Weekly oil news round up by Oilman Jim – 88E BPC PVR LOGP AAOG ICON TRP BLOE TRIN IOG COPL UKOG IGAS EOG BOIL ZPHR

88 Energy (88E) announced a not unexpected A$12 million placing at 0.45p.  As a result, the company is fully funded for all planned activity through to the end of the calendar year.  88E now has funding to drill the Harrier prospect, in addition to Merlin, which provides a combined gross aggregate target of over 1 billion barrels of recoverable oil, on trend to large existing discoveries.  The resignation of David Wall also was announced, but no reason was given.  More on 88E in the private blog.

Bahamas Petroleum Company (BPC) announced its widely expected duster and the price collapsed by 70%.  The well did encounter hydrocarbons, but it’s very rare that an oil drill does not.  The issue of course is commerciality.  It’s important to understand that the most likely end result with any of these AIM/London small cap oil projects is failure, particularly so if no farm-out to an actual oil company has been achieved.  That’s why I believe they’re generally only worth buying for a short-term run up to a potentially transformational event and only when fully financed for that.  Remember also that anything like a convertible loan in place is more or less certain to kill any upwards momentum dead.  BPC was a particularly difficult one for investors, given its haphazard funding approach and the shareholder abusive nature of most of it.  It’s curious that drilling stopped well short of target depth, but perhaps the company simply ran out of money, which would explain why Lombard Odier had to dump fast, since BPC wouldn’t have had the cash needed to reimburse their likely substantial losses in the event of a dry hole.  Lombard Odier had a rather special agreement in relation to their investment in the company, guaranteeing them a minimum profit of 15% on their share purchase and indemnifying them against any loss.  Company law is different in the Isle of Man, and not in a good way for shareholders.

Providence Resources (PVR) issued a response to media speculation that it could be merging with SpotOn Energy (a £1 UK company whose only asset appears to be it’s agreement with Providence, which in turn is conditional upon SpotOn somehow raising $166 million).  PVR denies that it is currently involved in any merger discussions with any party, but that it will continue to work closely with SpotOn Energy to deliver the necessary funding to develop the Barryroe asset.  Funding of course has always been the issue with Barryroe and to date there have been plenty of deals to pump the share price, but no actual hard news of any money arriving.  PVR, along with Lansdowne Oil & Gas (LOGP) also announced Government consent for the Barryroe site survey.  This must be completed to enable Providence to apply for any potential further works on the K site location of the Barryroe field and further regulatory approvals are required before any commencement of drilling can take place.  Further on PVR and LOGP in the private blog.

I was contacted by David Sefton following my piece last week referencing Anglo African Oil & Gas (AAOG) and Iconic Labs (ICON).  He takes exception to the statements of the European High Growth Opportunities Securitization Fund (EHGO), which were legitimised by their publication in a Business Wire article.  EHGO apparently is a disgruntled CLN financier, who tried to bully ICON management, are annoyed that they did not get their way and are now throwing mud.  Crucially, though, their litigation does not mention or concern David Sefton or his company, Greencastle, and they are not even included as parties.  On that basis, the statement by EHGO regarding David Sefton is misleading and no inference should be drawn from it.  I’m also expecting to receive from David Sefton his account of events at Anglo African Oil & Gas and I look forward to sharing that with readers.

Tower Resources (TRP) announced a South Africa update.  50% partner and license operator, New Age Energy, has reprocessed additional 2D seismic data covering the Algoa-Gamtoos license, offshore South Africa, plus further data acquired from the Petroleum Authority of South Africa, resulting in an increase in portfolio volumes to a mean figure of 1.983 billion boe recoverable.  The Algoa-Gamtoos license is located adjacent to Total’s Blocks 11B/12B, where Total has made discoveries in excess of 1 billion boe at Brulpadda and Luiperd.  More on TRP in the private blog.

In other news, Block Energy (BLOE) announced a West Rustavi update.  Production from the WR-38Z and WR-16aZ wells has recommenced.  Trinity Exploration (TRIN) announced an operations update.  Like virtually every other producing oil company these days, it sees opportunity in “the development of transitional energy projects such as micro LNG, wind and solar power.”  Independent Oil &Gas (IOG) announced the appointment of a new chief operating officer.  He’s David Gibson, ex-Foster Wheeler Wood Group, Amec, Marathon Oil UK, TAQA Bratani and Ithaca Energy.  Canadian Overseas Petroleum (COPL) announced it has repaid the balance of its Riverfort loan in cash.  £400,000 has discharged it.  

UK Oil & Gas (UKOG) issued multiple announcements.  It’s lodged an appeal with the Planning Inspectorate against Surrey County Council’s 15 December 2020 decision to refuse planning consent for the Loxley gas appraisal project, the High Court has upheld its injunction against unlawful protest at the Horse Hill site and it’s completed the second instalment due under the sale and purchase agreement of the Horse Hill surface production equipment.  IGas Energy (IGAS) announced a trading and reserves update.  It has “continued to make good progress in a number of key strategic areas.”

Europa Oil & Gas (EOG) announced a placing, broker option & joint broker appointment.  It’s raised £1,500,000 at 1.3p and granted Turner Pope a broker option to conditionally raise up to a further £500,000.  Baron Oil (BOIL) announced the relinquishment of UK licenses PEDL330 & PEDL345.  As in accordance with the operator’s recommendation.  Finally, Zephyr Energy (ZPHR) announced updated well & project economics.  Its Paradox acreage is estimated to hold net 2C contingent recoverable resources of over 12 million boe in the Cane Creek reservoir from 30 wells.

