Weekly oil news round up by Oilman Jim – PVR LOGP PET CLON PRD RBD UJO UKOG RPT ENW CORO EME AST BPC 88E PTAL ECHO HUR

A short week, but no shortage of news:

Providence Resources (PVR) announced receipt of the outstanding £200,000 from SpotOn Energy and progress with the farm-out of Barryroe is back on.  It’s not clear why PVR needs SpotOn as an intermediary, but the important point is can a deal with a well financed, larger oil company be done.  If so, it will be good news for 20% partners, Lansdowne Oil & Gas (LOGP) too.

In other Dublin oil and gas small cap news, Petrel Resources (PET) announced that it is raising £250,000 at 3.25p per share, with the main purpose of advancing its interests in Iraq, where it maintains strong relationships with government officials.  I highlighted PET as a favourite several times last year around 1p and it’s now over 4.5p, having been as high as 26.5p. 

Sister company, Clontarf Energy (CLON), announced preliminary results for the year ended 31 December 2019.  Clontarf’s reports are usually worth reading, if only for Dr. John Teeling’s comments and opinions.  Their main interest is a a 60% stake in the Tano 2A concession offshore Ghana, in which Petrel owns a 30% interest too.

Quite a lot of Irish news last week.  Predator Oil & Gas (PRD) announced its intention to proceed to apply for a liquefied natural gas import licence for Ireland following the execution of confidentiality agreements with a global supplier of LNG and an owner of LNG re-gasification vessels.  It’s an interesting idea, since Ireland risks running short of gas in the not too distant future.

Back in the UK, Reabold Resources (RBD) announced the conditional acquisition of a further 16.665 per cent. interest in West Newton, plus a £5 million “Discretionary Cash Facility” with “death spiral” potential.  It’s good news for Union Jack Oil (UJO), less so for RBD shareholders.

UK Oil & Gas (UKOG) gave notice of its Annual General Meeting.  Due to Covid-19 health and safety advice, it will be held via an electronic platform.  It could be lively with online attendance.  Let’s see how many questions they allow, and from whom.  There’s a considerable amount of dissatisfaction, since the outstanding loan notes are being converted at ever lower prices.  Last tranche announced on Thursday was at 0.1796p and there’s still a further £1.85 million outstanding.  With 8.686 billion shares now in issue, all investors are seeing is endless dilution.

The old Regal Petroleum (RPT) is giving itself a makeover.  It now has a new, more contemporary name, Enwell Energy plc (ENW) and has launched a new website.  It’s probably a good move and indicates that they’re looking to increase investor appeal.

Coro Energy (CORO) and Empyrean Energy (EME) announced their much expected Mako resource upgrade.  No surprises there and no positive impact on their share prices either.  Question now is can they develop and commercialise it, because that’s the hard part.

Coro connected company, Ascent Resources (AST), announced a “Slovenian Strategy Update.”  It was a neat way of disguising a 200,000 Euro default.  It’s just a lifestyle operation for the Board, so none of the “news” really matters anyway.

Bahamas Petroleum Company (BPC) announced signature of the drill rig contract.  The window for commencement of drilling is between 15 December 2020 and 1 February 2021. It’s a big drill with significant speculative potential, but it all now comes down to whether and how they can finance it.

88 Energy (88E) announced the despatch of its bidder’s statement, which contains its offers to acquire all of the ordinary shares and listed options in XCD Energy Limited.  I mentioned 88E as a favourite several times last year and it rose over 100% in the run up to the drill.  It’s a regular money maker if you know how to get the timing right and the next drill is awaited with interest.

PetroTal (PTAL) announced that publication of its two outstanding sets of accounts are further delayed.  Meanwhile it “continues to assess a variety of financial arrangements to ensure it has the necessary funding.”  I said a number of times before that it would require funding, regardless of all the self-financing hubris and, as regular readers and listeners will know. I’ve been negative about this one all the way down from the 30s.

As an aside, I write critically about many companies.  Most comments receive little challenge and, if there is one, it’s usually a polite communication explaining what the writer thinks I’ve got wrong.  I always know the ones whose share prices will completely collapse though.  It’s indicated by the receipt of a barrage of abuse and sometimes threats.  AAOG, BLOE, RBD and PTAL are some recent examples.

Back to the news, Echo Energy (ECHO) announced that while it was being ramped the previous week, Lombard Odier sold more than half its stake.  Always remember that when you see paid commentators promoting a stock, it’s to enable someone to sell it.  ECHO is another one I’ve been warning about, all the way down from 17p.

Hurricane Energy (HUR) issued disappointing news the previous week and fell into the 6p range, but Hannam & Partners have issued a new report with a target of 45p.  It’s a very rare event indeed that a share price reaches a broker’s target, but it does indicate some potential.  The link to their full report is in my Tuesday Twitter post on the subject.  The Oil and Gas Authority has been understanding of the situation and it was announced last week that they have extended the deadline for the commitment well on Lincoln to 30 June 2022 and extended the deadline for plugging and abandoning Lincoln Crestal to 30 June 2021.

For those interested, my personal investing and trading focus is on the elimination of losses and only going for those trades which I view as certainties.  That’s the secret to large profits.  I set out my trading ideas in the private blog each week and I’ve also written a 10 part trading course for those who want to understand these small cap markets in detail and make money out of them.  Details of the course are at https://www.oilnewslondon.com/course and details of the private blog are at https://www.oilnewslondon.com/subscribe  Subscription to the private blog also gains you full access to the subscribers section of the Oil News London site, including key information such as the full schedule of upcoming drills.  There are trial offers for both.

Contact me on Twitter @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.

Weekly oil news round up by Oilman Jim – 88E UKOG PET PXOG AEX PVR JOG

I said last week it wouldn’t be long before 88 Energy (88E) started planning its next drill and they confirmed that on Thursday in their latest operational update.  It could be quite interesting once fully financed.  It’s a share, 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).  It’s one I’ve also profited from many times before.  Obviously, you never hold for the drill result.

Overall, there’s been a strong recovery for both the oil price and the markets this past week, with confidence returning and money flowing back into shares.  It’s all looking much better now than it was a few weeks ago.  Some further news:

UK Oil & Gas (UKOG) converted another £75,000 of the convertible loan, this time at 0.1944p per share.  The remaining loan balance is £1.93 million, so still quite a lot to go.  Balanced against that is some potential strong news flow regarding not just Horse Hill, but some of their other assets too.  Where the price goes from here depends entirely on how much new buying comes in.

Petrel Resources (PET) announced an update on their agreement with the Tamraz Group.  Petrel still haven’t received the money due and are cancelling the shares that were to be issued to Tamraz, whose remaining shares remain frozen since they still haven’t bought back the shares they sold in breach of the lock-in agreement.  Meanwhile, Petrel is progressing its existing projects, of which the most promotional would be their Iraq activities.  I highlighted PET as a favourite several times last year around 1p and it’s now 3.75p, having been as high as 26.5p

Prospex Oil & Gas (PXOG) issued its 2019 final results.  Timeframes may well have to be extended since project operators are adjusting to the current environment and taking a cautious approach to discretionary expenditure.  Meanwhile, PXOG burns £1 million a year in administrative expenses.  It’s difficult with companies like these for shareholders even to have a fighting chance of making money from them if they hold.

