Weekly oil news round up by Oilman Jim – RRE JSE TRIN CASP TLW PMO RBD EOG MSMN AST TXP UKOG PTAL BPC BOIL TRP SOLO EDR UJO 88E LBE CLNR IOG

It’s been a busy week.  The oil price dropped into the $30s, which prompted a number of company announcements, some credible, some not.  The worst of them also took the opportunity to blame their misfortunes on the Corona-virus.

Starting off, RockRose Energy (RRE) was hammered on Monday, “closing the gap” from its last pre-suspension price.  On Tuesday, it confirmed it was “debt-free with net cash of £272.1 million (equivalent to £20.75 per share),” more than double the current share price.  Jadestone Energy (JSE) confirmed “the business is resilient and expected to generate positive operating cashflow in 2020, even at oil prices below $30 a barrel.”  In similar vein, Trinity Exploration & Production (TRIN) confirmed their “operating break-even has consistently been below $30 a barrel in all periods since the new management’s measures took effect in 2016.”

Caspian Sunrise (CASP) knows all about low oil prices.  Although restrictions have relaxed somewhat of late, it’s used to having to sell most of its production at a special domestic price per barrel, currently $17.82.  An export price in the $30s still looks good by comparison to a long time low cost producer.  The current oil price certainly doesn’t look good for Tullow Oil (TLW), though, whose final results disclosed a free cash flow breakeven of around $45 a barrel.  Its shares have collapsed from a high of over 250p last year to just 10p last week.  Premier Oil (PMO) has a similar problem.  Its cash flow breakeven price is stated to be “under $50” a barrel and this includes the benefits of the hedging programme.  Its shares also fell to 10p last week, having been over 120p just two months ago.

With its share price having collapsed from 1.7p last year to 0.3p last week, Reabold Resources (RBD) also jumped on the oil price/market volatility/Coronavirus RNS bandwagon.  No matter how much sand they throw in investors’ eyes, the issue really is will they even recover their investments in California and Romania?  Yet this “proven track record” of one of the RBD co-CEOs (£600,000 a year each for this pair) apparently “will prove invaluable” to Europa Oil & Gas (EOG), which nicely illustrates the alternative business reality which prevails in the AIM/small cap sector.  On that subject, Mosman Oil & Gas (MSMN) didn’t miss the opportunity either to blame in advance all the current events for its upcoming bad news.  I’ll add Ascent Resources (AST) to this group.  Now run by two failed AIM company directors, investors perhaps don’t think they’re going to be able to “perform” in this type of market and of the £800,000 supposedly raised, only £500,000 was actually paid over.  Hopefully, it will cover their salaries for a month or two.

There was a better quality announcement from Touchstone Exploration (TXP), who reported that the Cascadura well tests had delivered a combined average of over 10,600 barrels of oil equivalent per day.  Good news from UK Oil & Gas (UKOG) too, who announced both the flow of dry oil to the surface as a result of their water shut off programme and that Horse Hill has been granted long-term production consent.  This will enable net recoverable reserves to be allocated and also permit UKOG to enter into long-term field operations contracts which can help reduce operating costs below $19 per barrel, making the field more profitable even at current low oil prices.

South American producer/developer, PetroTal (PTAL) took a hammering.  It’s 2020 capital program is based upon $60 oil.  They issued news on Tuesday stating that “given the strong relationship PetroTal has with its key contractors, the Company has agreed to manage payments with a number of its contractors, allowing for ongoing operation of the contractors’ crews.”  In other words they don’t have the cash now to pay them.  Another one without enough cash, Bahamas Petroleum Company (BPC), announced the possible execution of a possible convertible loan note agreement deferred to 15 April, perhaps 15 May.  In the meantime, the possible CLN holders who were already granted options, exercised at 2p and, I guess, sold them for a nice profit.  Now, BPC is announcing well delay and blaming it on the Corona-virus.  The reality of course is they don’t have the funding to drill.  Let’s see how oil in the $30s works for these two.  I reckon we could be seeing placings by both of them soon.

Baron Oil (BOIL) announced the completion of its £2.5 million placing at 0.1p per share. The proceeds will be used to fund Baron’s share of the ongoing work programme in Timor-Leste, the drilling of the onshore El Barco-3x well in Peru, and to provide additional working capital.  Tower Resources (TRP) managed to get away a £500,000 placing at 0.375p just in the nick of time.  Now, lets see if the first farmee provides proof of funds this month and whether the second one signs up.  They may well do since Tower says it’s comfortable in the lower oil price environment and still believes that the Thali license can earn excellent returns.  Solo Oil (SOLO) announced the return of the ONE-Dyas deposit.  Now, they’re confident they have sufficient cash resources to meet current firm budgeted commitments within the existing portfolio of assets in Tanzania, and to cover general working capital needs for the remainder of 2020.

Egdon Resources (EDR) announced that the subsurface review of their eastern Humber Basin licences has identified a new low-risk near-field exploration opportunity, which can be targeted by drilling from the current Keddington location. This presents a number of low-risk/low-cost drilling opportunities.  Union Jack Oil (UJO) has an even larger interest than EDR in these now and announced it’s also expecting news during the remainder of Q1 and Q2 in respect of the extended well test at West Newton A-2 and the commencement of site works in preparation for the drilling of the West Newton B-1 well.  They also confirmed that they’re fully funded for drilling.  Meanwhile, 88 Energy (88E) confirmed the Charlie-1 surface hole is complete and they are commencing drilling the production hole.  Now we wait for the important announcements from the only company currently drilling a potentially transformational well.

Longboat Energy (LBE) announced a market update.  They believe that if the recent fall in the oil price is sustained, it will provide an increasing number of material and attractive opportunities.  They expect transaction valuations to decrease and thus potential returns to shareholders to grow significantly.  Cluff Natural Resources (CLNR) remains confident too.  It’s in a position of relative strength with £13.3 million cash and remains funded for its share of the Selene and Pensacola wells plus its working capital requirements through to the end of next year.  Independent Oil & Gas (IOG) also delivered reassurance.  Work on its Key Core Project Phase 1 is proceeding to plan and it is fully funded to cash flow from its proven gas resource base.

Now, if you feel you’ve had a bit of an awakening this past week or two with the sharp market moves, it might be time for my fact based trading course, which really will open your eyes.  It vastly expands on some of the principles I expound here and provides information that most will never have heard before.

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.  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.

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.

It’s not theory in this course, rather how it all actually works in the real world, keeping it practical and realistic, so that everyone can use the information for their own advantage regardless of the level of their trading or investment.

Small cap speculative companies exist to enrich their insiders, not their investors, and everything those involved do is for their benefit, not yours.  The vast majority lose with these companies, but for the whole scheme to work, some investors have to profit, and you can be one of those too.  The link 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.

Weekly oil news round up by Oilman Jim – 88E PMO ANGS LEK SDX PRD PTAL SOLO NTOG ZEN AST TRP

The lower they go, the harder they bounce and there’s still good money to be made, even in (perhaps because of) such markets.  Just look at some of the movements between the previous Friday and last Wednesday.  For those using CFDs and spread bets, there were 100% gains possible even just with retail leverage.

On the news front, the usual mixture, but I sense that with the current conditions, companies are holding the good ones back and I expect to see more this coming week.