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Weekly oil news round up by Oilman Jim – PTAL 88E SENX AAOG ICON PRD BPC BOIL UPL RBD UJO EDR EOG UOG UKOG CASP SAVE CAD

PetroTal (PTAL) announced a successful $100 million bond issue.  It intends to use the proceeds to repay all existing outstanding loans, to finance the continued development of the Bretana oil field, to provide support for crude oil hedging transactions, and to finance potential acquisitions.  With this completed, PetroTal can more realistically target its goal of 20,000 bopd production.  I mentioned PTAL positively towards the end of last year at 7.6p, after having been rather negative from the low 30s down.  It’s now more than doubled to 16.375p.

88 Energy (88E) issued a further operations update.  The permit to drill for the Merlin-1 well has been approved, field operations are fully underway, rig commissioning is almost complete with mobilisation imminent and well spud is expected later this month or early next.  88 Energy is not saying anything yet about the second well, Harrier-1, which would probably require another fundraising if it is going to be drilled this season.  More on 88E in the private blog.

An interesting announcement from Serinus Energy (SENX) regarding the pricing anomaly in its share price that has arisen between the London and Warsaw markets.  While all 1,140,660,629 issued and outstanding shares of the Company are eligible to be traded on AIM, only 78,629,941 of these shares are eligible to be traded on the Warsaw Stock Exchange.  It’s important for them to clarify this, since manipulating share prices on a secondary, illiquid foreign exchange and creating a price disparity to encourage buying on the main exchange is a classic form of investor abuse.

On that subject, it appears the chickens may be coming home to roost for David Sefton, the former CEO of Anglo African Oil & Gas (AAOG), a company which, as regular readers know, I was calling out as wrong all the way down from around 20p.  It’s now suspended at 0.3p.  His nemesis comes in the form of the European High Growth Opportunities Securitization Fund, which has expressed significant concerns about arrangements made by the departed executive directors of Iconic Labs (ICON) with Greencastle Capital, a company established by the former Executive Chairman of Iconic, David Sefton.  To quote: “This follows their stewardship of Iconic in which they presided over huge value destruction for shareholders and a collapse in the share price of the company, leaving the company in an almost valueless state with significant debts owed to its creditors. This whole episode raises major questions about their conduct and the conduct of David Sefton, questions which we expect they will now be required to answer, whether in court or by the appropriate regulatory authorities.”  You can read all about it at https://www.businesswire.com/news/home/20210202005931/en/EHGO-expresses-concerns-about-arrangements-made-by-departed-Iconic-Labs-directors-with-Greencastle-Capital

Predator Oil & Gas (PRD) issued an announcement regarding licensing legislation Offshore Ireland and welcomed the renewed commitment by the Irish Government to honour existing licences issued by the State for oil and gas.  Predator wants to help promote enabling legislation that facilitates CO2 sequestration, having pioneered CO2 injection in Trinidad and de-risked the larger scale potential.  It’s looking at utilising existing oil and gas infrastructure and subsurface oil and gas reservoirs in Ireland.  Further on PRD in the private blog.

Lombard Odier responded to one of my tweets concerning Bahamas Petroleum Company (BPC).  Regarding their investment into BPC, they say: “We regret this situation and are taking the necessary actions to address it.  This investment decision was not aligned to our commitment to sustainability and our strategic investment framework.”  I don’t know at which level this was written, but the statement would ring a lot more true if they hadn’t negotiated a very special guaranteed 15% profit arrangement with the company.  The drill result here is imminent, but it appears Lombard Odier isn’t too confident.

In other news, Baron Oil (BOIL) and Upland Resources (UPL) issued UK Licence P2478 updates.  Essentially, the “Interested Party” (“a large European E&P Company”) has walked away (Reabold Resources (RBD) is involved in this licence too).  Union Jack Oil (UJO), Egdon Resources (EDR) and Europa Oil & Gas (EOG) announced the commencement of oil flow at the Wressle Field.  No numbers yet.  United Oil & Gas (UOG) announced a full year 2020 trading update and guidance for full year 2021.  Group working interest production in Egypt is forecast to average between 2,300 and 2,500 boepd for the first half of 2021 and group capital expenditure is forecast to be $5.3 million, fully funded from existing operations.  UK Oil & Gas (UKOG) announced an update concerning its interim injunction against unlawful protest at Horse Hill.  The High Court will be invited to continue the injunction until February 2022.  Caspian Sunrise (CASP) announced a commercial, operational and regulatory update.  “Commercial, operational and regulatory progress has been limited of late.”  Savannah Energy (SAVE) announced a gas sales agreement with Mulak Energy.  This is Accugas’s first Gas-to-CNG sales agreement and represents Savannah’s new entry into the compressed natural gas market.  Finally, Cadogan Petroleum (CAD) issued an announcement regarding its controversial loan to Proger Managers & Partners.  EUR 14,857,350 is due on 25 February and it’s questionable whether they’ll pay it.

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Weekly oil news round up by Oilman Jim – UJO RBD BPC 88E COPL BLVN AEX ECO ADME JOG EOG ADV ANGS RMP SAVE GBP

Union Jack Oil (UJO) announced a West Newton technical update.  They’re now talking about a B-2 well, which is provisionally planned to be drilled in H2 2021.  No word yet on Wressle, in respect of which it was previously stated that the Ashover Grit reservoir was to be flowed prior to the end of January 2021.  Perhaps we’ll see something on that tomorrow.

Reabold Resources (RBD), the effective majority owner of West Newton, took advantage of the “provisionally planned” B-2 well to raise a further £7.5 million via a placing at 0.55p.  What’s important here is the outcome of the flow testing of the B-1Z well, which now is going to be tested ahead of the A-2 well (that’s the second time now that the A-2 testing has been delayed), commencing in Q1 2021.

Bahamas Petroleum Company (BPC) announced that Lombard Odier’s holding has fallen below the lowest applicable notification threshold.  It appears they wanted to take no risk on the outcome of the drill, which is expected imminently.  BPC now is a pure gamble on the success or otherwise of the Perseverance #1 well.