People sometimes get angry when I make comments like these and say I’m negative.  To be clear about this, all I’m negative about is losing money.  I’m very positive about getting it right and succeeding.  To do that you need the right shares.  And if all I do is just say nice things about them all as some other commentators do, then my comments and opinions would be worthless.

Following on from my recent piece about cleaning up AIM, I think a further major problem is caused by investors’ failure to read and/or understand the disclosure information available.  Some trade simply based on someone else’s tweet and, to many, their concept of “research” is to read some recent posts on the message boards.  The more “diligent” might listen to the latest interview.  Very few read the RNS announcements and hardly any read the admission document.  Yet these are the key documents mandated by the authorities to be published for investor information.

There is often a reluctance by some investors to confront facts.  They know a side of the story that they like and they don’t want to hear anything that contradicts their beliefs.  This weakness contributes to huge losses.  In reality, if something isn’t what you think it is, you want to be out.  Unfortunately, most won’t accept they’ve made a mistake until it’s too late and they’ve lost their money.  Pride is the enemy here.

The only way to succeed, of course, is to base decisions on facts, not fallacies which you’d like to be true.  Accepting reality is essential.  Conviction can only be based upon your own assessment of the facts, not the thoughts and opinions of others.

It’s critical to always bear in mind that many commentators and message board/social media posters have their own agendas and will deny the truth of points you may raise in public, particularly regarding sensitive subjects.  You have to be strong enough to believe in yourself and your own knowledge.

Remember with many of these smaller companies, the “other side,” the directors and the promoters, are not playing on the same team as you.  Investors are who they feed off.  Your money is their living.  Read the RNS announcements, the admission document and ignore most of the rest of it.  Reality is many investors would spend more time researching which washing machine to buy than they would with shares in which they’re investing 10 or even 100 times that amount.  Don’t be one of those.  Focus should be on news and share prices and how they’re moving, not the comments of others.  This isn’t negative, the return for not allowing yourself to be misled can be serious financial success.

There’s a lot of money to be made in the markets, but not from those companies which are being touted so someone else can sell their shares to you.  You need to go for shares where you have the conviction yourself that they will perform and avoid the uncertain trades, which have a habit of ending in losses.  The Special Trading Course explains all this.  It’s about how to take advantage of what is an imperfect market.  It warns you about what to avoid so you don’t get cleaned out and also informs you of the type of situations where there can be virtually guaranteed profit.  I think most, even those with significant experience, will find it extremely useful.  There are 10 parts at £19.50 per part and I’m certain that it will be really helpful, so for a limited time, you can receive the first part of the trading course for just £1.  Read it, see what you think and if it’s not for you, you can cancel with the click of a button and pay nothing further.  Special links for blog readers and podcast listeners are https://www.oilnewslondon.com/weekly if you want to receive it weekly over 10 weeks, or https://www.oilnewslondon.com/daily if you prefer to receive it over 10 days.

Back to the company news, Aminex (AEX) announced a farm-out update.  It’s received the Tax Clearance Certificate from the Tanzania Revenue Authority and with onward submission to the Tanzania Petroleum Development Corporation to be forwarded to the Ministry of Energy, Aminex has now accomplished all of the conditions within their control in order to complete the farm-out.  Things are starting to look much better for them now.

There’s a sense of deja vu at Providence Resources (PVR) who announced on Friday that SpotOn Energy has experienced some delays in closing out the necessary arrangements with its consortium and has informed Providence that it will be necessary to delay the second tranche of its investment by approximately one week.  Let’s hope this doesn’t turn out to be a repeat of the Chinese fiasco.

Jersey Oil & Gas (JOG) announced completion of the acquisition of Equinor’s interest in Licence P2170.  It provides them with the opportunity to potentially developing the Verbier discovery as part of the Greater Buchan Area hub, plus further exploration upside.  As always, it will come down to whether, and on what terms if any, financing can be obtained.  It’s potentially a very large project.

This blog covers the news each week.  I write another covering my trading ideas, which may be of interest.  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.  It’s not investment advice that I offer and if you want that, you should speak with a financial advisor.  I share my take on companies and the markets and, as those who follow me know, I’m rarely wrong about these matters.  Details of the private blog are at https://www.oilnewslondon.com/oilman-jim 

Contact me on Twitter @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.

Weekly oil news round up by Oilman Jim – AIM PTAL 88E MSMN COPL PPC MATD UJO UKOG PRD

There was some talk last week about “cleaning up AIM” and I suggested perhaps borrowing a few ideas from the United States, who have been dealing with the challenges of regulating micro-cap fraud on a much larger scale, for a much longer period of time.  Adopting certain provisions of their Securities Act would help, in particular minimum holding periods for shares issued in placings and disclosure of compensation by paid commentators.  Another practical way, and this approach proved very effective, is when a company announces a new business endeavour and heavy promotion starts off the back of a short news announcement, suspend the shares pending publication by the company of what in the UK would be a new admission document disclosing all information necessary for investors to make an informed investment decision.  I’m not aware of any companies to whom this happened in the US ever coming back.  Just a few thoughts if anyone was serious about wanting to clean up the market.

Strange goings on at PetroTal (PTAL).  It closed at 7p in London on Thursday the previous week, then was walked up to the equivalent of 9.6p in the North American markets on the Friday when London was closed.  PTAL had some heavy social media promotion last weekend, the angle being buy at the “bargain” price in London first thing Monday morning.  It did some good volume, although the price of course didn’t go anywhere, but the interesting question is who was behind it?  Entirely coincidentally I’m sure, Miton sold half its stake in the company on Monday.  Fact is PetroTal is now down from 32.5p to 6.9p and has recently disclosed a hitherto unknown contingent derivative liability of $42 million.  Reality is it’s an old style Canadian stock promotion out of a letterbox in Zug and this tends to be what happens with these companies.

The question is and it goes back to the points I made at the start, do we always have to rely on others to protect us?  With common sense and a bit of knowledge, we can do that ourselves.  Problem is the lack of knowledge plus most people’s laziness and unwillingness to learn.  Many investors, particularly new, rely on certain paid commentators for guidance, not realising that person is getting paid to persuade them to buy their offers.  And if you’re one of those investors, understand that while you’re buying, the people who are paying these commentators are selling.  Think about that.  Then when the placing comes along and the share price dives, your trusted guides start chuntering on about how wise the company was to take advantage of increased market interest to raise and they’ve spoken to the CEO and it’s all great, etc. etc.  Hold your shares they say and it will all be fine.  Unfortunately, it never is.  Some of these people cover many shares, using them as clickbait to draw in investors desperate to hear any comments about the shares they’re stuck in and desperate for another tip to make back their losses.  Next time, see if you can spot the one(s) they’re being paid for.

Many of these companies can’t raise money in the normal manner, only via the market, selling to the most ignorant and ill-informed.  Personally, I would say it’s market abuse, particularly since some commentators vehemently deny receiving payment, even though everyone familiar with the business knows they do.  It also falls foul of advertising regulations.  On their clients’ side, it has to be insider dealing selling shares when you know that a placing is forthcoming.  So plenty of ways to stop it if anyone wanted to.