88 Energy (88E) announced that Charlie-1 appraisal well drilling has commenced.  They say they’re “optimistic that success is just around the corner.”  This is a credible drill since Premier Oil (PMO) has farmed in, and a big one targeting 1.6 billion barrels of oil with 480 million barrels net to 88E.  There are seven stacked targets and multiple oil and gas show announcements are highly likely.  I highlighted this as a favourite several times around 0.7p in the blog and it’s now 1.075p, having been nearly as high as 1.5p.

Among the less credible projects, Angus Energy (ANGS) announced a CPR for the Saltfleetby gas field, touting reserves of 16 billion cubic feet of gas which will, they claim, generate a total cash flow after costs of approximately £50 million.  I think it’s worth remembering that the party who “sold” them the Saltfleetby gas field viewed it as such “a gem of an asset” (as Angus describe it) that they paid them £2.5 million to take it off their hands.

Lekoil (LEK) announced the results of their internal investigation into the OPL 310 facility agreement.  All the directors are, of course, exonerated, although the company was the principal beneficiary of the fraud, seeing its share price rocket up on huge volume to 11p, allowing large shareholders to sell at higher prices.  Blame is placed upon the external advisors.  Regardless of the rights and wrongs here, though, LEK has some interesting news coming up and now down to 2.4p, it’s one to keep an eye on.

SDX Energy (SDX) announced that their play-opening BMK-1 well in Morocco encountered commercial quantities of gas in both target horizons.  The rig now moves to drill the potentially play-opening LMS-2 well.  Predator Oil & Gas (PRD) also announced approval of the environmental impact assessment for their upcoming Morocco well.  The shares are well under their 4p placing price with large numbers to be flipped and it’s amusing to see the CEO already starting to talk about someone acquiring the company.  It’s worth bearing in mind, though, that PRD will be covered to convert the outstanding convertible loan into shares down to 1.5p.

One thing this correction has done is inject a much needed dose of reality into the oil and gas small cap market.  For those who are puzzled about some of the larger falls in the share prices of what they consider to be “good companies,” there usually are good reasons for these.  For example, PetroTal (PTAL), which I frequently get asked about, where what I think many perhaps do not realise yet is that the company’s 2020 capital program only is fully funded on the basis of a Brent oil price over $60 per barrel.  The same oil price issue applies to many other companies’ projects too.

Back to the news, Solo Oil (SOLO) announced a transaction update and restoration of trading.  The transaction with ONE-Dyas has fallen through and they’re now looking to sell their Tanzania assets to pursue acquisitions within the European gas market.  They’re currently in discussions with several separate vendors.  At 0.95p and a £6 million market cap, there could be potential.

Nostra Terra Oil & Gas (NTOG) and Zenith Energy (ZEN) issued their announcements.  The NTOG board room drama has been brought to a close with Andy Morrison becoming Chairman and Ewen Ainsworth stepping down.  It doesn’t change the nature of the extremely poor assets one little bit though and losses for shareholders plus high salaries for directors will continue as normal.  Any new deal the new directors bring in will just require even more funding.  In the meantime, ZEN has lost its “flagship” Azerbaijan licence and they’re trying to compensate with talk about a possible acquisition in Tunisia.  In the meantime, all I can do is suggest that bondholders and shareholders take time to check out their latest accounts.  Reality of course is none of them will do that, which is of course why they all continually lose money.  I’ve been calling NTOG and ZEN down for some considerable time and, within just the last year, both of their share prices have collapsed by around 80%.  Remarkably, these and other similar companies continue to have their fans, the question of course is are they just stupid – or compensated?  Meanwhile, the ex-Nostra Terra Ewen Ainsworth stepped up, along with the ex-Sound Energy James Parsons, as new directors of Ascent Resources (AST), both having passed the “necessary regulatory due diligence” checks, however low they may be.  The merry-go-round of failed AIM company directors continues to turn.

On a brighter note, Tower Resources (TRP) announced a Cameroon farm-out update.  Half the well costs are now covered and other half is under discussion, with the company confident.  Let’s see if the private company they’ve farmed-out to has the money though.  They’ve got until the 29th of this month to prove it.

As regular readers and listeners will 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 here 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’ve decided to write this course.  

I’ll be covering 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’ll set out exactly how it all works in detail.  Exactly how the insiders make their profits.  And how you can profit too.  I’ll 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 useful 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 for the whole scheme to work, some have to 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 – 88E PMO SOU INFA ZEN AAOG RBD UOG RKH PRD TLOU ECO PTAL AEX SOLO

Quite a week and a particularly savage one for those holding the poorer companies.  The most positive event was 88 Energy (88E) confirming rig mobilisation for the upcoming Charlie-1 appraisal well.  Spud now is imminent and drilling & logging are estimated to take around 30 days.  I highlighted this as a favourite several times around 0.7p and it’s now over 1p, having been nearly as high as 1.5p.  It’s a big drill targeting 1.6 billion barrels of oil and 480 million barrels net to 88E.  There are seven stacked targets and multiple oil and gas show announcements are highly likely.  It’s also a credible drill with Premier Oil (PMO) having farmed in.

On to the news from a few less credible ones (better ones will be along shortly), Sound Energy (SOU) announced the immediate appointment of Graham Lyon as Executive Chairman.  Mr. Lyon is a former Chairman of Infrastrata (INFA).  It will be interesting to see if he presides over a final collapse of the share price to the sub-penny fractional level.  I suspect he will.  In which case, fellow director, Brian Mitchener, who sold 2 million shares last week at just over 1.5p will be able to look back with satisfaction at the excellent price he achieved.  I saw SOU featured in someone’s bucket list last week, down over 80%.  It’s also in my list, down over 95%.  Thing is I said it was rubbish; the other guy said it was one of the best.  That’s the problem with supposedly independent commentators getting too close to the companies and failing to remain detached.

Moving on with the bad ones (it’s a sort of reverse bucket list where instead of saying buy them, I said the opposite), Zenith Energy (ZEN) announced it intends to drill in the Congo in April.  But that is dependent on so many things and in reality it’s not going to happen.  I’ve been warning about ZEN for some time and it’s down from 4.2p to 0.9p (79%) in the last few months alone.  That’s nothing compared to its Congo co-venturer, Anglo African Oil & Gas (AAOG) which is down from 11.7p to 0.21p (98%) over the last year.  In fact, I’ve been saying it’s a con since around 20p.  It never stops with them, though.  AAOG’s own news last week revealed that RiverFort et al effectively received a present from the other AAOG shareholders of £336,926 in the form of the ISA.

I sometimes wonder why some people criticise me so heavily for warning about these scam companies.  What’s most fascinating is how those who are being scammed speak up and defend those who are scamming them.  A social media version of Stockholm syndrome perhaps.  The ones who attack me hardest, though, generally are those stuck with stock in placings that they’re trying to flip and are furious with me speaking out the facts about their companies.  I find it particularly amusing when they refer to their co-conspirators as “other respected posters.”