88 Energy (88E) announced an operations update in relation to its permit to drill for the upcoming Merlin-1 well.  They say they have received confirmation from the Alaska branch of the Bureau of Land Management that the Assistant Secretary for Land and Minerals intends to sign the permit, subject to satisfactory completion of the standard review process.  Field operations will now recommence.  Whether they’ll be able to drill Harrier-1 now remains an open question.

Canadian Overseas Petroleum (COPL) issued its comments regarding the new US Federal oil and gas lease policy, which it believes will have a largely positive effect on COPL’s Atomic acquisition.  Most normal companies operating in a commercial manner would be using such a development to negotiate the acquisition price downwards; unfortunately, small AIM companies are more or less entirely focussed on their fundraising.

Bowleven (BLVN) announced that the operator of the Etinde licence has received formal approval to apply for a new Etinde Exploitation Agreement, replacing the existing agreement which came into force by Presidential decree in January 2015.  The joint venture partners can now progress towards achieving a final investment decision on the licence this year.  Perhaps, at last, there’s some upside for shareholders.

Aminex (AEX) announced a strategic and corporate update.  It’s cutting the fat and intends to reduce gross general and administrative costs by 30% this year from 2020 levels, with an additional 25-30% reduction in 2022.  The Board is being reduced from five directors to three and from some of the negative commentary, the “cost reduction process” appears to include some of their paid PR.  Objectives now are to capitalise on Ruvuma, maintain discipline on expenditures and pursue strategic initiatives.  It’s starting to look like a decent bet.

In other news, Eco (Atlantic) Oil & Gas announced the launch of Eco Atlantic Renewables.  This “exciting opportunity” has “crystalised” due to a “lack of oil and gas acquisition opportunities.”  ADM Energy (ADME) announced it has extended its agreement with Trafigura for conditional financing of up to $120 million.  Critical question here is can they actually find an acquisition that Trafigura will approve?  Jersey Oil & Gas (JOG) announced a significant uplift in Buchan contingent resources.  Whether they actually can attract industry partnership with this is another matter entirely.

Europa Oil & Gas (EOG) released its Annual General Meeting statement.  It now has an “industry-leading position in the proven gas play of the Slyne Basin offshore Ireland and the Inezgane permit offshore Morocco which, in terms of size, is the equivalent of 50 blocks in the UK North Sea.”  Advance Energy (ADV) announced interim results.  The admission document relating to its proposed acquisition of an interest in the Buffalo Oil Field in Timor-Leste is awaited.  Angus Energy (ANGS) announced an equity placing.  It’s raising £1.5 million at 1p with warrants on a one-for-one basis.

Red Emperor Resources (RMP) announced its quarterly activities and cashflow report.  A number of potential projects were considered during the quarter in the wider natural resources sector outside of oil and gas.  Savannah Energy Plc (SAVE) announced guidance for full year 2021.  It’s anticipating total revenues of greater than $205 million, administrative and operating costs of $55 million to $65 million, depreciation, depletion and amortisation of $19 million plus $2.60/boe, and capital expenditure of up to $65 million.  Finally, Global Petroleum (GBP) announced an updated prospective resources estimate for PEL0094.  Total unrisked net prospective resources (best estimate) attributable to GBP now total over 2.2 billion barrels.

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Weekly oil news round up by Oilman Jim – 88E PANR PRD FOG RBD UJO PHAR COPL TRIN SQZ UKOG UPL PTAL RMP

Nerve-wracking news for 88 Energy (88E) who announced on Friday that they are currently seeking clarification on a recently announced 60 day suspension of authority for department bureaus and offices in relation to the issuance of new drilling permits on Federal land.  The authority for approvals has not been completely withdrawn, but has been delegated to various higher positions within the government, and the Bureau of Land Management has indicated that it will continue to process the permit to drill in anticipation of receiving a signature on or before 12 February.  88E does have some cause for optimism due to the advanced nature of the existing operations, which is one of the carve outs for the suspension.  The shares are in a trading halt on the ASX pending clarification, but continue to trade in London, where their price fell by around 25% following the news.  More on 88E in the private blog.

Staying with this subject for a moment, though, it is important to understand that while the Biden administration’s suspension of new oil and gas drilling permits on Federal land could be the first step towards banning all leases and permits to drill on those lands, it is only in relation to Federal lands, not the whole of the US.  Most minerals are privately owned or, particularly in Alaska, owned by the State.  It’s obviously an important point to look out for now.  At least one other recent AIM high flyer, with a large project on Federal lands in the Lower 48, is going to be very seriously impacted.

Pantheon Resources (PANR) should be OK.  The Talitha unit, where it currently is drilling, comprises State, not Federal leases.  There was a further announcement regarding that unit last week: PANR has acquired the remaining 10.8% interest from Otto Energy Ltd. and now owns 100%.  Purchase consideration was 14,272,592 ordinary fully paid shares and Otto keeps a 0.5% overriding royalty interest in any future production.

Predator Resources (PRD) issued a strong announcement.  In Trinidad, encouraging pilot CO2 EOR results now support their pre-injection desktop production plateau forecasts of 243 to 547 bopd from the Herrera #2 Sand.  CO2 sequestration potential is confirmed and CO2 EOR services business are strengthened and de-risked as a marketable asset.  In Morocco, Guercif exploration well planning is targeting a Q2 spud and core area gross prospective gas resources are estimated at 819 to 1,823 BCF.  Further on PRD in the private blog.

