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  The authority for approvals has not been completely withdrawn, but has been delegated to various higher positions within the government, and the Bureau of Land Management has indicated that it will continue to process the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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For those who are not familiar with me, I focus exclusively on small cap oil and gas companies and I know this sector inside out.  I have been involved in the stock markets (both UK and US) since the early 1980s and understand exactly how the finance and promotion game works.  I also have many years’ operational and corporate experience in the oil business, which enables me to see very quickly whether or not these companies are telling the truth.  I share my take on companies and the markets and, as those who follow me know, I’m rarely wrong about these matters.

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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.

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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 – 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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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 – PANR 88E LEK BPC AEX SCIR RBD UJO EDR EOG UKOG DELT IOG PVR LOGP

The US Presidential election result at last appears to be settled and the transition is underway.  The Republic of Ireland looks likely now to be the one with the “special relationship” and act as the new bridge between America and Europe.  A UK-EU trade deal still has not yet been agreed and businesses remain in the dark with just 22 working days to go.  Many appear to believe that Brexit will be finished on 31 December.  In reality, Brexit starts on 1 January.  Whatever one’s views on the subject, it’s effects certainly are going to be “interesting,” particularly when combined with the Coronavirus countermeasures.  The important longer-term question is in which direction is Great Britain going to go.

Away from the economy and politics, I’m pleased to say that total reader numbers have more than doubled over the past few weeks following a blog syndication change.  To those who don’t like its content, I would say don’t read it.  There are plenty of others compensated by the companies they write about, which publish exactly what you want to hear.  I’ll continue to focus on the facts.

On to the company news, it’s been quite a busy week for RNSs and I’ll comment on the more interesting ones.  Pantheon Resources (PANR) announced the execution of a rig contract with Nordic Calista to drill the Talitha #A well, with operations expected to commence in January 2021.  The Talitha #A will target four independent reservoirs in three separate trapping sequences, which PANR estimates has the potential to contain in the region of a billion barrels of recoverable oil.  The contract secures the use of Rig #3, which is the same rig which drilled the Winx #1 and Charlie #1 wells for 88 Energy (88E) in the last two winter seasons.  Let’s hope it has better luck.

Lekoil (LEK) failed to secure a replacement Nominated Advisor on time and trading in its shares was suspended on Monday morning.  Later in the day, it announced that it had received a letter on the instructions of Metallon Corporation Limited, a 15.4% shareholder, requisitioning an extraordinary general meeting proposing resolutions that the Chairman be removed from, and Michael Onochie Ajukwu, Thomas Donald Richardson and George Maxwell be appointed to, the Board.  LEK says this is an opportunistic attempt to take control of the company without paying a premium for the value of the assets to the shareholders and increases the risk that the shares may be delisted.  Shareholders should be asking them exactly why the NOMAD resigned.

Bahamas Petroleum Company (BPC) announced a Perseverance #1 cost estimate and funding update.  Covid-19 mitigation measures are increasing the cost by $4 million and a further $2 million is required as a contingency.  To cover this, the conditional convertible loan note facility is being increased by £4.75 million to £15 million.  This essential financing, though, remains subject to the satisfaction of certain conditions precedent.  I’d suggest all those interested in this company take the time to read the 27 November RNS in full and understand exactly what is going on.

Aminex (AEX) issued a Ruvuma operations update.  The operator, ARA Petroleum Tanzania, plans to spud the Chikumbi-1 well in Q1 2022 and to submit the full field development plan before the end of 2022.  In the meantime, the work programme and budget for 2020/2021 (including the acquisition of a 454 km² 3D seismic survey) anticipates a gross JV expenditure of approximately $22.8 million.  Aminex is fully carried for its 25% interest, however, the un-carried Scirocco Energy (SCIR) now has to find $5.7 million to cover its 25% share.

Two companies notorious for their leaked placings, Reabold Resources (RBD) and Union Jack Oil (UJO), announced a disappointing West Newton drilling update.  Both the companies’ share prices were hit hard, but the news wasn’t that much of a surprise to the better informed.  No larger companies were interested in getting involved with their “major oil discovery,” plus there was already the red flag of them having suspended the extended flow test for the A-2 well.  It was only ever a trade for a pre-spud run.  They’re now pushing ahead with a side-track and for those who do believe in West Newton, I would mention that UJO with its 16.665% interest is capitalised at £27 million, while RBD with more than three times that economic interest is capitalised at £29 million, just £2 million more.