The two companies which present the most trouble to comment upon are Reabold Resources (RBD) and United Oil & Gas (UOG).  But the reality with these two is in their share price performances.  RBD is down from 1.7p to 0.57p (66%) in the last six months and UOG is down from 6.25p to 2.65p (58%) over the past two years.  Their business models simply aren’t the best and there’s no getting away from that.  In the last week, RBD announced an update on California operations.  The number that’s missing from their RNS is current oil production. There’s a heavy decline rate on these California wells, that they prefer to avoid to mention.  Meanwhile, UOG announced the completion of its acquisition and re-admission to AIM.  114.5 million shares are being issued to Rockhopper Exploration (RKH), 150.6 million shares are being issued to placees, plus 8.4 million to subscribers, all at 3p.  With that lot, it’s difficult to see the UOG share price doing anything positive for some time.  RKH meanwhile has the extra funds to get on with its much more exciting North Falkland Basin development.

Predator Resources (PRD) is down from 12.65p to 3.45p (73%) over the last year.  PRD announced a drilling team update last week; they also announced the exercise of the rig option the previous week.  What they didn’t announce was the publication of their CPR.  I don’t think that any company grounded in reality can seriously expect potential investors to be checking their website daily, so the question is why.  There’s still a lot of 4p placing stock out there to be flipped and shifty looking behaviour by the company is never a good sign.

Tlou Energy (TLOU) is down from 10.35p to 2.6p (75%) in the last year.  TLOU last week reported that dewatering is taking longer than originally anticipated.  I thought it might.  Sustained higher gas rates will take more time and/or require more wells.  They’re now talking about including solar, but are the management here really the most competent people to undertake all this?

On to the ugly as opposed to the bad, Eco (Atlantic) Oil & Gas (ECO) announced unaudited results and a corporate update.  It appears there will be no drilling on the Guyana block this year, indeed perhaps never.  ECO is down from 194.5p to 24.5p (87%) in the last six months, since it wasn’t entirely truthful about the nature of the oil it had encountered.  If the majority partners do somehow agree to drill, though, there could be significant upside.   ECO was a blog favourite that gained more than 100% last year, but then collapsed when it turned out that their oil was heavy.  Fortunately, I warned that the upward share price movement had run out of steam before that collapse happened.  It just shows how these type of companies are more for trading than investing.

The shine is now starting to come off PetroTal (PTAL) which is down from 32.5p a month or so ago to 18.25p (44%), having been as low as 16p (down over 50%) last Friday.  There were some fairly unpleasant exchanges over that one last weekend, but yet again it’s turning out that I was right.  PTAL announced the publication of a presentation on Thursday and the 20,000 barrels of oil per day year end target, far from being a virtual certainty, now is something to which there only is “a clear line of sight.”  Hitting such a target, of course, is another matter entirely.

On the brighter side, Aminex (AEX) pushes forward in Tanzania, so that when approvals are given, they can quickly move into the operational phase.  This also is positive for Solo Oil (SOLO), whose shares currently are suspended although the company hopes to be able to shortly provide an update on its proposed reverse takeover transaction.  Whilst the form in which SOLO will emerge from suspension is as yet unknown, there’s significant potential with AEX if it can pull it off.

The preceding commentary relates only to companies which issued news during the week.  Surveying the carnage, there are many other interesting possibilities.  Most of these companies of course are worthless and last week simply accelerated their inevitable declines, but such times present great opportunities and I’ll be reviewing the good ones in the private blog.  It’s at times like these that the big money is made.  

Fundamental analysis isn’t primary here (indeed, I see huge losses being made by those who try to apply it to AIM oil and gas companies); 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 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.  Some question the cost, but what I can say is that of those who try the £23.75 first month’s trial subscription, the vast majority see the value of it and continue at the full monthly rate.  The link is https://www.oilnewslondon.com/subscribe

Contact me on Twitter @Oilman_Jim

Click “SUBSCRIBE” to receive these blog posts by email

The author holds 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 – LOGP PVR PRD PTAL BLOE RBD ZEN UKOG SOU ECHO AST TRP UJO TXP COPL ECO UOG RKH BPC

Another busy week.  Lansdowne Oil & Gas (LOGP) announced its placing: £488,000 at 0.6p to keep the company going until the end of the year.  Now, their target is to complete a farm-out deal within the next six months.  LOGP is trading at a valuation of 8 cents per contingent resource barrel, so there’s scope for a significant re-rating if the farm-out comes about.  Same for its Barryroe partner Providence Resources (PVR) too.

Following its placing the previous week, Predator Oil & Gas (PRD) announced the exercise of its rig option with mobilisation to occur between 15 March and 30 April.  From posts on social media, there’s plenty of placing stock still to be flipped.  The next important announcement here will be the publication of the CPR, which will allow their project to be properly assessed.

PetroTal (PTAL) issued an oil reserves and operational update.  I mentioned declines and a promotion out of Zug and encountered quite a reaction.  It’s always interesting to float a thought on Twitter to test the response and, in particular, see how broker, promoter and company connected accounts respond.  An overreaction usually indicates you’re correct, otherwise they’d just ignore it, particularly when they’re also saying that all your followers are fake and nobody reads what you write anyway.  Some of them who’ve given trouble previously over my comments on companies such as Block Energy (BLOE) and Reabold Resources (RBD) (both of which are down in price very significantly since) were complaining that they were blocked.  I actually block very few people, only around 20 since I first started posting on Twitter in 2013, and very few of them are genuine investors.  I’m happy to have a normal discussion with anyone about anything, but if someone starts posting insults and childish pictures, then sorry, but I’m going to block them, as anyone else would.  More on PTAL and its promotion as it all unfolds.

UK Oil & Gas (UKOG) announced a loan balance reduction to £3 million (so the convertible loan note shares continue to gradually be distributed) and and also reported commencement of the HH-2z water shut off intervention.  Resumption of extended well test operations is planned to follow directly after.  As I’ve said before, where UKOG goes price wise now is down to power of news and new buying verses the level of convertible loan note share sales.

Sound Energy (SOU) announced that the anonymous UK private company, which was previously stated to be the purchaser of their assets, doesn’t have the funds.  No surprises there.  I said in November last year that their “sale” announcement then had been drafted to make people think the sale of the Morocco assets was a certainty in order to help associated parties sell their shares.  Sound is now around just 3% of the price it was when I first started warning about it.  Now CEO, James Parsons, who managed to destroy investors’ capital in Echo Energy (ECHO) too, is off to rescue Ascent Resources (AST).  Per the recent RNS, the “rescue” starts by wiping out the equity of existing shareholders.

Some people ask whether I short these companies.  Actually I don’t and next time there’s a quiet news week I’ll explain why.  My focus is on certainties, companies which I’m certain will perform on the upside.  Finding them involves reviewing all companies, good and bad, and I post my comments on the lot.  I’m only negative on companies because I don’t think they’re very good.  I have no financial interest in their outcomes.  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 a good 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.  Some question the cost, but what I can say is that of those who try the £23.75 first month’s trial subscription, the vast majority see the value of it and continue at the full monthly rate.  The link is https://www.oilnewslondon.com/subscribe 

Back to the individual companies, Tower Resources (TRP) announced a Cameroon update.  They’d like to spud the well in the course of June 2020, but that of course needs financing.  The Company believes that it will be able to complete a farm-out within its desired timeframe, although there can be no certainty.  It remains a bet.

Union Jack Oil (UJO) and Reabold Resources (RBD) announced West Newton updates.  Rathlin, the operator, now has filed a revised plan to the Environment Agency for approval, following which they will notify the Oil and Gas Authority in respect of the recommencement of the A-2 extended well test.  Meanwhile, the bottom hole drilling location for the B-1 well has been finalised and preparations are currently underway for the works required for the commencement of operations at the B site, which will begin during Q2 2020.  It looks like the timetable is slipping a little here, hence the poor market reaction.