Other news was broadly positive.  Falcon Oil & Gas (FOG) announced it has submitted a notification of discovery on the Kyalla 117 N2-1H ST2 well in the Beetaloo Sub-basin, Australia.  Unassisted gas flow rates ranging between 0.4 and 0.6 MMCF per day were recorded over seventeen hours.  Reabold Resources (RBD) and Union Jack Oil (UJO) announced a West Newton A Site planning update.  Nothing really material in it unfortunately.  Pharos Energy (PHAR) announced the results of its placing.  £8.6 million was raised at 19.25p and the funds will allow them to restart their investment in the water flood programme in the El Fayum oil fields in Egypt.  Canadian Overseas Petroleum (COPL) announced signature of a term sheet for a $65 million senior credit facility.  It’s not yet legally binding and is subject to “typical closing conditions” so let’s see.

Trinity Exploration (TRIN) announced a Q4 2020 operational update.  Production levels during the fourth quarter averaged 3,206 bopd, yielding a full year 2020 average of 3,226 bopd, up around 7% over the prior year.  Serica Energy (SQZ) announced the US Office of Foreign Assets Control licence renewal relating to the North Sea Rhum field, plus a corporate update.  Cash flow is set to increase materially since on 1 January 2022, Serica’s share of BKR Net Cash Flow will increase from 60% to 100%.  UK Oil & Gas (UKOG) announced completion of the Resan licence agreement with Aladdin Middle East.  Both will now work towards finalising the design and delivery of a first appraisal well, Basur-3, aimed at establishing the commerciality of the undeveloped Basur-Resan oil discovery.

Upland Resources (UPL) announced a one year extension to the Saouaf prospecting permit and new prospectivity.   Detailed interpretation of all vintage data has been completed, revealing a “rich array” of new plays.  PetroTal (PTAL) announced completion of its arrangement with Petroperu, a two year extension of its oil sales contract and an update on the third-party sale of shares.  Gran Tierra Resources has terminated its private purchase and sale agreement with Remus Horizons.  Finally, Red Emperor Resources (RMP) announced the suspension of trading on AIM and ASX.  The shares are suspended pending the release of an announcement in relation to a potential acquisition.  Could be interesting.

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Weekly oil news round up by Oilman Jim – PANR BPC 88E IOG PTAL HUR UJO EDR EOG RBD UKOG TRP MNRG WCAT

Pantheon Resources (PANR) announced the spudding of the Talitha #A well on the North Slope of Alaska.  PANR estimates the well will target in the region of a billion barrels of recoverable oil potential across the multiple stacked primary and secondary objectives.  Drilling and testing operations at Talitha #A must be completed prior to the onset of Spring when temperatures warm up and the ice road begins to thaw.  Historically, the drilling season ends late March.  Let’s see what happens.

Bahamas Petroleum Company (BPC) issued a lengthy announcement headed “Funding Strategy: Reconciliation & Put Option” which I doubt many will read in full.  Bottom line is that large numbers of shares are being and will be issued.  Perhaps OK if the well comes in, but the Perseverance #1 has a very low chance of success and failure could result in a share price bloodbath.  The profit to be had here would have been in the run up to the spud, but their financing approach prevented any such run happening.

88 Energy (88E), due to start drilling its Alaska well next month, announced the purchase of the Umiat Oil Field located on the North Slope.  This is an old field drilled in the 1940s and was previously classed as non-commercial.  88E must see it differently.  The share price got up to over 0.66p following the news, more than double the recent 0.33p placing price.

Independent Oil & Gas (IOG) announced a corporate and operational update.  Phase 1 remains on schedule for first gas in Q3 this year.  The Blythe and Elgood offshore pipelay campaign was executed in Q4 2020, detailed well design will complete in this quarter and the first development well is expected to spud by early Q2.  Platform fabrication also is expected to complete in Q1, before installation in Q2 and the gas sales tender process is being prepared, with ECC appointed as advisor.  It looks like they’re getting there.

PetroTal (PTAL) announced a contemplated $100 million bond issue and an operations update.  Subject to, among other things, market conditions, a new $100 million senior secured three year bond issue may follow.  The proceeds of the potential bond issue will be used to settle in full the cumulative oil price difference liability owed to Petroperu (approximately $16.6 million), to finance the ongoing development of PTAL’s Bretana oil field, to provide funds to support the company’s hedging program and to finance potential synergistic acquisitions.  They also announced that oil production has increased to an average of 10,025 bopd, with optimisation continuing.  I mentioned PTAL positively a number of weeks ago at 7.6p, after having been rather negative from the low 30s down.  It’s now more than doubled to 16.25p.

Hurricane Energy (HUR) announced a trading and operational update.  Production for the final four months of 2020 averaged 12,500 bopd.  Revenue for the year ended 31 December 2020 was $179 million and year-end net free cash was $106 million.  HUR is currently engaging with its stakeholders on a proposed development plan for Lancaster and, as pointed out in their December announcement, suitable funding arrangements will need to be entered into, which Hurricane says present a risk of dilution to existing shareholders from a possible restructuring and/or partial equitisation of the convertible bonds.  If no agreement can be reached with the stakeholders on additional investment, the field may then be decommissioned, with potentially no value returned to shareholders.  Like PTAL, HUR is another one I was cautioning about from the low 30s down.  Unlike PTAL, I did not see a recovery point for HUR and its share price is now down to just over 2.5p.

Union Jack Oil (UJO), Egdon Resources (EDR) and Europa Oil & Gas (EOG) all issued announcements regarding Wressle.  The work-over rig has been mobilised and operations to re-complete and re-perforate the well have commenced.  Operations are expected to be completed to enable the Ashover Grit reservoir to be flowed prior to the end of this month.  It’s expected to produce 500 bopd, increasing UJO’s net production by 200 bopd and EDR’s and EOG’s by 150 bopd each, when fully on stream.  This, though, is now more or less discounted in these companies’ share prices and upside for the higher capitalised UJO and its joint venturer, Reabold Resources (RBD), now depends upon the outcome of flow testing the West Newton wells.