I explain all this in much further detail in the Special Trading Course along with many other things to enable you to protect yourself.  Also, I explain my methods for making money in the markets, which perhaps are a little different to most.  I actually just finished writing the final part of the Special Trading Course last weekend.  In it I’ve written down all my observations about these markets and companies, the issues with the bad ones and how to make money with those that look certain to perform.  I think most, even those with experience, will find it useful.  In fact, I’m certain that it will be really helpful, so for a limited time, you can receive the first part of the trading course for FREE.  Read it, see what you think and if it’s not for you, you can cancel with the click of a button and pay nothing.  Special link for blog readers and podcast listeners is https://www.oilnewslondon.com/free

Moving on, 88 Energy (88E) released it’s Bidder’s Statement, setting out the details for its takeover of XCD Energy.  As I’ve said before, expect them to start planning soon for the next big drill, which could be quite interesting once fully financed.  It’s a share, 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).  It’s one I’ve also profited from many times before.  Obviously, you never hold for the drill result.

Mosman Oil & Gas (MSMN) announced the agreement of terms of a fairly uninspiring farm-out agreement whereby it receives an immediate sum of just under £8,000, plus a further similar amount after completion of the required seismic re-processing work.  If all proceeds satisfactorily, it will end up with a 15% interest carried through the first well.  A huge ramp took place, with many getting spiked on a 350% share price rise.  I did warn about it on the day, explaining that a review of the accounts indicated a placing must be imminent.  As expected, it’s now given up the vast bulk of its gains and those who bought it earlier in the week are sitting on some very substantial losses.

I said on 12 April that it could be “lights off” at Canadian Overseas Petroleum (COPL) and that was very much confirmed by their announcement on Wednesday, which stated that “the Company does not currently have sufficient working capital, cash inflows and/or adequate financing to continue its operations.”  They’re now even paying the staff in shares.  The future rests on a share price destroying £2 million equity placing agreement with Yorkville Advisors Global and Riverfort Global Opportunities, but closing of this facility is contingent on the clearing of a prospectus.  It’s hard to see the attraction here.

President Energy (PPC) has been getting a lot of promotion on social media, some from the paid commentators too.  The story is that the government in Argentina is going to institute a minimum oil price of $45 per barrel.  It sounds great, but $45 oil would only be a boon for producers if there were buyers.  There aren’t.  “If there’s nobody to buy the oil,” said one union leader, “how will higher prices help?”  Watch out, because these things often presage a placing.

Petro Matad (MATD) announced cost reductions that they say will see them through to next year with their current cash resources.  Meanwhile, the Block XX Exploitation Licence application is progressing with the Mongolian authorities.  I suspect there won’t be too much happening here for some time, although MATD is always one for an opportunistic placing if the opportunity arises.

Union Jack Oil (UJO) announced final results, but most importantly reconfirmed that it is fully funded for all current drilling and well testing commitments.  UJO had a cash balance in excess of £5.5 million as at 1 May and the company remains debt free.  Works now are underway at West Newton, with further developments awaited.

UK Oil & Gas (UKOG) announced a further loan balance reduction, converting into shares at just over 0.2p this time.  They also paid off £75,000 in cash out of the recent £1.275 million placing at 0.2p, leaving £2.005 million outstanding on the loan.  I suspect we may be reaching the bottom here and it’s now time to start watching UKOG more closely.

Predator Oil & Gas (PRD) now is paying off its convertible loan, partly via a new placing at 2p.  It’s still well down from the 4p price at which most of the funds were raised and COVID plus the oil price remain serious concerns.  Nevertheless, the millstone around its neck now is gone and at least the share price will have room to breathe.

If you’re not yet familiar with me, I’ve been involved in the markets for a long time.  I bought my first shares in the 1970s and I’ve worked in the financial sector since the early 1980s.  My particular knowledge is of the stock markets and I’ve been actively involved in these, both in the UK and the US for over 40 years from both sides of the fence.  I’ve also had significant involvement in the oil and gas industry along the way, from drilling wells to negotiating farm-outs to majors, which enables me to see very quickly whether or not these companies are telling the truth.

My personal trading philosophy is based upon conviction, elimination of possible loss making trades and only going for those which are certainties.  It takes discipline, but it maximises profits, which is what this is all about.  I write two blogs.  The main blog (and associated podcast) focusses on the news. The private blog focusses on the trades.  Writing it all down and publishing it is an excellent discipline, requiring focus and accuracy, since I’m open to criticism if I don’t get it right.  Writing the main blog ensures staying on top of and correctly assessing all the oil and gas public company news each week.  Writing the private blog and sharing my thoughts ensures careful and accurate analysis of the trading ideas.  The main blog is free.  The private blog costs £95 a month.  You can try out the first month on a trial basis for just £23.75.  The link is https://www.oilnewslondon.com/oilman-jim 

Contact me on Twitter @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.

Weekly oil news round up by Oilman Jim – PTAL UJO RBD 88E XCD AAOG ZEN JOG PRD AEX

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.

Now, if you want to know how to avoid disaster and losses with many of these companies and at the same time learn my methods for making money in the markets, which perhaps are a little different to most, it’s all in the Special Trading Course, where I’ve just finished writing the final part.  I’ve written down all my observations about these markets and companies, the issues with the bad ones and how to make money with those that look certain to perform.  I think most, even those with experience, will find it useful.  In fact, I’m certain that it will be really helpful, so for a limited time, you can receive the first part of the trading course for FREE.  Read it, see what you think and if it’s not for you, you can cancel with the click of a button and pay nothing.  Special link for blog readers and podcast listeners is https://www.oilnewslondon.com/free 

Contact me on Twitter @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.

Weekly oil news round up by Oilman Jim – IGAS UKOG RKH NVPT PMO ZEN AST ROSE COPL EUA SLE AEX SOLO UJO RBD PTAL LEK 88E BPC I3E

I mentioned on Wednesday the number of companies referring to being protected by hedges covering future production and, on the other side of these, the example of airlines who buy fuel forwards.  They’re looking at paying out hundreds of millions now on these hedges, which wouldn’t be a problem if they actually were buying and using an equivalent amount of fuel bought at the new lower market price, since that hedged price was what they were basing all their forward pricing calculations upon.  There was some interesting information last week regarding demand in Spain as pipeline CLH is publishing its data and offering a unique view on lockdown impact.  Petrol is down 75%, diesel is down 55% and jet-fuel is down a massive 93%.  You can see the size of the problem.

Another matter which I’m not sure everyone is aware of is that with massive oversupply and lack of storage, producers aren’t getting anything like the prices you see on your screen.  That’s why so much production now is being shut in.  If you’re at the end of a dirt road somewhere in the middle of the US with a few stripper wells, you’re maybe receiving a couple of dollars a barrel and without a disposal well, you could be paying even more to have the water hauled away.  Back in the UK, you can see the benefits for the operators from the numbers in Friday’s IGas (IGAS) announcement: shutting-in 600 barrels of oil equivalent per day has a positive impact on their cash flow of £250,000 a month. 