Touchstone Exploration (TXP) raised £9 million in a placing at 40p.  Funds will be used to accelerate exploration drilling at Ortoire, where so far they’ve had considerable success.  At the other end of the credibility spectrum, Canadian Overseas Petroleum (COPL) only managed to raise a comparably miserable £117,000 from its Chairman, “reflecting his confidence in the company” they said.

Eco (Atlantic) Oil & Gas (ECO) was “delighted to announce it has been recognized as a 2020 TSX Venture 50™ company, an annual ranking of top-performing companies on the TSX Venture Exchange.”  Makes you wonder how bad the other TSX Venture companies must be.  Meanwhile, United Oil & Gas (UOG) announced completion of the Rockhopper acquisition.  The 114,503,817 shares issued to Rockhopper Exploration (RKH) will be admitted to trading on AIM on 28 February. 

Perhaps more interesting, Bahamas Petroleum Company (BPC) announced it has arranged a second convertible loan note facility.  Imagine the two of them competing to sell when things get going.  Interestingly, it’s a Bahamas based entity which, although the share price now is over 4p, could have participated in the recent 2p offer.  Kind of indicates they see the share price going lower than that.  Indeed, it’s still not certain whether Bahamas are fully funded yet and they say that they are continuing to evaluate farm-in options.  I suspect the recent strength in the share price is more perhaps due to a short position rather than renewed confidence in the company.

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’ve been involved in the stock markets on both sides of the fence since the early 1980s and I also have many years’ operational and corporate experience in the oil industry, which enables me to see very quickly whether or not these companies are telling the truth.  It’s not just about understanding the fundamentals, though, critical 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.  If you’re interested in knowing my trading ideas, plus more about some of these companies that I can’t write here, then subscribe to the private blog 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 – BOIL I3E PRD BPC 88E TRP PVR LOGP AAOG ZEN AST NTOG PET HUR

It’s been a particularly interesting week.  Starting with Baron Oil (BOIL) about which I said last weekend the only question was the price of the placing, that question was answered on Friday: 0.1p.  Quite a blow for those who believed the social media pumpers’ stories of a $300 million takeover and bought it at up to nearly 0.6p.  I did warn about what would happen, but on the bright side for those who bought before the ramp at 0.1p and below, the company is now fully funded to drill the El Barco-3x well in Peru later this year.

There’s shades of I3 Energy (I3E) here, where there was a similar stunt by the ill-informed misinterpreting and distorting a RNS announcement back in December.  Again I warned about it and again I turned out to be right.  Now at a much lower price, I3E issued a corporate update last week, stating it is making good progress in its farm-out process to fund a 2020 appraisal drilling program on its assets in Blocks 13/23c in the UK North Sea.  They also denied that the secondary listing is being done in preparation for an imminent equity placing, but did not actually deny that there will be an equity placing.  I think that’s probably inevitable.

Predator Oil & Gas (PRD) announced its anticipated placing at 4p per share, significantly lower than its 52 week high of 12.7p.  They now have the funds to drill their well onshore Morocco, although it’s disappointing that they weren’t also able to retire the convertible loan note.  PRD are now required to publish a prospectus and a clearer picture of this company will emerge once that is done.

Bahamas Petroleum Company (BPC) announced that its Bahamas mutual fund offer has flopped, raising only £700,000 at 2p.  The locals were not as stupid as they thought and weren’t lured in by the 3p+ price put up in the London market.  I suspect a more conventional placing now will be coming up and at a somewhat lower price.  They have to drill this year, or they lose the licence, so not much choice.

Another one with a big drill, but fully funded, 88 Energy (88E) announced an operations update.  The ice road is more than 80% complete, the drill permit has been issued and spud is anticipated later this month.  I highlighted 88E as a favourite several times towards the end of last year around the 0.7p placing price and it’s been as high as 1.48p since then.  This is an important well: the gross mean prospective resource across the seven stacked targets to be intersected by Charlie-1 is 1.6 billion barrels of oil, 480 million barrels net to 88E.

Tower Resources (TRP) announced a Cameroon operational update.  The marine survey vessel completed its work at the well site last Friday and the company’s initial view is that the data from the three boreholes are consistent and in line with pre-survey expectations.  It all now comes down to whether or not they can negotiate a farm-out.  If they do, it flies.  If not, then it will have to be a large placing at a low price.

One that’s clear about its need to place is Providence Resources (PVR), which advised that it currently has sufficient working capital to fund it’s costs through to the end of March/ early April 2020.  Additional funds will be required to provide sufficient working capital to support the business in the near term.  More positive for Providence (and by extension for its partner, Lansdowne Oil & Gas (LOGP), too) was the news that they have recommenced the Barryroe farm-out process and a number of companies are actively assessing the field data.  The work programme is expected to include at least two appraisal wells and independent reports of the hydrocarbons recoverable concluded that a mid-case of 346 million barrels of oil equivalent of 2C resources was present.  In addition to the discovered resources, the Jurassic formation beneath the field remains un-drilled.  Deepening one of the appraisal wells to assess this additional potential deeper in the Barryroe structure is under consideration.  PVR could be a great one, but as always it’s down to funding, something that has eluded them to date.

I though it would be hard for a company to be worse than Anglo African Oil & Gas (AAOG), but then along came Zenith Energy (ZEN).  There was some serious competition last week from Ascent Resources (AST), which is being “rescued” by James Parsons, and Nostra Terra Oil & Gas (NTOG), where the group wanting to take over is even worse than the current management, but Zenith easily trumps them both.  There was so much nonsense from ZEN last week, it would take up most of the blog, so all I’ll say for now is go to SEDAR (https://www.sedar.com), look at the accounts they just filed, whose actual numbers they didn’t even want to include in their 6.29pm Friday night RNS, and ask yourself: what actually happens to all the cash they raise?

Petrel Resources (PET) issued news last week regarding the Tamraz shares and posted a link to a letter from the group.  It’s not at all convincing.  I keep getting asked about this company and as I explained last weekend, I mentioned Petrel as a favourite around 1p.  It then went up over 2,500%.  It’s still up 1,000%, but those who bought it at 15p, 20p and 25p remain unhappy.  All I can suggest is that they read my blogs in future.  You have to get in at, or close to, the ground floor with these things and overcome FOMO (fear of missing out).  If you miss it, wait for the next one.  You need to control emotions and be patient, because it’s all about getting the timing right.

I mentioned Hurricane Energy (HUR) last weekend too, saying that I had cautioned about it towards the end of last year when it was in the 30s and it was now down to 17p.  The decline has continued and it was under 15p this week.  Along with FOMO, which I mentioned before, most money that’s lost in the market is by those who think they’re buying bargains, but there’s always a reason why what appears to some to be a “bargain” may not in fact be mis-priced.  The saddest thing is people holding on to losers and supporting them like football teams.  They then usually lose most or all of their investment.  You have to get rid of the losers, not hold them.  And forget what you see on social media that purports to be fundamental or technical analysis, most of it is uninformed rubbish.

