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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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.