UK Oil & Gas (UKOG) announced a Horse Hill oil field update.  The flagship HH-2z horizontal oil production well is now being reconfigured into a water re-injection well.  I expect focus will now shift onto their “potentially transformational” Turkish drilling campaign and that Horse Hill (plus all the other complicated UK oil and gas assets) will quietly be forgotten.  In that connection, formal Turkish government consent for UKOG’s acquisition of a 50% interest in the Basur-Resan licence has now been granted via official decree.  Their announcement on Friday sings the praises of Turkey’s operational environment.  It will be interesting to see what they have to say about it in a year’s time.

Tower Resources (TRP) announced a placing at 0.325p to raise £1.25 million.  As always, the company is continuing discussions with potential farm-out partners for its Thali license in Cameroon and hopes to have a more substantial announcement to make in due course.  MetalNRG (MNRG) announced completion of its oil and gas transaction.  Unfortunately, it turns out not to be very exciting and the news had little market impact.  Finally, Wildcat Petroleum (WCAT) announced the appointment of Pello Capital to support their efforts to market Wildcat to new investors.  They seem to have done quite a good job and WCAT hit 1.57p on Wednesday, up several times from the price when I first mentioned it a couple of weeks ago.

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Weekly oil news round up by Oilman Jim – 88E PANR BPC PTAL EDR UJO EOG UOG COPL MATD BOIL IGAS SDX LEK

First full week of the New Year and some interesting announcements.  88 Energy (88E) continued its usual pre-spud run, moving up to 0.55p (the placing was at 0.33p) on the back of announcements that snow road construction has commenced for Project Peregrine drilling, rig 111 commissioning is underway, spud is on track for mid to late February, drilling on neighbouring acreage by Pantheon Resources (PANR) is taking place this month, commercialisation options are being explored for gas discovered at Project Icewine and it was High Bidder on Tract 29 adjacent to its existing Yukon Leases and the Point Thomson field in the Alaska Coastal Plain Lease Sale.  That’s the way to do it (Australian, Canadian and US companies tend to have the knack for promotion) and UK companies should pay attention.  The faux cautious and conservative style only pays off for shareholders if results actually are achieved and that very rarely is the case.

Bahamas Petroleum Company (BPC) had a busy week.  The Supreme Court of The Bahamas granted the application from environmentalists against the Government of The Bahamas to seek leave to bring judicial review proceedings in respect of various decisions taken by the Government in relation to BPC’s licences in The Bahamas, but refused to grant any orders that would affect BPC’s current operations, which means that the drilling of Perseverance #1 will continue.  Financing remains opaque, but there’s probably enough available to get its Bahamas well drilled.  Thereafter, it becomes problematic, extremely so should the drill result be negative.  A huge amount of stock needs to be sold into the market here.

PetroTal (PTAL) announced that following the recommencement of operations of Petroperu’s Northern Oil Pipeline, oil production at the Bretana oil field is currently at 9,500 bopd and expected to reach 10,000 bopd in the next few days.  As a result of higher oil prices, the company’s contingent derivative liability was reduced to $2.7 million at 31 December 2020 and at that date, PetroTal had cash resources of approximately $9.6 million, with accounts payable and accrued liabilities of approximately $44.3 million.  It continues to work towards finalising a significant credit facility to support the planned capital program and a return to development drilling at the Bretana oil field.  I mentioned PTAL positively a few weeks ago at 7.6p, after having been rather negative from the low 30s down.  It’s now more than doubled to 16p.

Egdon Resources (EDR) announced preliminary results.  Loss for the year ended 31 July 2020 was £4.75 million after write-downs, pre-licence costs and impairments, more or less the same as the company’s market capitalisation.  On the bright side, field development operations are progressing well at Wressle and first oil is targeted during January 2021, which will add 150 bopd to Egdon’s production in respect of its 30% interest.  Union Jack Oil (UJO) and Europa Oil & Gas (EOG) have interests in Wressle of 40% and 30% respectively.  On the not-so-bright side, the 3D seismic survey over the Resolution gas discovery in offshore licences P1929 and P2304 has been deferred by Shell from the current quarter to February 2022 and to to fund ongoing exploration and development projects, they’ve had to raise £1.05 million through the issue of convertible loan notes.

United Oil & Gas (UOG) announced the spudding of the ASH-3 development well in Egypt, which is expected to take up to 60 days to drill and test.  Let’s see if this time it can hold over 3p.  Canadian Overseas Petroleum (COPL) announced an additional £3 million placing.  COPL has now paid $8 million to Atomic Oil & Gas LLC as the second payment, which will secure the purchase of 15% of Atomic’s working interest in all of Atomic’s leasehold interests.  Petro Matad (MATD) announced a Block XX exploitation licence application update.  The application is progressing with the last meeting of the Mineral Resource Professional Council taking place virtually.  Baron Oil (BOIL) announced a Chuditch PSC update.  There has been a significant upgrade in estimated resources and mean prospective resources net to BOIL’s interest now are 882 BCF.  Igas Energy (IGAS) announced a business update.  They’re excited about the various energy transition opportunities they’ve identified.  SDX Energy (SDX) announced a trading and operations update.  Production for the year was around 6,400 boepd, an increase of 58% from 2019.  Nine further wells are to be drilled in 2021.  Finally, Lekoil (LEK) eventually held its EGM.  Three new directors were appointed and the chairman resigned.

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Weekly oil news round up by Oilman Jim – BPC PANR 88E UJO RBD WCAT PTAL SAVE COPL ZEN AAOG

Into 2021 now and we’ll see what that brings, but first, to tidy up, there were a few interesting announcements in the last two weeks of 2020.