Fundamental and technical analysis can work with larger companies, but 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 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.  Some question the cost, but what I can say is that of those who try the £23.75 first month’s trial subscription, the vast majority see the value of it and continue at the full monthly rate.  The link is https://oilnewslondon.com/subscribe

Contact me on Twitter @Oilman_Jim

Click “SUBSCRIBE” to receive these blog posts by email

The author holds 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 – BOIL TXP ECO TLW JOG EQNR VLU HUR UKOG PET I3E TRP RRE IGAS

I mentioned Baron Oil (BOIL) last weekend and said I thought there would be a fundraising.  The preliminaries for that started on Tuesday with a website update incorporating an old Shell report already in the public domain and, with plenty of misunderstandings and misinterpretations on social media, the share price rose 1,000%.  In the real world, Baron has $500,000 to pay on 26 April 2020, plus of course all its other expenses, and as at 31 December 2019, its net cash position was £346,000.  Only question now is the price of the placing.

Touchstone Exploration (TXP) pleased the market with its announcement that the average flow back rate at Cascadura during the final 14-hour test period was 5,180 barrels of oil equivalent per day and the shares enjoyed a strong performance with the company stating that the Cascadura production test results represented a dramatic change for Touchstone.  This was a bright spot, since much of the news last week had negative impacts on the companies’ share prices.

Eco (Atlantic) Oil & Gas (ECO) announced what appeared to some to be a positive reserves report, but in fact it was not.  Whereas very few investors would ever actually read the 74 page CPR filed at SEDAR, those that did would have noted the following: “The results from the drilling of the Jethro 1 and Joe 1 wells indicated the presence of oil and gas; however, the level of testing of these hydrocarbon accumulations was not sufficient to change the category of those resources from Prospective to Contingent.”  So it’s still all down to future drills and the big question now is whether majority partner Tullow Oil (TLW) will want to proceed.  Remember, I warned in the blog three weeks ago Tullow’s trading statement and operational update stated that “exploration costs written off…include Jethro, Joe and Carapa well costs in Guyana” and that ECO should be asked some hard questions now, but all they really tried to do was to continue to promote it, the same as when  they were failing to inform investors that what they had found was actually heavy oil.  End result is that the share price, which was already down significantly, has nearly halved again over the last month.  ECO was a blog favourite that gained more than 100% last year, but then collapsed when it turned out that their oil was heavy.  Fortunately, I did warn that the upward share price movement had run out of steam before that collapse happened.  It’s invariably best to take profits and not get greedy.  I’m always happy with 100%, since I know that there’s always going to be another one like it coming along soon.  Back to the present, though, it now all comes down to Tullow’s drilling decision, which is due this month.  If that’s positive, then ECO could again become interesting.

Jersey Oil & Gas (JOG) has been weak since its announcement that it had acquired Equinor (EQNR)‘s 70% interest in Licence P2170.  Part of the reason for that was disclosed with last week’s announcement that Richard Griffiths has been selling.  JOG are now looking for farm-in partners, but with Equinor out, how many will want in?  Equinor also notified Valeura Energy (VLU) that it intends to discontinue participation in their deep gas appraisal programme.  VLU has $37 million working capital and a £21 million market cap.  People might think that offers value, but what it actually indicates is the market expects management to lose the money.

Hurricane Energy (HUR)’s share price decline continued as it announced another operational update.  I was cautioning about HUR towards the end of last year when it was in the low 30s.  It’s now down to 17p.  The most money that’s lost in the market is by those who think they’re buying bargains.  Most exposed to this are those who think they understand fundamental analysis, but don’t.  Like VLU above, there’s always a reason why what appears to some to be a “bargain” may not in fact be mis-priced.

A quick comment about UK Oil & Gas (UKOG) in passing, because I’m asked about it, and that concerns the convertible loan notes, the latest tranche of which were converted at 0.56p.  To clear these, and there’s still a balance of £3.15 million outstanding, there needs to be net buying in the market, otherwise the price will fall as convertible loan note holders sell.  I made this point in the blog twice in December and, at the end of the day, it’s all going to come down to the results of the HH-2z extended well test.

I also regularly get asked about Petrel Resources (PET), which I mentioned as a favourite several times last year around 1p.  I said it had the potential to 10 bag and it did a lot more than that, rising around 2,500%.  Quite frankly, PET is now just a pure gambling stock.  It was interesting at 1p, but those who keep asking me about it and who bought it at 15p, 20p and 25p must be crazy.  Personally, I would never buy a share that’s up 100% or more, let alone 1,000% or 2,500%.  You have to get in at, or close to, the ground floor with these things.  Like buying what you think are bargains, FOMO (fear of missing out) is the other thing that will destroy you in the market.  Control emotions and be patient.  All it’s about is getting the timing right.

I3 Energy (I3E) announced a board and operational update.  David Knox has resigned as chairman, the site survey on Serenity and Liberator West is ongoing, they’d like to start drilling late summer but don’t have funding yet, and they’re seeking a secondary exchange listing, presumably to help them raise the money.  Unfortunately, peoples’ view of this has changed.  What was previously seen as a low-risk development proposition, which was able to attract significant debt funding, is now more perceived as a wildcat.  Perhaps they will be able to raise more debt financing, but I think it is more likely a substantial equity raise will be required.  The big question is at how low a price?

Another one requiring finance, Tower Resources (TRP), announced that the survey vessel should be about to complete its boreholes and the Company aims to move to more concrete scheduling of the NJOM-3 well on the Thali block later in February. Now 0.58p, having been nearly as high as 0.8p in January, I said a couple of times towards the end of last year that Tower was a good buying opportunity under 0.4p.  Key of course to move this forward is a farm-out.

RockRose Energy (RRE) announced  the acquisition of a 100% interest in the Cotton gas field for a limited initial consideration, with the larger part of the consideration becoming due at Final Investment Decision.  Essentially, they’re just paying option money now for Cotton while they evaluate it, although it’s not really a material acquisition. Hannam & Partners only state its risked value at 25p per share.  For some who can’t understand the share price in the context of its cash generation, that same source also estimates negative free cash flow of around $30 million in 2020 as RRE focuses on development projects.

IGas Energy (IGAS) announced a reserves and trading update.  Compared to a current market capitalisation of £48 million, the independent expert’s valuation of conventional assets is around $180 million on a 2P NPV10 basis, and approximately £15.5 million of free operating cash flow was generated in 2019 from the conventional business before administrative expenses, capital investment and finance costs.  This really is a bet on whether the moratorium on fracking is lifted, in which case the share price could double or more and, in the meantime being reasonably underwritten by a fairly solid oil and gas business.

To explain what I think and what I do, my personal trading philosophy is based upon conviction, elimination of possible loss making trades and only going for those which are certainties.  It takes some 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 public criticism if I don’t get it right.  I started writing the main blog a couple of years ago, because doing that 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.  Some question the cost, but what I can say is that of those who try the £23.75 first month’s trial subscription, the vast majority see the value of it and continue at the full monthly rate.  The link is https://oilnewslondon.com/subscribe

I’ve 40 years experience in the markets (both UK and US) from both sides of the fence.  It’s not just about understanding the fundamentals, critical 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.