Moving on with the company news and I’ll focus on the more interesting announcements, good or bad, UK Oil & Gas (UKOG) announced a £1.275 million placing at 0.2p.  There’s still £2.325 million outstanding on the convertible loan notes, so the share price could be going even lower yet.  The oil price is a big damper, but the problem also now is investors not wanting to finance a CEO who they see as having his snout in the trough, taking three quarters of a million a year, enjoying large “bonuses” from a severely loss making company.

Rockhopper Exploration (RKH) issued a Sea Lion farm-in update.  Despite the current oil price weakness, Navitas Petroleum (NVPT) (Tel Aviv market) remains committed to the finalisation of the definitive farm-in agreement.  They’re targeting late Q3 or Q4 for the Falkland Islands Government to approve Navitas becoming a licencee and Premier Oil (PMO) will fund Rockhopper’s share of the remaining pre-effective date costs.  There is no guarantee this will complete, but in the current climate, it’s all looking relatively positive.

Desperate times for those companies which don’t really have any assets.  Zenith Energy (ZEN) is now trying to jump on the Coronavirus bandwagon and sell PPE to Africa.  I said on Wednesday that it would just be another excuse for them to raise cash and lo-and-behold the very next day they announced a £540,000 placing.  Ascent Resources (AST) must have given up on getting the £200,000 out of the disgruntled investor in the 5p placing.  The litigation funding update didn’t work, so they tried a memorandum of understanding announcement and pulled in the necessary £200,000 at 2.75p per share instead.  Rose Petroleum (ROSE) has suspended its acquisition of a 2% stake in a US shale gas unit, but has compensated by developing a series of proprietary tools for use in evaluating assets, “demonstrating the value Rose brings to potential investor and industry partnerships” they say.  It’s quite pathetic really.  Canadian Overseas Petroleum (COPL) announced a £2 million equity placing and equity sharing agreement on Thursday.  It’s already trading substantially below the 0.07p placing price and I guess the RiverFort “Equity Sharing Facility” will bring the share price down further.  I’ll also mention Eurasia Mining (EUA), which although not an oil company (none of these ones are either) fits well into this section.  It’s suspended already, now has lost its NOMAD and will be delisted on the 29th unless it finds another.  This is the regular fate of these types of companies and the result is that you lose all your money.  I’d strongly suggest the special trading course for those who want to understand what’s really going on at these companies and how to actually take money out of these things.  Link is https://www.oilnewslondon.com/trading

Back to the news, Aminex (AEX) and Solo Oil (SOLO) announced the extension of their Tanzania licence.  AEX can now proceed with its farm-out and SOLO can continue to explore its value realisation options.  Good news also for the shareholders of Union Jack Oil (UJO) and Reabold Resources (RBD), both of which announced a positive decision from the environment agency in respect of the testing of the West Newton A-2 well.

PetroTal (PTAL) appears to be in a bit of mess now and it would be interesting to see their most recent financial statements.  Unfortunately, they are playing the Coronavirus card to postpone release.  Absent a strong oil price recovery, I think we could be seeing a placing here.  Meanwhile, Lekoil (LEK) has restructured its financial obligations to Optimum and lives to fight another day.  They’ve agreed a more manageable payment schedule of $1.0 million on or before 15 July 2020, $2.0 million on or before 30 September 2020 and $4.6 million to be paid on or before 30 November 2020, but I think a fundraising is inevitable.

In contrast, San Leon Energy (SLE) actually is making money from its business, not just from selling shares, and is returning some of it to shareholders, this time in the form of a special dividend of 6p per share.  You could have bought SLE for 11p just over a month ago.  It will still have £59 million left though, with a lot more cash expected to come in, and they continue to pursue growth opportunities, which are prevalent in the current market.

88 Energy (88E) didn’t take too long to get going again after its recent duster.  They’re making an offer for XCD Energy, an oil exploration company with operations on the North Slope, to create an Alaska-focused entity with three project areas.  I mentioned 88E as a favourite in the blog several times last year around 0.7p and it gained over 100% in the run up to the drill.  It’s a stock promotion, but one that you can make money from.  It will get interesting again when it announces the next fully-funded new drill.

Bahamas Petroleum Company (BPC) could have been financed itself by now, but got greedy and now they’re converting part of a convertible loan note at 1.17p per share.  Difficult to know whether they can pull this back together.  I3 Energy (I3E) is in a similar boat, having lost focus, gone off at a (misguided) tangent and now is at the mercy of its noteholders.

Personally, I look for what I would call certainties.  Those shares where I think a profit is as good as guaranteed.  My trade ideas are in the private blog each week and the link for that is https://www.oilnewslondon.com/oilman-jim

If you’re not yet familiar with me, I’ve been involved in the markets for a long time.  I bought my first shares in the 1970s and I’ve worked in the financial sector since the early 1980s.  My particular knowledge is of the stock markets and I’ve been actively involved in these, both in the UK and the US for over 40 years from both sides of the fence.  I’ve also had significant involvement in the oil and gas industry along the way, from drilling wells to negotiating farm-outs to majors, which enables me to see very quickly whether or not these companies I write about are telling the truth.

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 – OOTT COVID19 88E TLW PTAL PANR GKP EME RMP SOU CORO ECHO

Oil has been trading like a penny share, bagging at one point earlier in the week.  For the first time ever, the price even went negative for delivery.  It’s being hit from both ends with too much supply and too little demand and the worry is when will conditions stabilise.  Producers are cutting output, but the great unknown of course is the Coronavirus, which countries around the world have attempted to counter with varying degrees of success.  It will all stabilise, people will just have to adapt.  However that takes time and governments are hesitant to disclose what will be the necessary new rules until the population gradually adjusts.  It’s not really about politics (experienced doctors, scientists and civil servants are in charge), the political aspect just impacts the way it’s all presented, which unfortunately in some countries hasn’t been done too well.

For shares it was another volatile week and many companies tried their best with news.  88 Energy (88E) announced that a petrophysical interpretation has indicated hydrocarbon pay in two formations.  There’s always a laboratory somewhere that will produce a soothing analysis to keep the necessary optimism alive, but the reality is that Premier Oil pulled out and let 88 Energy have their interest for free.  I think it’s time to move on from this chapter.  88E gets interesting again after it’s financed for the next drill.

Tullow Oil (TLW) issued an AGM trading update.  It’s positive and the shares are now up over 200% from the low they hit last month.  It just shows the type of quick profits that can be made in the current market environment.  And this is a company capitalised at over £300 million.  You don’t have to trade only small cap pump and dump stocks to make fast money now.

PetroTal (PTAL) is being hit hard by the current oil price.  The company now effectively has suspended all further development activity and the talked about reserve based lending facility looks doubtful in this climate.  Contractors also need to be paid.  But financed, this still has potential and with a reasonable sized placing, PTAL could get going again.  It’s one to keep an eye on.

Pantheon Resources (PANR) continues to seek a farm in partner for its Alaskan projects.  It would like a meaningful up-front cash component as well as carried terms on future drilling.  I think that in the current environment this could take some time.  For the moment, they’re reducing their salaries by 20%.