Bahamas Petroleum Company (BPC) announced commencement of the drilling of Perseverance #1.  The well is anticipated to take 45 – 60 days to complete, which takes us through to sometime next month.  Meanwhile, court hearings have taken place regarding a judicial review brought by environmental activists, whose aim is stop the drill.  The judgement of the court is awaited.

Pantheon Resources (PANR) announced that ice road construction has commenced and it’s on schedule in obtaining the necessary permits, contracts, and services to commence the drilling of the Talitha #A well, which is estimated to spud, subject to weather conditions, this month.  Talitha #A is targeting four distinct horizons which PANR estimates has the potential to contain in the region of a billion barrels of recoverable oil.  The current market capitalisation is equally generous at nearly a quarter of a billion pounds.

Trading at around one-fifth of that capitalisation is fellow Alaska explorer, 88 Energy (88E), whose first well this year, the Merlin-1, is due to spud next month, to be followed thereafter by the Harrier-1.  Also coming up is testing of Union Jack Oil (UJO) and Reabold Resources’ (RBD) two West Newton wells.  For those who are believers in West Newton and see this as the main attraction of these two companies, UJO is capitalised at around £1.9 million per percentage point and RBD is capitalised at around £0.8 million a point, so more than twice as much of it for your money with Reabold.  Wildcat Petroleum (WCAT) is one to keep an eye on, having been admitted to trading on the London Stock Exchange last Wednesday.  It’s seeking to invest in businesses within the upstream sector of the petroleum industry.

PetroTal (PTAL) announced the recommencement of oil sales into the pipeline plus its first oil export sale through the Brazilian terminal, which will facilitate future oil production growth when PetroTal continues development of the Bretana oil field.  I mentioned PTAL positively a few weeks ago at 7.6p, after having been rather negative from the low 30s down.  It’s now 14p and they’re targeting to reach 20,000 barrels of oil per day production in the first quarter next year.

African producer, Savannah Energy (SAVE) announced a financial and operational update.  Gross production guidance for 2020 is 19,000 to 20,000 barrels of oil equivalent per day, with full year 2020 revenues greater than $200 million, group depreciation, depletion and amortisation of $35 million to $37 million, group administration and operating costs of $43 million to $47 million and capital expenditure of $8 million to $10 million.  The market cap by comparison is £137 million.  Also aiming to be a producer, Canadian Overseas Petroleum (COPL) announced a £6 million placing at 0.2p.  The net proceeds will be used towards its acquisition of Atomic Oil and Gas LLC.

Zenith Energy (ZEN) announced its successful bid for Tilapia II.  Subject to the outcome of the Congolese Ministry of Hydrocarbons’ enquiries this month, ZEN now looks set to become Anglo African Oil & Gas (AAOG) II.  AAOG always blamed its staff and contractors for its operational failures.  Let’s now see whether or not that was true.

The important point with most of these small-cap/AIM companies, though, is that buying them on the basis of their stated fundamentals rarely works.  More relevant are their promotional abilities.  I explain all this in great detail to private blog subscribers in the new introductory material sent to them upon subscription.  Try it out and you’ll see where I’m coming from.  The link is https://www.oilnewslondon.com/oilman-jim 

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Weekly oil news round up by Oilman Jim – HUR BPC LEK COPL AAOG UKOG GBP JOG CHAR TRP

Another interesting week in the UK small-cap oil and gas company market:

Hurricane Energy (HUR) announced an operational and corporate update.  It’s considering a new production well at an estimated cost of around $60 million and a water injection programme at an estimated cost of around $75 million.  Suitable funding arrangements will need to be entered into, which HUR says present a risk of dilution to existing shareholders from a possible restructuring and/or partial equitisation of the convertible bonds.  If no agreement can be reached with the stakeholders on additional investment, the field may then be decommissioned, with potentially no value returned to shareholders.  HUR is one I was cautioning about a year ago when it was in the low 30s and problems started to become apparent.  It’s now down to just over 2.5p.  Perhaps remember those touting this over the past year and recall the abuse they and their associates hurled at those who were mentioning the facts.  Hard reality here is that the only choice left for shareholders now is between a rock and a hard place.

Bahamas Petroleum Company (BPC) announced belatedly, and perhaps not wholly voluntarily, the details of a remarkable funding agreement with the Cayman Islands based 1798 Volantis Fund Ltd, which is managed on a discretionary basis by Lombard Odier Asset Management.  It’s an agreement of a type which all looking for guaranteed profit should aspire to be entering.  1798 has bought shares at 2p, a good discount to market value, and if the Perseverance #1 comes in, they could well be selling those shares for several times the price they paid.  If it doesn’t and the price collapses, BPC has to reimburse them for any loss.  It’s actually even better than that for 1798, since Bahamas has to pay them for any shortfall under 2.3p, ensuring they make a minimum 15% profit, even in the event of failure.  It’s a guaranteed reward for an investor without any risk with the benefit of unlimited upside and it turns out this is not the first time BPC has entered into such an agreement.  It will be fascinating to see the subsequent litigation when/if this goes wrong.  If you’re puzzled as to why institutions invest in some of these low-quality, high-risk companies and why some companies’ cash appears to be consumed so quickly, perhaps you now start to see the answer.  It’s another reason why some of these companies are such appalling investments: guaranteed profits for one preferred shareholder results in massively geared up losses for all the others.

