO) also picked up an additional 3% and now has a 30% interest in the licence.
Solo Oil (SOLO) delayed filing its financial statements. Importantly, though, it confirmed it has sufficient cash to support its operations in its current state to the end of Q1 2021 and remains funded for its share of the firm budget for its Tanzanian operations, capital programme and strategy. In contrast, Mosman Oil & Gas (MSMN) announced a corporate and operations update. It encapsulates pretty much everything that’s wrong with the worst of the AIM companies. Basically it’s just nailed on, guaranteed losses for anyone who holds long term.
San Leon Energy (SLE) issued final results. They had a cash position of $36.5 million as at 19 June 2020, with an expected $10 million to come in Q4, and a further $103.9 million expected in interest and loan note repayments by end 2021. Market capitalisation is £102 million and they have an interest of 10.58% in OML 18, which can produce around 40,000 to 50,000 barrels of oil per day. It doesn’t look expensive.
As mentioned above, my new book explains exactly how it all works and how you can actually make money out of these markets, using a method where risk doesn’t actually matter in the end from a trading perspective. The book is exceptionally frank and I think virtually all will find it extremely useful. Details of how you can obtain a copy are at https://www.oilnewslondon.com/oilman-jim
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The author may hold 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.