Oil prices have been firming up, making projects more viable now for low cost operators. It’s still difficult for many, but some can make it work at these levels. More importantly, for those involved in the stock market, it injects confidence and share prices are starting to perform.
Not all though. PetroTal (PTAL) now has collapsed, as I expected it eventually would. As readers and listeners will know, I’ve been warning about this one for some time. It’s not just COVID and oil prices that brought them down, rather them having to reveal a contingent derivative liability of $42 million, regarding which they are in “discussions for a multi-year settlement.” In the meantime, the Bretana oil field is shut in and they have zero, in fact negative cash flow, with their contractors unpaid. It doesn’t look good. But what’s fascinating is that of all the companies I criticise, those where there is the most outrage end up collapsing the most. PTAL now is one, BLOE and AAOG are two other recent examples.
On the brighter side, Union Jack Oil (UJO) and Reabold Resources (RBD) reported the Rathlin update to the local community concerning the upcoming West Newton well. Completion of the access track is expected to take 5 to 6 weeks and “in due course,” site construction works will commence and are anticipated to take between 5 and 6 weeks. Drilling of the West Newton B-1 well will commence following completion of the access track, site construction activities and the conductor setting operations. It’s all looking positive so far.
88 Energy (88E) and XCD Energy (XCD – Australia) are merging to form an oil exploration company with operations on the North Slope of Alaska. I doubt it will be too long before they’re planning a new drill. It’s a stock promote, but one where if you time it right, delivers returns virtually as good as guaranteed (it did an easy 100% last time from the 0.7p placing in the run up to the spud and I highlighted it as a favourite several times in the blog before that run). Obviously, you never hold for the drill result.
Anglo African Oil & Gas (AAOG) announced the completion of the sale of Tilapia to Zenith Energy (ZEN) for £200,000. AAOG now is a shell and has six months to do some kind of transaction. Either they’ll put some old failed project into it, or perhaps something new. The deal actually is less important than people might think, because where the share price goes from here short term will depend primarily on the structure of the financing. What is more or less certain, though, is that even in its new form, renamed with a new deal, new investors will end up losing 95%+ of their investments, just as I warned they would last time.
Jersey Oil & Gas (JOG) announced final results. Net discovered and recoverable resource estimates have increased to more than 120 million barrels of oil equivalent. Their year-end cash position was £12.3 million, with no debt and they’re fully funded through concept selection and to at least the end of 2021. With a market cap of £15 million, it’s not expensive for those who like these types of companies.
Predator Oil & Gas (PRD) announced final results. The main upcoming project is their Morocco well, in respect of which they remain “drill-ready” awaiting the lifting of COVID restrictions. They’re financed for that having conducted a placing at 4p, significantly more than the current share price, but the last convertible loan note conversion was done at 1.329p and there’s a lot more outstanding still to be converted. It could be profitable, but it’s one to be careful about.
Aminex (AEX) issued a farm-out update. $2.2 million taxes need to be paid before the farm-out can be approved. To that end, they’ve arranged a further loan to cover it. Whether this will be the end of the bureaucratic hurdles remains to be seen, but if they can pull it off, there could be some significant rewards here.
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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.