Lekoil (LEK) announced receipt of a statement letter from the requisitioner of the Extraordinary General Meeting, Metallon Corporation Limited.  Lekoil has raised over $264 million of equity from shareholders since listing in 2013 and the shares were suspended last month with a market cap of $13 million.  During this period Lekoil has spent $129 million on general and administrative expenses, but Otakikpo, its only asset generating returns, has been starved of investment whilst G&A and other costs remain at extremely elevated levels.  Since its listing, the Board has awarded the CEO a total remuneration of over $10 million, close to the current market capitalisation of Lekoil and it also recently entered into a related party transaction to extend a material part of the longstanding $1.8 million directors loan to the CEO at a time when the Company is short of cash.  Metallon also reminds shareholders of the $187 million fake loan agreement in January 2020, as part of which LEK paid $450,000 of fees to a fake intermediary.  It turns out the extension of the director loan to the CEO did not follow the correct process under the AIM rules and ignored a clear message from shareholders to the board, via the previous NOMAD, who as we know resigned, resulting in the suspension in trading of the company’s shares.  Metallon is further concerned by the board’s loose interpretation of the dissemination of price sensitive information.  The real scandal with all of this is that it’s all pretty much just par for the course at many of these London quoted companies.  Metallon is proposing that some new directors be appointed to the board and not unreasonably suggests that the current board’s reluctance to do so indicates a desire by certain directors to avoid both the board and management team being held to account.  It’s looking like heads might roll here at last.

Canadian Overseas Petroleum (COPL) announced the acquisition of Atomic Oil & Gas LLC for a consideration of $54 million.  The challenge of course is paying for it and COPL already has had to announce that it will not be via an “equity sharing” agreement, the type of financing which finally put Anglo African Oil & Gas (AAOG) in the grave.  That leaves plenty of other abusive options open though, in particular convertible loan note finance.  The headline numbers for the acquisition appear superficially attractive, but whether there actually will be any profit in the deal for retail shareholders is highly questionable.

UK Oil & Gas (UKOG) announced that it will launch an appeal against Surrey County Council’s decision to refuse planning consent for its Loxley gas appraisal project.  UKOG plans to submit an appeal to the Planning Inspectorate early in the New Year, with an expectation  that a public hearing or inquiry will be held in the following six to nine months.  The cited grounds for refusal were in direct conflict with both the planning and highway officer’s reports and the officers’ two separate recommendations for approval.  An appeal will enable an independent professional inspector from the Planning Inspectorate to consider the evidence and come to an “objective, evidence-based decision.”  Unfortunately, we don’t come across too many of those these days.

On the brighter side, Global Petroleum (GBP) announced that interpretation of the seismic data recently acquired is progressing well and it expects to be able to publish an updated prospective resources estimate for PEL0094 in the latter part of January 2021.  The farm out process for this licence has now commenced and the data room will open next month.  Jersey Oil & Gas (JOG) announced that four of its prospects have been matured to drill-ready status.  These are Verbier Deep, Cortina NE, Wengen and Zermatt with aggregate P50 prospective resources of 222 million barrels of oil equivalent.  Individual probabilities of geological success range from 16% to 30%.  Subject to funding, a drilling campaign is planned from 2022.  Chariot Oil & Gas (CHAR) announced that key terms have been agreed on a new licence offshore Morocco.  The Rissana licence will completely surround the offshore boundaries of Chariot’s existing Lixus licence, which contains the Anchois gas discovery, as well as covering the most prospective northern areas of the previously held Mohammedia licence and Kenitra licence.  Tower Resources (TRP) announced it has now formally agreed to enter the second exploration period of the Algoa-Gamtoos license, offshore South Africa, adjacent to Block 11B/12B, where Total’s Luiperd-1X well encountered 73 meters of good quality net pay and reached a maximum constrained flow-rate of 33 million cubic feet per day of natural gas and 4,320 barrels of condensate per day, an aggregate of approximately 9,820 barrels of oil equivalent per day.

That’s the main announcements for the week.  The next issue of the blog will be out on Sunday 3 January 2021.  In the meantime, I wish everyone a very Merry Christmas and a Happy New Year.

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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.

Weekly oil news round up by Oilman Jim – PRD SDX 88E UOG TLW UKOG UJO RBD BPC IOG

A number of interesting announcements last week:

Predator Oil & Gas (PRD) issued an end of year operational update.  The main event coming up is the Guercif drilling programme, onshore Morocco.  The Star Valley Rig 101 remains securely stacked in Morocco awaiting lifting of COVID-19 restrictions and PRD are seeking to optimise drilling programme synergies with SDX Energy (SDX) based on their MOU-1 being the first well to be drilled.  Spud is expected in the first half of next year.

88 Energy (88E) announced the execution of a rig contract for drilling at Project Peregrine.  Permitting and planning remain on track for a scheduled spud in February 2021.  The contract is with All American Oilfield for the use of Rig 111 to drill the Merlin-1 and Harrier-1 wells.  Funding details of the latter have not yet been disclosed to the market.

United Oil & Gas (UOG) announced a new prospective resources report for the Walton Morant licence, offshore Jamaica.  They and the former operator Tullow Oil (TLW) have been trying to farm out this licence for some years now.  It’s not a popular view, but the way I see it, Tullow simply binned a work programme liability into United.  A lot of people like this company and many get angry with me for not sharing their enthusiasm.  No apologies for that and I’d suggest fans work out for themselves why the UOG share price is never able to hold over 3p.

UK Oil & Gas (UKOG) “Energy for Britain” continued its transition into a Turkish oil and gas company with the announcement that its has applied for three new licences in Turkey.  It’s undoubtedly an easier operating environment than the UK, but it’s going to lose the “patriotic” shareholder support it previously enjoyed.  Other than the RNS news tucked away, there’s still no mention of any of this on its web site.

Union Jack Oil (UJO) announced the expected encounter of a hydrocarbon column in the Kirkham Abbey formation.  Reabold Resources (RBD), who appear not to know too much about these matters, announced another “Discovery,” which in fact contradicts the claim of a successful appraisal well.  Next up in determining the actual development potential of the West Newton project is the testing programme.  There’s no date for that yet.