Reabold Resources has other investments and it appears to be dawning on investors that these perhaps aren’t really worth that much, as I have been saying from some time now (see past issues of the blogs).  If West Newton is a write-off, then RBD will be worth virtually nothing at all.  Union Jack Oil has other investments too and further announcements were issued in conjunction with Egdon Resources (EDR) and Europa Oil & Gas (EOG) regarding Wressel, where they’re hoping to commence production at an initial gross rate of 500 barrels of oil per day.  UJO has a 40% stake; EDR and EOG 30% each.  Whatever operating profit there is should at least start to go some way towards covering these companies’ administration expenses.  Union Jack’s is a massive £1,343,362 a year (a remarkable amount for the administration of a few non-operated minority working interests); Egdon, which actually runs an operating business, manages with £1,066,041 a year; and Europa, engaged in significant licence permitting activity, gets by on £811,000 a year.

Nothing’s ever really sure in the oil business, though, particularly onshore UK, as UK Oil & Gas (UKOG) demonstrated with its announcement that Surrey County Council has refused planning consent for its Loxley-1/1z Portland gas appraisal project, contrary to the recommendation of the Council officers’ report which recommended approval.  Undoubtedly they will appeal, but this type of process shows how a few individuals worried about local property prices can derail projects in some areas of England.

Deltic Energy (DELT) announced a prospectively update for Licence P2428.  Prospective resources are 904 BCF (P50) including unlicensed acreage to the east.  DELT’s business plan is to build a pipeline of drilling prospects, a conveyor belt of exploration drilling opportunities of material scale.  It sounds exciting and they’ve already got two farm-outs to Shell under their belt.  A number of large buyers of the shares are active in the market.  Remember, both Reabold Resources and Independent Oil & Gas (IOG) made takeover approaches to Deltic earlier this year.

Providence Resources (PVR) and Lansdowne Oil & Gas (LOGP) issued announcements noting recent media speculation, confirming they remain in exclusive discussions with SpotOn in relation to a farm out of Barryroe and will update the market in due course and as required.  Tomorrow is the expiry of the first extension to the exclusivity agreement with SpotOn, so an announcement of some nature will be required by Tuesday morning at the latest.  A further extension will be a disappointment and revive memories of the failed Chinese deal last year.  An agreement will result in a significant share price move, how much and which way depending on how exactly the deal is structured and who actually are the counter-parties.  Tom Anderson is taking no chances, though.  It was announced on Friday that he has sold 10 million shares and his shareholding has fallen below 3%.

I’ve now finished the second edition of “UNDERSTANDING THE LONDON SPECULATIVE MARKETS and THE SECRETS OF HOW TO PROFIT FROM THEM” and a complimentary copy in electronic format will be sent out mid-week to all private blog subscribers, existing and new, so if you’d like to read the book, try out a trial subscription to the private blog, details of which are at https://www.oilnewslondon.com/oilman-jim

The intention of the book is to be educational, as with my blogs, public and private.  Hopefully, what I write can help protect you from being scammed and get you thinking about how you actually can make money in these unconventional markets.  The private blog also includes my actual trading ideas.

For those who are not familiar with me, I focus exclusively on small cap oil and gas companies and know this sector inside out.  I have been involved in the stock markets (both UK and US) since the early 1980s and understand exactly how the finance and promotion game works.  I also have many years’ operational and corporate experience in the oil business, which enables me to see very quickly whether or not these companies are telling the truth.  I share my take on companies and the markets and, as those who follow me know, I’m rarely wrong about these matters.

Contact me on Twitter @Oilman_Jim 

Click “SUBSCRIBE” to receive these blog posts by email 

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 – 88E BLOE PANR PTAL PMG BPC LEK UJO

Interesting political and economic times.  In the US, Trump continues to refuse to concede, until, it appears, he can negotiate behind the scenes a blanket immunity from prosecution deal which includes the individual States.  A Presidential pardon, which is dubious anyway if he’s pardoning himself, covers only Federal offences, not the charges which may result from the active criminal investigation into his and his family’s business dealings currently underway in the State of New York.  Despite the noise, at the end of the day, the GOP isn’t really going to bin American democracy to save Trump and relative normality will resume with the inauguration of President Biden in January.  Printing by the Fed will continue as usual.