Contact me on Twitter @Oilman_Jim

Click “SUBSCRIBE” to receive these blog posts by email

The author holds 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 – HUR JOG UKOG BPC LEK BOIL RBD PANR PXOG CORO SOU ECHO AAOG ZEN BLOE

It’s been a busy week.  Hurricane Energy (HUR) issued a trading and operational update and addressed the recent share price weakness, confirming that they are not aware of any subsurface, operational or commercial reasons that would have caused such decline.  HUR was in the mid-40s a couple of months ago and now it’s more than halved to 21p.  Generally, I think that with these type of companies, the best profits are to be had in the exploration/appraisal phase; many tend to plateau or decline once the development/production stage is reached.

Also operating in the North Sea, Jersey Oil & Gas (JOG) announced the acquisition of Equinor’s 70% interest in Licence P2170.  Payment terms are $3 million upon sanctioning by the Oil & Gas Authority of the Field Development Plan, $5 million upon first oil and an undisclosed royalty.  This increases total 2C discovered resources across the Greater Buchan Area to 142 million barrels of oil equivalent net to JOG.  They will be launching a farm-out process to attract partners, unfortunately the market doesn’t appear to be hugely impressed with their news.

Back onshore, UK Oil & Gas (UKOG) announced that they are bringing HH-1 into production during Spring 2020, followed by HH-2z upon completion of the current extended well test.  This will enable recoverable reserves to be allocated to the project, a key first step to help access debt-based funding.  HH-2z water shut-off intervention is to proceed in February. In relation to Loxley-1, the planning application will be heard by Surrey County Council at the end of February and, if approved, the Company plans to commence drilling in the winter of 2020/21.  Can they generate enough new investor interest to offset selling by the convertible loan note holders is the issue here.

With the largest upcoming drill net to its interest, Bahamas Petroleum Company (BPC) announced its “Roadmap to Drilling” resulting in some market excitement.  Drilling is expected to commence in April 2020 targeting P50 recoverable prospective resources of 0.77 billion barrels of oil, with an upside of 1.44 billion barrels.  It’s not actually financed yet though.  I discuss all this further in the private blog and, if you’re interested in subscribing to that, the link is https://www.oilnewslondon.com/oilman-jim

Moving on, Lekoil (LEK) announced that its Otakikpo field is currently producing 2,122 barrels of oil per day net to LEK’s subsidiary, LOGL.  Their expansion project has the potential to increase production on the field up to 8,000 barrels of oil per day net to LOGL, although the subsidiary also carries a term loan debt of $19.2 million at LIBOR + a rather large 10%.  The big play at LEK is OPL 310, in respect of which $2 million has to be paid on or before 20 March 2020, $7.6 million has to be paid on or before 2 May 2020 and evidence of their ability to fund 42.86% of the costs and expenses for drilling the first OPL 310 appraisal well has to be provided by July 2020.  A financing is certainly coming up and I doubt it will just be debt this time.

Baron Oil (BOIL) returned from suspension; its reverse take over of SundaGas has been terminated.  They still have an entitlement to an effective 25% interest in the Chuditch Petroleum Sharing Contract, offshore Timor-Leste, providing they reimburse their $500,000 share of costs before 26 April 2020.  Perhaps of more immediate interest, an experienced local operator with onshore drilling capability has expressed a desire to drill their Peru block, farming-in by contributing a substantial portion of the costs in return for equity in the block.  Drilling this well would be a relatively low-cost operation, estimated at $1.4 million (gross) with two independent reservoir targets which would offer shareholders drilling activity during 2020 and the potential for significant additional value on discovery.  They also have a 15% share of the Corallian prospects, but apart from Reabold Resources (RBD) rabbiting on about a huge discovery, I think everyone else accepts that Colter is dead.  Currently, I wouldn’t pay too much attention to the talk about the Inner Moray Firth licences either.  With £346,000 cash as of 31 December 2019, a fundraising clearly now is imminent.

Pantheon Resources (PANR), has been issuing some strong announcements, to no end unfortunately since their shares currently are suspended for failing to file their accounts on time.  They announced a report the previous week confirming a contingent resource of 76.5 million barrels of recoverable oil and say that their farm-out process remains underway with a number of groups having entered the data room and with a number of others having expressed interest in entering the data room in the future.  It doesn’t really sound that promising actually.  Of more relevance to investors perhaps, following receipt of the contingent resource statement, which their auditors insisted upon, they’re “targeting” publication of the financial results and hope to return to trading this month.  This week, they’re touting their own management estimates that the new acreage they picked up in the December lease sale could contain in excess of 1 billion barrels of oil in place. It all seems a bit of a waste of time with their shares suspended.  For some reason, I find it very hard to take this company seriously.

Prospex Oil & Gas (PXOG) announced a placing of 600,000,000 shares at 0.12p to raise £720,000.  Two years ago the share price was nearly 0.8p, so you can see the value destruction that has gone on here.  Latest wheeze is an old Spanish gas to power project, which sounds quite interesting, until you see that the original “vendors retained the right to 16% of future revenue derived from any further commercial discoveries.”  That’s a 16% royalty on gross production, which is quite something compared to the royalty paid to the actual owner of the gas, the Kingdom of Spain, which is just 3%.  PXOG is yet another unfocussed company jumping from here to there and never likely to generate operating profits exceeding administration expenses allowing an actual return to shareholders.  I’ve warned about this one and other similar companies before.  As investments, they are pointless really.  Kind of like burning your money.

In the same category, Coro Energy (CORO) announced the termination of the Bulu PSC acquisition.  They say it’s due to a change in strategy, but I guess that change was forced upon them since they could not raise the finance needed.  CORO is one “person” in James Parson’s self styled “holy trinity,” the others being Sound Energy (SOU) and Echo Energy (ECHO).  With credibility now shattered and the share prices collapsed, unless they’ve already forward sold the shares at a higher price, only an idiot would invest any money.  I’ve warned about all three of them constantly.

There’s even worse companies than this though.  Anglo African Oil & Gas (AAOG) issued its most positive news in a while, confirming they have enough cash to keep going until the end of March.  I’ve been calling this down since 20p and it’s now 0.325p.  I took a lot of abuse from its supporters along the way though, but that’s very much stopped now.  Who is really in change at Anglo African is not clear, but with the ISA shares now gone at a fixed price and the convertible loan note financing no longer needed, at least it is possible for the shares to move up.  This is a highly questionable company (and I doubt the real control parties have actually changed) but with a new deal in, which seems a good possibility, it could be back in business.

Zenith Energy (ZEN), Anglo African’s new partner in their Congo field took the opportunity to place again: this time, nearly £1,000,000 at 1.68p.  Whoever listened to those touting it at up to 2.9p recently got shafted.  As a consolation, it’s even worse for those who bought over the last year at up to 4.2p.  They probably don’t realise they may have been buying shares being sold short, which would then be covered in a lower priced placing.  ZEN is another one I’ve constantly warned about, while others have been promoting it as a so called “bargain.”  It’s now down to the placing price at 1.68p, so anyone who took the placing and who didn’t forward sell is looking at immediate losses.