Gulf Keystone Petroleum (GKP) announced full year results.  Cash at 22 April 2020 was $164 million.  Current market cap is £166 million.  Operations now have been reduced to focus on the minimum safety critical activities required for production, but once macro conditions improve, including resolution of outstanding payments from the KRG, Gulf will restart expansion activity to increase production to 55,000 barrels of oil per day.  It doesn’t look expensive.

Empyrean Energy (EME) announced an open offer at 3.5p.  There’s a sense of deja vu here.  I remember buying EME at 3.5p in 2017.  It looked like a no brainer then and so it turned out going to over 30p and delivering some of the best trading gains that year.  Now we’re back where we started, unfortunately I don’t get the same feeling again.

Red Emperor Resources (RMP) issued its quarterly activities and cashflow report.  They say they’ve continued to conduct due diligence on a number of potential projects,  but the current state of the global economy, and depressed oil prices, has made valuing companies and assets difficult.  With A$4.7 million cash and access to more, they’re now waiting to take advantage of any opportunistic deals as and when they become available.  It’s one that will get interesting again in the future.

Sound Energy (SOU) issued final results.  I’m only commenting on this now since it claims to have assets of £186 million.  It’s one that’s been continuously pumped for cash by certain people as a result of which large numbers of investors have lost hundreds of millions  of pounds.  It’s not a joke and I see some of the same people working Coro Energy (CORO) now.  Reality is that these two companies plus Echo Energy (ECHO) (all three under the same control) have significant debt of over £20 million each and possibly worthless assets.  The CORO auditors made reference to a material uncertainty in relation to going concern within their audit report last week.  So watch out.  I’ve been warning about these three all the way down.

Regardless of circumstances, the good companies will pull themselves back together and the bad companies will fail.  If you want to know how to spot the differences, I explain it all in the Special Trading Course.  Plus of course how to choose the ones that will deliver the large returns.  The link for that is https://www.oilnewslondon.com/trading 

Personally, I look for what I would call certainties.  Those shares where I think a profit is as good as guaranteed.  My trade ideas are in the private blog each week and the link for that is https://www.oilnewslondon.com/oilman-jim 

If you’re not yet familiar with me, I’ve been involved in the markets for quite a long time.  I bought my first shares in the 1970s and I’ve worked in the financial sector since the early 1980s.  My particular knowledge is of the stock markets and I’ve been actively involved in these, both in the UK and the US for over 40 years from both sides of the fence.  I’ve also had significant involvement in the oil and gas industry along the way, from drilling wells to negotiating farm-outs to majors, which enables me to see very quickly whether or not these companies are telling the truth.

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 – BLOE AAOG ZEN BOR CLNR UJO RBD PRD TLOU BPC RPT CORO EME ECHO SOU NUOG AST HUR

Another short week, but an interesting one.  Following on from my “success” in predicting the collapse of Block Energy (BLOE), Anglo African Oil & Gas (AAOG) now has come to the end of its life it its current form, losing investors over 99% of their investment.  Ironic how I was attacked at the time for explaining what it actually was.  I always said the Tilapia field was worthless and the final proof was delivered by the announcement of its sale to Zenith Energy (ZEN) (including a claimed $5.3 million of receivables) for £200,000.  The clock now ticks down towards ZEN’s inevitable demise.

Back to something more real, Border and Southern Petroleum (BOR) announced final results.  Their farm-out process remains active, although they say progress has been impacted by current industry capital allocation constraints.  Cash balance at 31 December 2019 was $3.7 million and administrative expense for the year was $1.45 million.  A 25% cost reduction target has been set for 2020, which should enable them to keep going for another three years.

Cluff Natural Resources (CLNR) announced final results.  Compared to a market cap of £12 million, as at 31 March 2020, the Company had cash on hand of over £13 million.  They continue to work with Shell towards firm well commitments on both Selene and Pensacola, but as the share price indicates, the market is doubtful that will happen.

Union Jack Oil (UJO) and Reabold Resources (RBD) announced the commencement of activity at the West Newton B site.  RBD also announced a Romania update, but more interesting now is the controversy swirling around their California “investments” first flagged up by me in the Sunday blog on 21 July last year.  More on all this as it unfolds.

Predator Oil & Gas (PRD) converted £70,000 of the outstanding loan note.  What they didn’t say in the RNS is that this was done at 1.329p, around half the price to which it was ramped last week.  It’s something I’ve been warning about and I’d suggest caution here.

Tlou Energy (TLOU) issued an operational report.  With the interim power purchase agreement in place, they are now looking to produce electricity both from coal bed methane gas and solar.  All still appears to be quite a long way off though and significant further finance will be required.

Bahamas Petroleum Company (BPC) announced that admission to trading on AIM of the fund shares is not taking place as previously announced, as the fund is yet to complete certain necessary administrative processes in The Bahamas.  Essentially, the 2p funds (which appeared such a bargain at the time compared to the ramped share price) have not been received.

Regal Petroleum (RPT) issued a Ukraine update.  Average daily production for the first quarter was up around 5% at 4,508 barrels of oil equivalent.  Market cap is £51 million; cash is over $55 million.  For those who like these type of companies, it doesn’t look expensive. 

Coro Energy (CORO) and Empyrean Energy (EME) announced a resource upgrade of the Mako Gas Field, but it didn’t help their share prices.  EME also announced a small £410,000 fundraising at 3.5p (they had to withdraw their proposed £1 million placing due to an understandable lack of interest).  The price of EME is now back down where it started a few years ago despite all their claimed successes.  Proves yet again my point that these companies are only for trading, not longer-term investing.  Of course EME are still doing well compared to their partner, CORO, and its stable mates Echo Energy (ECHO) and Sound Oil (SOU), all now proved to be AAOG and BLOE type failures and all long warned about. 

The now connected Nu-Oil and Gas (NUOG) announced a proposed RTO transaction and suspension of trading.  Main purpose is to have an excuse for another fund raising.  The only binding provision in the deal though is they have to pay the transaction fees of the other party up to £60,000.  I think most now know what NUOG and its directors are, thus any deal should be the usual guaranteed, nailed-on failure.

Remaining in the same stable, I said last weekend that the previous Thursday’s litigation funding RNS from Ascent Resources (AST) was just a spoof to entice the defaulting placee to pay up and so it turned out, when they announced on Tuesday that the “funder” pulled out over the Easter weekend.  To keep the pot boiling, they also announced a “Cuba New Market Entry.”  It’s exactly the type of flimflam acquisition deal to be expected.

Returning to more serious companies, Hurricane Energy (HUR) announced an operational update.  Full year guidance is maintained at 18,000 barrels per day, implying 19,000 barrels per day production for the rest of the year.  Hannam & Partners have a risked NAV of 61p per share, five times the current price in the market, with over half its current market cap in cash.  It’s still not a company I would want to hold myself though.