The UK has still not agreed a trade deal with the EU and businesses have no idea what the arrangements, if any, will be come 1 January 2021, a date now just 27 working days away.  I reckon an extension to the “implementation” period may be on the cards, albeit suitably and euphemistically renamed (“ratification” phase perhaps).  Behind the rhetoric, I’ve often wondered what the benefits of Brexit actually are.  Businesses in meetings with Government have been told to seise the opportunities of Brexit, to which they have responded that there aren’t any, hence the “fuck business” line from Ministers.

The benefits for some though are now starting to come into sight.  Post Brexit, the UK no longer needs to comply with the general restriction imposed by the EU on the size of government deficits, plus it is no longer unlawful for the Bank of England to directly fund government spending.  This is prohibited for EU members, but it is now possible for the UK to fund the deficit by creating money.  Previously, the Bank of England created money to buy assets (quantitative easing).  Now it can create money to fund government spending – and there’s going to be a lot of that (think “Green Industrial Revolution” for example).  We get a hint of what’s to come from the PPE procurement exposures.  Those close to the current Government are going to be enormously enriched I suspect.

On to the companies, I said last Sunday that next up at 88 Energy (88E) would be a placing, and that was announced on Tuesday, A$10 million at 0.33p.  However, the set up here is different to before.  The farm-out agreement is not yet signed and the drill is not yet fully funded.  1.67 billion placing shares will be admitted to trading on Friday.

Another one where I expect a placing is Block Energy (BLOE), who are starting to ramp up the hype.  It’s one that I warned about several times before and investors who ignored me incurred horrendous losses.  The last pre-placing promotion was based on lies, so I’d suggest exercising extreme caution here.

Pantheon Resources (PANR) also announced a placing, raising $30.2 million at 31p.  This does fully fund their upcoming Alaska well, which the company aims to drill in the first quarter next year.  It has big numbers, but so does PANR’s existing market capitalisation, which was standing at nearly £200 million at close of business on Friday – and that’s before the new placing shares are admitted.  

PetroTal (PTAL) is another that I’ve warned about frequently, all the way down from over 30p.  It’s now 7.6p, at which level it’s capitalised at £62 million.  However, if they can start delivering through the Northern Oil Pipeline as discussed in last week’s third quarter 2020 financial and operating results, it’s possibly not too expensive now at this level.

Parkmead Group (PMG) announced preliminary results for the year ended 30 June 2020.  What always smells with this one is the director self-dealing.  Nevertheless, cash balances are £25.7 million compared to a market cap of £32.7 million and there are 2P reserves of 45.7 million barrels of oil equivalent.  There’s also a move into renewables on the land in Scotland purchased from the Chairman’s wife.

Bahamas Petroleum Company (BPC) announced an operational update.  They’re now “one month out” to Perseverance #1.  Funding, however, is dependent on the conditional convertible notes and I wonder if this line of finance actually can only come by selling shares into the market.  It’s one to keep a careful eye on.

Lekoil (LEK) announced the sudden resignation of its Nominated Advisor, Strand Hanson.  If no replacement is announced by 7 a.m. tomorrow, their shares will be suspended half an hour later.  Absent the appointment of a replacement Nominated Adviser within one month, the admission of its AIM securities will be cancelled.

My reporting last Sunday of the Union Jack Oil (UJO) @UnionJackOil account being suspended for violating Twitter rules provoked quite a reaction.  Indeed, one self-styled “independent” oil analyst/blogger came on later in the day, apparently rather the worse for wear, forgetting to mention that he in fact takes payment from the companies to say positive things about them.  Watch out for this one: the last time I looked, his “bucket list” (of the shares of the companies paying him most?) was down by around 80%.  Back channel communications from the company indicated the management was concerned about what their PR might have posted and therein lies the problem with UJO: the crowd of characters swarming around it.

Today, I’m finishing off the edit of the second edition of “UNDERSTANDING THE LONDON SPECULATIVE MARKETS and THE SECRETS OF HOW TO PROFIT FROM THEM” which includes some interesting new material.  Its intention is to be educational, as with my blogs, public and private.  Hopefully, what I write can help protect you from being scammed and get you thinking about how you actually can make money in these unconventional markets.

