Main excitement last week came from 88 Energy (88E), which moved up as high as 9.19 cents (6.7p equivalent) in the United States on Monday, hitting a $1 billion market cap when the UK and Australian markets were closed. Ramping of the EEENF OTC symbol was widespread across social media and there was a multi-million dollar windfall for those who were able to sell into the US market. Reality hit that evening, though, when the company announced operational issues had prevented hydrocarbon samples from the two most prospective zones. The share price on Tuesday went as low as 0.875p on the news, but that was still nearly double the last 0.45p placing price. It closed on Friday at 1.38p, over three times that price.
88E, which features regularly in the private blog, is a regular and reliable money earner for traders, simply because management actually plays the game expected by its shareholders, fulfilling a silent agreement with them and directing significant funds to professional public relations following their placings. That’s why, notwithstanding numerous exploration failures, 88 Energy can always continue to raise cash. It’s interesting how some company promoters understand this, while others don’t even want to try to give their shareholders an even break.
Grimmest company press release of the week has to be that from Hurricane Energy (HUR), which announced a “CPR Summary & Stakeholder Engagement Update.” Essentially, the shareholders are done for. The company reports that it continues to engage with an ad hoc group of its convertible noteholders over its forward work programme, strategy, financing and balance sheet recapitalisation and warns there is a risk of significant dilution to existing shareholders from a possible restructuring and/or partial equitisation of the convertible bonds and of potentially limited or no value being returned to shareholders.
It gets no better, since if no agreement can be reached with HUR‘s stakeholders on additional development activity at Lancaster, although the field could continue to produce from the P6 well before reaching its economic limit (the timing of which would depend on oil prices, actual production levels delivered and the level of cost savings achievable), the field may then be decommissioned, with potentially limited or no value returned to shareholders. Now 2.7p, I’ve been warning about Hurricane Energy from the low 30s down.
PetroTal (PTAL), now 17.62p, has staged a nice recovery since I mentioned it positively towards the end of last year at 7.6p. It announced a Q1 operations update last week, reporting the commencement of its 2021 drilling program. PetroTal has spudded the first well of the year (7D), with expected completion the first week of May, and has already successfully completed the workover of well 4H on time and under budget. Following completion of the 7D well, the team will drill the second water disposal well, adding 50,000 barrels per day of water disposal capacity, and following completion of that, they will drill four development horizontal oil wells in H2 2021.
PTAL achieved Q1 2021 exit production of 8,275 barrels of oil per day with the quarter’s production averaging approximately 7,300 barrels of oil per day. Total cash liquidity was approximately $76 million at quarter end, plus future Petroperu true-up payments of approximately $36 million to PetroTal are expected, significantly enhancing the 2021 cash flow profile compared to budget. After a rather rocky time, PTAL now appears to be back on track.
UK Oil & Gas (UKOG) announced that the Turkish Ministry of Energy and Natural Resources has granted UKOG Turkey and its 50% partner, Aladdin Middle East, formal consent to drill the forthcoming Basur-3 appraisal well, located in the Resan licence, which contains what UKOG states is the “potentially significant” Basur-Resan oil discovery. UK Oil & Gas is delighted with the speedy grant of drilling consent, which it says illustrates how oil and gas projects can be pushed ahead with more certainty in Turkey than in the UK.
Drilling pad and access road construction works continue to move ahead at good pace, with completion expected by end May, as previously announced. The Basur-3 drill is the first step towards establishing the commerciality of the Basur-Resan Mardin oil pool, which UKOG claims contains “potentially transformational discovered recoverable oil resources.” All that’s really certain here is a large placing.
In the private blog this evening, 88E, LBE, IOG, PRD, DELT, AEX, TRP, PVR, LOGP, HUR, PTAL, JOG, UKOG and PANR (but please note that commentary on all of these is not necessarily positive). Further on that 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.