Another investor favourite, Block Energy (BLOE) finally announced its operations update.  Gas is being flared, so that has no value currently and they’re still having to truck away water, which appears to be nearly 80% of their production.  They don’t exactly try to be clear (quite the opposite in fact), but it appears from what they say that actual oil production is just over 100 barrels of oil per day.  They say they’re hitting the ground running as they enter 2020, but what about that 1,100 barrels of oil per day production that the CEO and his promoters were touting last year?  It’s the same sort of nonsense as Anglo African Oil & Gas and Zenith Energy and, although the company will have the occasional run up in its share price, overall and longer-term it’s going the same way – to virtual zero.  The control parties don’t exactly have much confidence either, since the misleadingly named Georgia Oil and Gas Limited of the British Virgin Islands, which actually is run from Switzerland and who almost certainly would have known the flow rates, sold over 4.5 million shares before the announcement.  Every red flag possible is flying here and Block is another one I’ve warned about numerous times. It’s difficult to imagine that some people still see Anglo African, Block Energy and Zenith as serious companies, but they do and drop serious money.

This is all grim stuff, but it’s the actuality and, overall, there are a lot of people in this market making a lot of bad choices and losing a lot of money.  Reality is that there around 10 or so what I would call “certainties” each year.  If you can stick with those you can make money and quite a lot of it.  Unfortunately, most people lack patience, but that’s how you actually make money in the market.  You also need to get in at the start, not later when it’s already up 50-100% or more.

If you’re interested in knowing my trading ideas, plus more about some of these companies that I can’t write here, then subscribe to the private blog at https://oilnewslondon.com/oilman-jim  There is no minimum term and you can unsubscribe at any time.  There’s also a first month’s trial subscription at 25% of the usual monthly cost.

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.  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.

I’ll be back on Wednesday with another blog and podcast.  In the meantime, I wish everyone a very successful start to the week.

Contact me on Twitter @Oilman_Jim

Click “SUBSCRIBE” to receive posts by email

The author holds 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

It was a busy week, with a number of interesting announcements.  After a suspension in Australia, 88 Energy (88E) completed a £2.6 million placing at 1.1p.  They also confirmed earlier in the week that Charlie-1 is proceeding as planned ahead of the scheduled February 2020 spud date, permitting of the Yukon acreage is underway ahead of potential drilling in 2021, subject to farm-out, and the JV partners plan to conduct a formal farm-out process to fund further appraisal of Project Icewine Unconventional.  Notwithstanding the 1.1p placing, the share price remained relatively resilient, trading around 1.3p, substantially above the previous 0.7p placing price around which I mentioned it as a favourite several times towards the end of last year.

88E’s previous drilling partner, Red Emperor Resources (RMP) issued its quarterly report.  RMP continued to conduct due diligence on a number of potential projects and, at the end of the quarter, had cash of approximately A$5.1 million.  It’s too early to say anything yet, and regardless of the project, it will undoubtedly need to raise more cash, but it could be a good one for trading with another fully-financed, big number drill in it.

Europa Oil & Gas (EOG) announced that the major oil company, with whom it has been negotiating, has pulled out.  Europa now is looking for another partner to drill its Inishkea prospect, which has gross un-risked prospective resources of 1.5 trillion cubic feet of gas and an estimated geological chance of success of one in three.  In the meantime, Europa is advancing the site survey process for a drilling location at Inishkea and hopes to obtain permission for the survey to be conducted during summer 2020, which would enable drilling to occur during 2021.

Meanwhile, Egdon Resources (EDR) issued a more positive announcement.  They’ve signed a farm-in agreement with Shell UK in relation to their offshore licences containing the Resolution and Endeavour discoveries.  Shell will acquire a 70% interest and pay 85% of seismic costs up to $5 million plus 100% of all studies and manpower costs up to a well investment decision.  It’s not the best of terms for EDR, but they were over a barrel and from personal experience I know Shell negotiate hard.  Nevertheless, Egdon bring in a serious partner and validate the merits of the licences.

Lekoil (LEK) appear to have managed a reprieve.  Obligations to Optimum Petroleum have been deferred, so that $2 million now is to be paid on or before 20 March 2020, $7.6 million is to be paid on or before 2 May 2020 and evidence of their ability to fund 42.86% of the costs and expenses for drilling the first OPL 310 appraisal well is to be provided by July 2020.  So it’s back to raising finance again.  The challenge they have though is that financing deals like the supposed Qatari one don’t exist in the real world.

Petrel Resources (PET) looks like it could be having middle-Eastern financing issues too, but the wily old John Teeling looks like he may have the chancers by the short and curlies, having obtained an injunction blocking all trading in the shares issued to this group.  The way this stock now trades, it appears there may be substantial short positions in the market.  If so, the PET share price could rocket.  I highlighted Petrel as a favourite several times last year around 1p and it subsequently hit 26.5p.  It went down as low as 3.85p on Monday last week and back up as high as 14.85p on Friday.  What can be said with certainty here is that extreme volatility will continue.

Now, if you’re interested in knowing my trading ideas and want to read a more critical assessment of some of these and other companies, then subscribe to the private blog at https://oilnewslondon.com/oilman-jim   There is no minimum term and you can unsubscribe at any time.  There’s also a first month’s trial subscription at 25% of the usual monthly cost, so why not give it a go.

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.  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.

I’ll be back next weekend and, in the meantime, I wish everyone a very successful week.

Contact me on Twitter @Oilman_Jim

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The author holds 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 TRP UOG TLW ECO AAOG ZEN LEK NTOG MSMN AOGL EDR EOG UJO 88E

It’s been an interesting week and some of the shares I mentioned last weekend performed strongly.  RockRose Energy (RRE) traded at nearly £23 a share, up from just under £20 the previous Friday and Tower Resources (TRP) traded at nearly 0.8p on Tuesday up from just over 0.5p.  I said a couple of times towards the end of last year that Tower was a good buying opportunity under 0.4p.  

Both issued news.  RockRose announced the change of operatorship of the Brae Area, although they point out it is of no strategic or financial consequence.  An alternative take is expressed in Saturday’s Energy Voice article.  Tower Resources announced a Cameroon operational update, they’ve been granted a further extension of the production sharing contract until 19 September this year.  All now hinges on whether they can negotiate a farm out.

On that subject, United Oil & Gas (UOG) has no takers for its Jamaica farm-out of what they describe as a “super wildcat area.”  They’ve managed to get a short licence extension until 31 July for the final “drill-or-drop” decision, but the reality here is that when Tullow Oil (TLW) gave UOG 20% of this for free they were simply binning a work programme liability.

This was confirmed by Tullow’s trading statement and operational update last week, which stated “exploration costs written off…include Jethro, Joe and Carapa well costs in Guyana as a result of drilling results and…Jamaica licence costs due to the levels of planned future activity or licence exits.”

Tullow’s statement also includes Eco Atlantic (Oil & Gas) (ECO)’s assets, so if I was an investor, I’d be asking them some very hard questions now.  ECO is one that I highlighted as a favourite last year and which then more than doubled.  I did say that the price rise had run out of steam before the collapse on the heavy oil revelation, but it underscores what I say about always taking the profit while it’s there.  Never get greedy with these things.

I’ll move back to the positive news shortly, but first let’s get some of the others out of the way.  The Anglo African Oil & Gas (AAOG) general meeting was held on Monday morning and, as expected, the Zenith Energy (ZEN) deal was approved.  Now they need a new licence, but the signature bonus is not agreed and, equally important, they need SNPC to pay up, although why SNPC will pay ZEN when they would not pay AAOG remains a mystery.  It’s now also been revealed that the claim against Anglo African, relating to the abortive acquisition of the Tunisian assets, is for £1.7 million, so the financial situation looks terminal.