A complimentary copy in electronic format will be sent out in the next week or so to all private blog subscribers, existing and new, so if you’d like to read the book, try out a trial subscription to the private blog, details of which are at https://www.oilnewslondon.com/oilman-jim 

Contact me on Twitter @Oilman_Jim 

Click “SUBSCRIBE” to receive these blog posts by email 

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 – 88E PANR UJO UKOG MSMN NTOG ZEN

Another week on and still no full acceptance of the Presidential election result in the US, nor any news about what the UK’s arrangements with the EU will be come 1 January 2021, a date now just 32 working days away.  Meanwhile, the Coronavirus rages worldwide, with record infection and death numbers being recorded.  It doesn’t seem to bother the markets that much, though, which now seem to realise that the only answer for Governments in the current situation is to continue printing money.  These artificially buoyant markets unfortunately have the side effect of helping enable the denial of reality.

The most interesting news this week from the smaller oil companies came from 88 Energy (88E).  The Peregrine farm-out is progressing well: multiple bids have been received, the preferred bidder has been selected and the transaction is expected to close within weeks.  Meanwhile there has been a resource upgrade at Icewine: total prospective resources are 1.77 billion barrels of oil equivalent with substantial oil volume in the Seabee formation of 1.4 billion barrels and a farm-out process for 2022 drilling at Icewine is to commence immediately.  Next up I think will be a placing.

Fellow Alaskan explorer, Pantheon Resources (PANR), announced formal approval of the Talitha unit.  Its ambitions to drill the Talitha #A appraisal well in Q1 2021 remain subject to funding and farmout discussions remain ongoing.  Compared to 88E’s market cap. of £42 million, PANR appears grossly overvalued at £242 million.  I also believe 88E has the more competent and effective management of the two.

Moving down to the more “lifestyle” orientated companies (I’ll cover these today since there was so little news from the more serious companies last week), Union Jack Oil (UJO) announced a Biscathorpe proposed side well planning update.  This is not particularly material in the context of a £31 million market cap; maintaining, or exceeding this all comes down to the results announced at West Newton.  Of greater interest was the @UnionJackOil account being suspended for violating Twitter rules.  What I wonder have the UJO directors and its PR people been posting?

UK Oil & Gas (UKOG) updated regarding the application for judicial review of Surrey County Council’s September 2019 consent for long-term oil production at Horse Hill.  A hearing will take place on 17-18 November and the company is well represented by David Elvin QC.  It’s unlikely the claimants will succeed and, in any event, focus is now moving on to Turkey.  The new prospect there has some decent sounding numbers, although I suspect many of the traditional shareholders who bought in on a rather different prospectus may regard this move as a betrayal.

Rounding off at the bottom end of the junkyard, Mosman Oil & Gas (MSMN) announced an operational update, Nostra Terra Oil & Gas (NTOG) announced a Pine Mills drilling update and Zenith Energy (ZEN) announced the terminations of both exploration in Azerbaijan and its nonsensical LOI for 2.5p per share funding (current share price is 0.35p).  As I’ve explained before, all these types of companies do is ramp and place, the “asset” being just a tiresome legal requirement.  At the bottom line of the accounts, there’s never actually anything for the shareholders, only losses.  Other than occasional ramps to clear placing stock and warrants, and provide the opportunity for insiders to sell short before covering at a profit in the next heavily discounted placing, there is nothing at all in it for investors.

I’ve now nearly finalised the second edition of “UNDERSTANDING THE LONDON SPECULATIVE MARKETS and THE SECRETS OF HOW TO PROFIT FROM THEM” which includes some interesting new material.  Its intention is to be educational, as with my blogs, public and private.  Hopefully, what I write can help protect you from being scammed and get you thinking about how you actually can make money in these unconventional markets.

I’ll be sending a complimentary copy in electronic format to all private blog subscribers, existing and new, so if you’d like to read the book, try out a trial subscription to the private blog, details of which are at https://www.oilnewslondon.com/oilman-jim 

Contact me on Twitter @Oilman_Jim 

Click “SUBSCRIBE” to receive these blog posts by email 

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.