Personally, I look for what I would call certainties.  Those shares where I think a profit is as good as guaranteed.  My trade ideas are in the private blog each week and the link for that is: https://www.oilnewslondon.com/oilman-jim 

I’ve also written a trading course explaining exactly how this market works.  It’s brutally frank and sets out what to avoid and, most importantly, how to profit.  The link for that is: http://www.oilnewslondon.com/trading 

I’ve been involved in the markets for a long time now.  I bought my first shares in the 1970s and I’ve worked in the financial sector since the early 1980s.  My particular knowledge is of the stock markets and I’ve been actively involved in these, both in the UK and the US for over 40 years from both sides of the fence.  There’s very little I don’t know about it.

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 – RKH 88E PMO CHAR RRE PVR LOGP COPL NTOG ZEN AST BLOE

A short week, but plenty of interesting news.  Rockhopper Exploration (RKH) announced final results.  At 1 April this year, it had $21.9 million cash, having sold its Egypt assets, and is now focussed on the Sea Lion Falkland Island development.  Market capitalisation is £35 million; net assets per the balance sheet are $396 million.

88 Energy (88E) announced a large condensate discovery, unfortunately Premier Oil (PMO) viewed it as non-commercial and decided to exit.  That’s the oil business and prudent traders don’t hold for the end result.  I highlighted 88E as a favourite several times around 0.7p and it more than doubled to over 1.4p.  As I’ve always said, it’s critical to take profits, de-risk and never get greedy.

Chariot Oil & Gas (CHAR) issued a strategic update.  They now intend to focus on monetising near term potential of the Lixus licence and maximising value for investors by developing a Moroccan gas business.  Their 2019 year-end unaudited cash position was $9.6 million, with no debt and no remaining work programme commitments.  Market capitalisation is £7 million.

RockRose Energy (RRE) delivered a strong set of results.  At the year end, total cash was $375.5 million, of which $59.7 million was restricted.  Pro forma adjusted earnings before interest, tax, depreciation and amortisation was $162.4 million.  The Company’s current expectation is that in 2020 unit operating costs will fall to below $30 per barrel of oil equivalent.  With its heavy burden of upcoming decommissioning costs, RRE remains a highly geared play on oil and gas prices.

After the Chinese debacle which knocked the share price to the floor, Providence Resources (PVR) has now agreed non-binding and non-exclusive heads of terms with the Norwegian company, SpotOn Energy, in relation to the farm out of the Barryroe oil and gas field.  SpotOn has been given a period of exclusivity until 31 October 2020 during which time they will agree an appraisal work programme for the Barryroe field and develop commercial terms with the aim of concluding a binding farm out agreement.  As a sign of good faith, they put up £300,000 of a £2.7 million fundraising at 1.5p, which will fund PVR through to April 2021, Barryroe 20% partner, Lansdowne Oil & Gas (LOGP), already being funded through to the end of this year.  It’s a step forward, but very far from conclusive.

In contrast, Canadian Overseas Petroleum (COPL) appears to be taking a step back.  The joint venture company which owns OPL 226 is being sued by Essar Mauritius, who are claiming $63 million of damages in respect to amounts invested in the OPL 226 project.  Unfortunately for COPL, the claim has been filed in the High Court of Justice of England and Wales, where the judges are unlikely to be persuaded by the usual type of statements made by Mr. Millholland.  Could eventually be lights off here now.

Nostra Terra Oil & Gas (NTOG) had a busy week with four announcements.  Looks like Matt Lofgran is going to save his salary by taking 10.8% of the company for £80,000.  The latest placing has been done at just 0.25p per share, but none of that matters.  The value to those involved lies in virtually always being able to raise money just by lowering the share price at which that is done.  That’s the worth of a public listed company to those who control the board, its ability to raise cash and keep paying them, and that’s why people fight to get control of these things.

To keep us all further amused, Zenith Energy (ZEN) announced a quick £525,000 placing at 0.7p, while waiting for the 2.5p “premium placing.”  This company appears to raise money almost every single week, but what actually happens to all the cash?  I suspect this will all end in tears.

Ascent Resources (AST) says that the defaulting placee has agreed to pay up.  Guess they must now have been promised that those in charge can ramp them out of it.  To that end the receipt of a letter of intent for litigation funding was announced.  It doesn’t amount to anything at all, in fact it’s barely worthy of a RNS and could even be said to be misleading, but at least it gives those who promote these things at the bottom end of the market something to talk about and try to get the dissatisfied 5p placees out.  Hasn’t worked yet though.  All involved here are tired and starting to look like they’re past it now.

Block Energy (BLOE) is mothballing West Rustavi.  The whole thing is, and always has been, completely unviable.  I’ve been calling this one out as a scam for a year now and, despite personal attacks plus threats from people connected to the company, I’ve continued to state my views firmly.  Following yesterday’s announcement, I suspect Block will just fade away now.  Interestingly, shareholder Georgia Oil & Gas (of the British Virgin Islands) was selling before this announcement, just as it has done immediately before previous bad news.  It’s now trading around 10% of last year’s placing price.

As regular readers and listeners know, I also write a private blog available by subscription, which focusses on my actual trade ideas.  Details of that can be found at https://www.oilnewslondon.com/oilman-jim  In addition, I’ve now compiled a trading course, which vastly expands on some of the principles I expound in the blogs and podcasts and provides information that most will never have heard before.

There are many books and courses on investing and trading, but hardly any that address the actual peculiarities of the speculative small cap markets.  The few that do exist deal with the North American markets, which operate in quite different ways to the UK.  What does exist is quite useless for AIM and the London small cap market.

Investment techniques which are suitable for main markets and large companies are not appropriate to AIM and most of those that try to apply them lose, and often a lot.  It’s a completely different game.  There’s virtually no genuinely beneficial information out there about trading AIM and small cap companies.  Hence I decided to write this course.

I cover everything you won’t read elsewhere, particularly subjects which others either don’t understand, or even know about, or even if they do, are unwilling to talk about openly.  I set out exactly how it all works in detail.  Exactly how the insiders make their profits.  And how you can profit too.  I explain all the things that no one else can or will and all the secrets the insiders don’t want you to know.  Lots of money can be made if you know how it all actually works, and what goes on behind the scenes may be completely different to what you think.  The course will be of great benefit to all trading the AIM and small cap markets, not just oil stocks.  I believe most will find it eye-opening.

I’ve been involved in the markets for a long time.  I bought my first shares in the 1970s and I’ve worked in the financial sector since the early 1980s.  My particular knowledge is of the stock markets and I’ve been actively involved in these, both in the UK and the US for over 40 years from both sides of the fence.  I’ve also had significant involvement in the oil and gas industry along the way, from drilling wells to negotiating farm-outs to majors.

Small cap speculative companies exist to enrich their insiders, not their public investors, and everything those involved do is for their benefit, not yours.  The vast majority lose with these companies, but some do profit and you can be one of those too.  The link is https://www.oilnewslondon.com/trading 

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 – I3E PET BPC NOG TLW JKX LEK UKOG UOG UJO EDR EOG TLOU CORO ECHO SOU ZEN TRP PRD CERP ECO CASP PTR EME NTOG MSMN AAOG 88E PMO

I know it can all look gloomy, but actually it’s not.  The number one on the private blog list rose over 100% in 8 trading days.  It all just depends upon which shares you’re in.  On to the news, and it’s been a busy week.  I3 Energy (I3E) entered into an option agreement to acquire Toscana, a Canadian company producing around 1,000 barrels of oil equivalent per day.  They say that the average breakeven price is $21.74 per barrel of oil equivalent, but what they don’t disclose is that this oil sells for well below US prices.  It’s a dog of a deal and I3E now has squandered its cash buying Toscana’s defaulted debt, while it’s own debt remains outstanding. 