Putting them into the shade was Lekoil (LEK) which announced that its Qatari financing was false, resulting in the share price collapsing from 9.5p to 2.5p.  LEK want to present themselves as the victim of an advance fee fraud, but this “victim” saw its share price double and do more than £10 million volume at the higher level before anything was said.  A TR-1 appears to show large buying at the time of the initial financing announcement, but check it out and the previous holding has been omitted to make it look like they’re buying, when in fact they’re selling.  Strange the NOMAD didn’t spot that.  Also troubling is a post by a well known influencer that he had met with LEK the previous working day to the false finance admission and bought a further 1%+ stake in the company.  There’s no reason to doubt the accuracy of this, but it means that while the company was spinning its story to him, other directors in the next room were consulting with professional advisors regarding what then must have been known was a bogus financing and preparing the explosive RNS.  

Moving forward, the big commercial problem for LEK is they are required to pay Optimum Petroleum sunk costs and consent fees by February 2020 – a payment estimated at around $10 million.  LEK is also required to show its ability by February 2020 to raise 42.86 per cent. of the drilling costs for one appraisal well, which is estimated to be about $28 million.  LEK needs real financing fast – by February means the end of this month.

Nostra Terra Oil & Gas (NTOG), who coincidentally has the same NOMAD as LEK, announced a requisition to convene a general meeting and remove the CEO, Matt Lofgran.  The only surprise here is that it took so long.  This is another long running saga and investors should seriously ask themselves why they invest in companies like NTOG, Mosman Oil & Gas (MSMN), Attis Oil & Gas (AOGL), etc.  Low impact wells in mature areas are simply never likely to generate sufficient operating profits to cover the costs of running a London listed company.

This is just “lifestyle” for the directors, but if drilling the occasional well in the US is something you like the sound of, you can just go straight to the source and buy non-operated working-interests in wells from the same type of operators/promoters these companies deal with and receive the revenue checks yourself each month, rather than let the directors spend the money.  You don’t need the public company with its directors’ salaries and bloated overheads in between.  You can get the same terms as the companies do and operators generally will allow you to participate for as little as 1/32nd or even 1/64th, that’s 3.125% or 1.5625% of the well, it’s always expressed in fractions.  It might be interesting for some who have a few thousand spare and would like to start to learn how it all really works in practice.  In the worst case, I doubt losses would exceed those of an investment in NTOG.

To have a chance with small stock market oil companies, best is to be in those with a big, high impact drill coming up, so back to shares and some better ones, starting with 88 Energy (88E) which announced a Charlie-1 appraisal well update.  Ice road construction is underway, the permit to drill application is submitted, approval is expected this month, and operational activity is progressing to plan for a February 2020 spud.  This is is now up around 100% from when I mentioned it as a favourite towards the end of last year.

Finally, and at long last for Egdon Resources (EDR), Europa Oil & Gas (EOG) and Union Jack Oil (UJO), their Wressle development was granted planning consent on appeal.  Icing on the cake for them is that North Lincolnshire Council has to pay their costs.  Regulatory issues probably will be easier now for onshore UK oil companies following the election.

I’ll be back mid-week with the next blog and podcast and if you’re interested in knowing all my trading ideas now and more about what I think of the various companies, then subscribe to the private blog at http://oilnewslondon.com/subscribe  I think you’ll find it’s worth it.

Contact me on Twitter @Oilman_Jim

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The author holds 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 PMO 88E RRE BPC PET PVR TRP LEK ZEN AAOG

First full week of the New Year and plenty going on.

Rockhopper Exploration (RKH) announced Heads of Terms with Navitas to farm-in to Sea Lion.  This adds additional strength to the Sea Lion joint venture, which Rockhopper believes will increase the likelihood of a successful senior debt project financing for the Sea Lion Phase 1 development.  Key of course will be the local political situation.

Sea Lion JV partner Premier Oil (PMO) announced its trading and operations update.  2019 production was 78,400 boepd.  It’s also looking forward to drilling its first well in Alaska, which it describes as “potentially transformational” for Premier, whose own interest comes via a farm out from 88 Energy (88E), which incidentally is now up 100% from when I mentioned it as a favourite towards the end of last year.

Premier also announced proposed UK North Sea acquisitions, which will add around 23,000 boepd production with development upside. The acquired assets are forecast to generate over $1 billion of free cash flow to the end of 2023, exactly the type of acquisition that RockRose Energy (RRE) is looking for.  They announced a year end trading update.  Year end total cash was $370.7 million ($54.9 million restricted), similar to the current capitalisation.

The market valuation of RockRose is very much a mystery.  I first bought it around 130p and a few months later received a 150p per share return of capital, leaving me in for free.  I said at the time it was financial alchemy, but so far it appears to be working.  RockRose now is nearly £20 a share and average production in 2020 is forecast to be around 21,000 boepd, a 9% increase on 2019, and they continue to look at opportunities to make acquisitions.  That’s the key to the next step up here.

Bahamas Petroleum Company (BPC) announced an update regarding their mutual fund set up to allow locals to invest.  The fund has opened for receipt of initial subscriptions and the proceeds received from investors will then be utilised for the purchase of ordinary shares in Bahamas Petroleum.  It will be interesting to see how this goes and may open some new fund raising ideas for other exploration companies looking for extra finance.

Petrel Resources (PET) shocked investors, announcing that payment for the second tranche of shares has not yet been received from the Tamraz group.  The shares fell sharply, but still look fairly resilient at 7.75p, some 520% above the 1.25p price Tamraz is paying and it would be rather strange if this transaction did not complete.  I highlighted Petrel several times last year as a favourite around 1p and I suspect that most who bought at this level will be long gone now.

The arrival of Alan Linn as CEO at another Dublin company, Providence Resources (PVR), has perked the share price up considerably.  He’s looking forward to working with the board to bring new investment into the Barryroe project.  Tower Resources (TRP), another looking to drill soon, also is starting to firm up.  I said a couple of times last year that this was a good buying opportunity under 0.4p.  Now 0.53p, key of course is a farm-out.

Lekoil (LEK) has been strong since it announced appraisal funding secured at the start of the year.  It followed up last week with an announcement of the commencement of site survey on OPL 310.  Currently 9.4p (up over 100% from 4.65p at the time of the 2 January announcement), Hannam & Partners have calculated a risked net asset value of 23p a share and an un-risked net asset value of 239p a share.

Meanwhile, the Zenith Energy (ZEN) and Anglo African Oil & Gas (AAOG) saga draws to a close.  Voting on the deal is Monday morning and it looks like Zenith is going to get the old Congo field.  It will be goodnight and goodbye to Anglo African though and, absent a relative miracle, I see it being sold down to virtually zero and delisting mid-year.  I’ve been seriously critical of this company for a considerable period of time, unfortunately most just wanted to argue with me.

Now, if you’re interested in knowing my trading ideas and want to read a more critical assessment of some of these and other companies, then subscribe to the private blog at https://oilnewslondon.com/oilman-jim  I receive a lot of enquiries from people interested in subscribing asking whether there is a minimum subscription term.  To clarify this point, there is no minimum term and you can unsubscribe at any time.  There’s also a first month’s trial subscription at 25% of the usual monthly cost, so why not give it a go.

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.  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.

Contact me on Twitter @Oilman_Jim

Click “SUBSCRIBE” to receive posts by email

The author holds 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.