Bahamas Petroleum Company (BPC) announced that an application has been made to the Supreme Court of The Bahamas by a number of environmental activists, for leave to make an application for judicial review of the decision taken by the Government of The Bahamas to grant Environmental Authorisation for BPC’s Perseverance #1 well.  Obviously, Bahamas Petroleum say the application is entirely without merit and BPC will vigorously oppose it.  Along with possible selling by the loan note holders, it’s another factor now preventing a pre-spud run.

Independent Oil & Gas (IOG) announced a technical and portfolio update.  The most interesting part of this is that they’ve received a formal offer from the OGA of licence P2589, which includes two gas discoveries, Panther and Grafton, with management estimated recoverable gas resources of 46 Bcfe and 35 Bcfe respectively.  Some other licences are being part or fully relinquished.  Also reported last week was that the LOG administrators have increased their holding from 28.74% to 29.88%.  It’s worth thinking about that.

I’ve finished the 2nd edition of “UNDERSTANDING THE LONDON SPECULATIVE MARKETS and THE SECRETS OF HOW TO PROFIT FROM THEM” which explains exactly how it all works in all its gory detail and how you can make money out of it.  The book is exceptionally frank and I’m not aware of anything else like it.  I am certain virtually all will find it useful.  For a limited time, I’m offering a complimentary copy in electronic format to all new private blog subscribers.  If you read the book, you’ll understand my approach to the market and see how I apply the principles in the private blog.  A first month trial subscription (including the book) costs just £23.75 and if it’s not for you, you can cancel anytime you wish.  The link is https://www.oilnewslondon.com/subscribe  

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Weekly oil news round up by Oilman Jim – BLOE PVR LOGP SLE BPC DELT 88E ECO GBP TXP

Still no agreement for an EU-UK trade deal, but regardless of whether it happens, absent some unexpected last minute extension to the transition period, Great Britain is out of the single market and customs union on 1 January.  Those uncertain as to the reasons all the other countries in Europe want to be part of these are about to find out why.  With the outcome of the US Presidential Election now certain, it’s clear there will be no trade deal for the UK with the US for some considerable time and, absent a deal with the EU, Britain will lack trade arrangements with half of the world’s economy.  On the brighter side, there’s much positive news about Covid-19 vaccines, although countermeasures are still likely to continue for a large part of next year and, most importantly for the stock markets, Government creation of money will continue unabated.

On to the week’s company news, and I’ll comment on the more interesting announcements, Block Energy (BLOE) announced a placing, raising approximately £5.28 million at 3p.  I warned this would happen two weeks ago in the blog and, as would be expected, when it was announced the share price dived.  It’s actually quite easy to spot these placings in advance and this is one of the many things the “Special Trading Course” explains.  Details of that are at https://www.oilnewslondon.com/course 

I also warned last week that in the event of the announcement of an agreement, the direction of the share price moves for Providence Resources (PVR) and Lansdowne Oil & Gas (LOGP) would depend on how the deal is structured and who are the counter-parties.  It was not the “no brainer” that so many assumed.  In fact, it ended up that the sole counter-party is SpotOn Energy (a company with a £1 share capital) and completion is subject to, among other things, SpotOn confirming a minimum of $166 million funding.  Unsurprisingly, PVR’s share price collapsed from around 8.5p to 4.5p and LOGP’s share price tanked from over 2.7p to 1.38p.  There is significant upside if it completes and I hope this deal works out for all parties involved, but looking back at the interview I did with Tony O’Reilly a couple of years ago, some of the characteristics and terms of the failed APEC transaction are remarkably similar.  For those interested in the project, it’s also worth remembering that San Leon Energy (SLE) has a 4.5% net profit interest over the Barryroe field and thus a free ride on the development should it happen.

Bahamas Petroleum Company (BPC) issued announcements regarding its Trinidad & Tobago and Suriname assets, where it has big plans.  Anticipated capital expenditure for the base work program is up to $20 million, and up to approximately $35 million in a scenario where all developments and exploration activities are accelerated.  I suspect, though, they may be tempted to use convertible loan note financing, as with the outstanding amounts still required to fund the Bahamas’ Perseverance #1 well.  This all could result in considerable dilution and dampen any possible drilling run.

Deltic Energy (DELT) announced the formal award of six licences in the UK’s 32nd Offshore Licensing Round.  To quote DELT, “the new licences reinforce the Company’s exploration focussed strategy which is based upon creating a steady ‘conveyor belt’ of licences that can be matured and support a long-term programme of exploration wells with discoveries supporting the longevity of existing infrastructure and the development of new gas production hubs.”  To drive the share price higher, what needs to be seen now are further farm-outs building on what has been achieved to date with Shell.

88 Energy (88E) announced execution of the Project Peregrine farm-out agreement.  The counter-party, APDC, will earn 50% in Project Peregrine by contributing $11.3 million towards the cost of the Merlin-1 well, the estimated gross cost of which is $12.6 million.  88E will contribute $1.3 million, representing its 50% share over and above a $10 million carry and all additional costs associated with the project above the $10 million carry will be borne equally by APDC and 88E.  Following the recent placing, the well is now fully funded and the spud of Merlin-1 is expected in February.

Eco Atlantic (ECO) announced it has been re-issued all it’s Namibia offshore licenses and is talking positively.  Global Petroleum (GBP) has lost one of its licences, which expired, but has purchased and is acquiring 2D seismic data on its other one, PEL0094.  What’s needed here are farm-in partners.

Finally, Touchstone Exploration (TXP) announced it has completed drilling the Cascadura Deep-1 exploration well in the Republic of Trinidad & Tobago.  This is the kind of RNS all companies want to be able to put out and is well worth reading in full.  It’s one of those very rare small-cap oil companies that appears to have pulled it off.

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