Petrel Resources (PET) updated on its projects.  Good progress now appears to be being made with the issue of its Tamo 2A licence in Ghana.  I highlighted Petrel Resources as a favourite several times in the blog last year around 1p and it’s now 6p, having been as high as 26p.  More companies with this potential in the private blog at https://www.oilnewslondon.com/oilman-jim  

The issue of convertible loan notes by the Bahamas Petroleum Company (BPC) board isn’t looking too clever now.  Last conversion was at 1.28p.  Yet the board was refusing finance at 2p + recently, when it got greedy again, as it does.  I did warn about this.

Nostrum Oil & Gas (NOG) is finding itself in a difficult situation too.  Per its announcement this week, they recognise the precarious liquidity position of the company and will therefore look to engage with their bondholders.  They’ve also got a 272 million barrel of oil equivalent reserve downgrade, which will lead to a significant impairment being taken when they release their full year results.

Tullow Oil (TLW) reported that “strengthening the balance sheet continues to be a key priority with the Group seeking to raise proceeds in excess of $1 billion through portfolio management.”  Things aren’t necessarily too bad here: “operating costs remain less than $12/bbl, with Ghana operating costs at c.$9/bbl.”  

JKX Oil & Gas (JKX) was not so informative.  It reported its 2019 financial results, but they’re academic now and unfortunately when it came to the outlook for 2020, rather than providing any hard information, they chose just to waffle.

Lekoil (LEK) meanwhile confirmed that the payment of $2 million in respect of OPL 310 has been received by the operator Optimum.  LEK now is pursuing cost reduction measures, targeting an annual reduction of $8 million or at least 40% in G&A costs, which is inclusive of a reduction in staff numbers and these measures will be completed within the next four to six weeks.  Just shows really how bloated most of these small public companies are.

UK Oil & Gas (UKOG) issued financial results.  Cost reductions should enable Horse Hill to break even at low Brent prices, but I’m not sure how appropriate the £310,000 bonus for Stephen Sanderson is in the current environment.  Tellurian have been issued with a further 255 million shares in respect of the final payment for their Horse Hill interest, another 47 million shares also were issued last week in relation to a loan note conversion, with a further £2.4 million worth still to be converted.  None of this helps the share price and the CEO now appears to be more focussed on his personal remuneration unfortunately.

United Oil & Gas (UOG) announced an operational and corporate update.  They say that “low operating costs at Abu Sennan of around $6.5/bbl provide solid operating margins even at low price levels.”  They’re going to be prudent and are “stepping away” “where licences offer a more uncertain or marginal return.”

Union Jack Oil (UJO) and Egdon Resources (EDR) confirmed their Biscathorpe development offers commercial upside with break-even full-cycle economics estimated to be $18.07 per barrel of oil.  Meanwhile, Europa Oil & Gas (EOG), also active onshore UK, has completed a comprehensive review and cost reduction programme and their existing cash reserves are expected to be sufficient to finance current and upcoming activity without the need for additional external funding.  This of course is going to be rather harder now for small companies without a really exciting story.

Another in a similar category, Tlou Energy (TLOU), announced that an interim 2MW CBM Pilot Power Purchase Agreement has been agreed with the Botswana Power Corporation.  They just need to produce some gas and generate some electricity to sell to them now.

Coro Energy (CORO) is more or less throwing in the towel.  Whatever Parsons, Fumagalli and MacAulay do, it fails, so this approach makes sense from their point of view.  Why waste the companies money on oil and gas projects when it can be used for their fees and expenses?  Fortunately, there’s sufficient cash left to keep them all in comfort for a year or two.  It’s best not to end up like their other company Echo Energy (ECHO) whose announcement last week made clear that it now is unable to pay its debts as they fall due.

Meanwhile, yet another of their companies, Sound Energy (SOU) issued an announcement of pure waffle regarding a still uncompleted gas sales agreement.  In the same category, Zenith Energy (ZEN) announced a letter of intent for a “premium placing” at 2.5p.  For those who want to fully understand these things (and learn how actually to profit from small caps) these type of tricks (and all the others) are explained in the Special Trading Course.  Link for that is: https://www.oilnewslondon.com/trading

Tower Resources (TRP) finds itself delayed by the Coronavirus.  They’ve notified the Ministry of a force majeure event to obtain more time, but overall the situation doesn’t sound great.  It’s a project that’s at the margin and I wouldn’t be too confident that it will proceed.  Directors took 0.2p warrants in lieu of fees, though, but why not, since it’s better than nothing.

The Predator Oil & Gas (PRD) Morocco drill isn’t happening either.  Usual Coronavirus excuses and they’re now talking about using the funds for acquisitions.  In the meantime, they confirmed that the Trinidad project economics (in partnership with Columbus Energy Resources (CERP)) are still attractive even at West Texas Intermediate $20 a barrel.

Eco (Atlantic) Oil & Gas (ECO) issued a market update.  Usual COVID-19 stuff, but importantly the Board and management are taking pay cuts of up to 40% and with all work commitments for 2020 under the various petroleum agreements offshore Guyana and Namibia met, only minimal costs are expected to be incurred over the remainder of the year.  As at 31 March 2020, the company has cash of $18.8 million and zero debt, remaining fully funded for its share of further appraisal and exploration drilling offshore Guyana up to $120 million (gross).  It will start to look quite interesting if it drifts off under 10p.

Caspian Sunrise (CASP) announced the successful perforation of New Well 150, which is flowing at the rate of approximately 500 barrels of oil per day using a 7 mm choke.  The infill drilling programme now is being suspended, as will work on the deep wells in a few weeks time.  It’s a company that has its followers, but now perhaps is the wrong time.  PetroNeft Resources (PTR) also has made progress, announcing the completion of a 26 kilometre pipeline allowing year round production from their Licence 61.  

Finances are getting tight for Empyrean Energy (EME).  It currently has sufficient working capital to the end of April 2020, but will need additional funding to enable it to satisfy its share of final costs in relation to the drilling of the Tambak wells last year and to provide sufficient working capital beyond that date. The board is currently reviewing a number of funding alternatives, including (but not limited to) drawing a portion of the Longstate Facility, an equity placement or undertaking an Open Offer to existing shareholders.  Doesn’t sound like one to buy now either.

Meanwhile, the boardroom row at Nostra Terra Oil & Gas (NTOG) has flared back up and a new requisition to convene a general meeting has been received with a new resolution to remove Matt Lofgran as a director of the company. All quite pointless really since the assets now must be more or less worthless and no matter how bad Lofgran may be, I don’t see who they’ve got to propose that’s any better.  It’s all really about someone else trying to nick his £250,000 a year salary.  They’ll never be anything in it for the shareholders here.  Same applies to Mosman Oil & Gas (MSMN), which reported a loss from ordinary activities of $4.3 million.  It’s an equally pointless company that exists only to profit its directors and connected parties, but it still looks like a “blue chip” compared to Anglo African Oil & Gas (AAOG) which now is being financed on the drip by its new control party, Forum Energy Services, who advanced them £50,000 to pay its most pressing debts.  Chair, Sarah Cope also finds herself in the novel position of owning shares now, 100 of them (a full 20p’s worth) to enable a quorum at the upcoming general meeting.  Such confidence in a company from which the directors took £395,000 for themselves in the last reported 6 months.

Back to more viable companies, 88 Energy (88E) issued an operations update.  Total depth of 11,112 feet now has been reached in the Kuparuk Formation and logging while drilling results were largely consistent with Malguk-1.  Wireline logging now is underway and is expected to take around seven days.  Premier Oil (PMO) is the majority partner in this venture.  Results this coming week.

Remember, normal fundamental and technical analysis doesn’t work on AIM.  Critical with these small caps which constantly require funding is to understand how the finance and promotion side works.  That’s why I know what’s going on at these companies and where they’re likely to go.  I’ve 40 years experience in the markets from both sides of the fence.

My personal trading philosophy is based upon conviction, elimination of possible loss making trades and only going for those which are certainties.  It takes discipline, but it maximises profits, which is what this is all about.  I write two blogs.  The main blog (and associated podcast) focusses on the news. The private blog focusses on the trades.  Writing it all down and publishing it requires focus and accuracy, since I’m open to criticism if I don’t get it right.  Writing the main blog ensures staying on top of and correctly assessing all the oil and gas public company news each week.  Writing the private blog and sharing my thoughts ensures careful and accurate analysis of the trading ideas.  The link for that is https://www.oilnewslondon.com/oilman-jim 

Contact me on Twitter @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.

Weekly oil news round up by Oilman Jim – RRE HUR GKP BPC LEK PVR UKOG PMG MATD BLOE PANR TLOU ECHO AAOG AST ZEN

Another interesting week:

RockRose Energy (RRE) issued an operations update.  Cash at close of business on 25 March 2020 was £287 million, of which £248 million was unrestricted.  They anticipate unit operating costs of around $30 per barrel of oil equivalent in 2020 and at least $50 million capital expenditure will be deferred.  Current market capitalisation is £85 million.

Hurricane Energy (HUR) reconfirmed that it has a strong balance sheet, including $164.3 million of unrestricted cash at 18 March 2020 and is in a strong position to weather this current downturn.  However, it warned that should this change in the market environment persist, it is likely to have a material impact on their capacity to fund capital expenditure.  A further concern was the announcement on Friday that a crew member on the floating production storage and offloading vessel at the Lancaster field had been evacuated to the mainland for medical reasons and subsequently tested positive for COVID-19.  Their current market capitalisation is £213 million.

Gulf Keystone Petroleum (GKP) announced an operational and corporate update, confirming that “at current production levels, the Company covers all operating, general and administrative costs and interest payments with a Brent price of around $35 per barrel.”  Production currently is around 38,000 barrels of oil per day and the balance sheet is strong with cash of $154 million at 23 March and no debt repayment until mid-2023.  Current market capitalisation is £135 million.

Bahamas Petroleum Company (BPC) has delayed drilling again.  Reality is it doesn’t have the cash and little chance of obtaining it via the convertible loan note route.  To save the day, since its licences expire at the end of the year, it’s claiming that the Coronavirus constitutes a “force majeure” event under the terms of the licences and has notified the Government of The Bahamas of such.  They say it is expected to result in a corresponding extension to the term of the licences.  Whatever the outcome, though, I don’t think there’s going to be a drill this year.

Lekoil (LEK) issued a slightly curious announcement that they’re “in the process of making the agreed payment of $2 million for OPL 310 in accordance with the agreement reached and announced by the Company on 21 January 2020.”  They say they’ve “given instructions for the payment to be made by [their] bank and will provide a further update when this process is completed.”  The wording here reminds me a little of Providence Resources (PVR) and their China payment. 

UK Oil & Gas (UKOG) announced that it has filed a planning application with the Isle of Wight Council for the appraisal drilling and flow testing of the Arreton oil discovery, which is a geological analogue of the Horse Hill oil field, containing calculated aggregate gross P50 oil in place of 127 million barrels.  It makes for an interesting addition.

The Parkmead Group (PMG) announced interim results.  “Gas prices have fallen from highs of approximately 25.70 Euro per megawatt hour in October 2018 to lows not seen in over a decade of around 8.60 Euro per megawatt hour in February 2020 due to the oversupply of liquefied natural gas into the European market.”  They’ve moved from an operating profit in the 6 months ended 31 December 2018 of nearly £4 million to an operating loss of £1.5 million in the 6 months ended 31 December 2019.  Let’s now see if they can make the money back from wind power on the piece of land in Scotland they bought from the Chairman’s wife.

Petro Matad (MATD) announced an operational update.  They’re progressing the Block XX exploitation licence application and a new CPR increases the total mean un-risked in-place oil resource potential of the Heron structure by 20% to 194 million barrels.  Reservoir stimulation studies indicate significant improvements in the recovery factor are possible and the Heron development base case has increased to 33 million barrels recoverable.  Challenge is whether they will actually be able to get any further work done this year with the current Coronavirus situation.

Block Energy (BLOE) acquired two blocks in Georgia from Schlumberger for no cash.  Reality with this deal is that Schlumberger have successfully binned what they, as experts in such matters, regard as liabilities.  BLOE have got the same social media pumpers on it as last time, so perhaps brace for another placing from this one, although perhaps not, since with the credibility of both the company and the pumpers shot after last year’s false production number claims, the initial ramp appears to have failed miserably.

Pantheon Resources (PANR) announced upgraded resource estimates: the shallowest horizon now is estimated to contain 1.8 billion barrels of oil in place and a P50 technically recoverable resource of 483 million barrels of oil.  They’re impressive numbers, but will they be able to achieve a farm-out is now the question.

Tlou Energy (TLOU) issued a response to prevailing financial market conditions.  Main point is that directors are reducing their salaries by 50%.  No such luck for shareholders at Echo Energy (ECHO).  They’re just “asking the holders of its debts to defer all cash interest payments during 2020.”

There were other announcements from “old favourites” Anglo African Oil & Gas (AAOG), Ascent Resources (AST) and Zenith Energy (ZEN) too, but I’m not sure that, other than the comedy aspect, there’s that much interest anymore in what are openly non-viable companies.

What there is interest in is the new Special Trading Course and I’d suggest that you at least read the details about it at https://www.oilnewslondon.com/trading  I’m confident it will be of significant benefit to you.  If you’re here because you’re interested in making money, the trading course is for you: it’s all about eliminating losses and going for the certainties which make you the profits.  In the context of the amount people risk (and regularly lose), it’s not at all expensive, a bargain in fact to learn all the things I know and profit yourself from that knowledge.  Link again is https://www.oilnewslondon.com/trading 

Contact me on Twitter @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.