A few changes have been made since the last full issue of Oilman Jim’s Letter. Commentary on the week’s oil exploration company announcements now is over at Exploration News (click the link to read this week’s newsletter and subscribe), which allows this newsletter to be wider ranging.
There’s a further new publication Trading Keys (click the link to read this week’s newsletter and subscribe), which aims in a nutshell to give you the key information that actually will affect a companies share price, particularly short term. Different and comprising information which isn’t provided elsewhere, it supplies the key trading information you need.
The Private Letter (containing my actual trading ideas) continues as usual and is sent to paid subscribers separately.
I also want to expand coverage to cover more international companies, as a number of readers have asked me to do. There are many interesting Australian and Canadian oil and gas companies out there (a number of United States ones too) and it’s just as easy to trade them online as British ones providing you can handle the time differences. Electronically and financially it’s all one world now.
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Starting off with an old favourite, Predator Oil & Gas (United Kingdom: PRD) - which I’ve covered on several occasions in the Private Letter, catching its share price run ups each time with the various Moroccan MOU wells - has now moved on to the testing stage, which is said to be on track and scheduled to start this month. MOU-1 will be the first well. Likely to impact the share price once fully announced are future drilling opportunities, in particular the up-dip appraisal of the Jurassic target encountered in MOU-4, which is a key objective of the company. The market is still digesting the recent £10 million 11p placing, but once it’s fully churned the share price should begin to move up again as announcements start to flow.
Longboat Energy (United Kingdom: LBE) has an indirect interest in the Velocette exploration well, which is currently being drilled offshore Norway. It’s a significant well with a 177 million barrel of oil equivalent gross un-risked resource estimate and a 30% chance of success. LBE’s current market capitalisation is around £13 million and its 50.1% interest in the Norwegian subsidiary, Longboat JAPEX Norge AS, is worth approximately the same based on the $16 million initial investment received into the JV from the Japan Petroleum Exploration Company for its 49.9% stake. However, a further investment of up to $30 million into the subsidiary will be made by JAPEX in the event of a successful discovery on the Velocette well. Regardless, JAPEX is providing the subsidiary with a $100 million facility to finance acquisitions and associated development costs, which offers shareholders in Longboat a significant degree of gearing.
Helium One Global (United Kingdom: HE1, United States: HLOGF) will soon spud the first of two helium exploration wells in Tanzania. The company is in an advantageous position having purchased its own rig in July and effected a placing, subscription and retail offer last week raising an additional £6.8 million to fund expanded operations. The appeal of helium is that it sells for around 100 times the price of natural gas and is in big demand. The placing stock will take time to be absorbed, which no doubt will be accelerated by a flow of news announcements commencing in the coming days and continuing for a number of weeks.
Noble Helium (Australia: NHE) also is drilling for helium in Tanzania. The two companies originally had a cooperation agreement to share a rig, but that fell through and they made their own arrangements. Noble’s rig arrived in Tanzania last week and drilling of the first of its two wells will commence later this month. Like Helium One, its series of operational announcements will be commencing soon. These future news announcements from Helium One and Noble Helium are likely to feed each others’ share prices; both companies’ news will flow almost in parallel.
Eco (Atlantic) Oil & Gas (United Kingdom: ECO, Canada: EOG) has two interesting projects. It recently acquired an additional 60% interest in the Orinduik block, Guyana, from Tullow, taking its interest to 75% and becoming operator. ECO now is looking for a farm-out partner to engage in drilling. The other project is Block 3B/4B, offshore South Africa in which ECO now has a 20% stake. A new CPR released by the operator earlier this year confirmed that the block contains estimated P50 prospective resources of approximately four billion barrels of oil equivalent and an application has been made to drill one well and one contingent well in the north of the block. A farm-out partner to fund the drilling here is also sought. Announcements on either will be highly positive.
88 Energy (United Kingdom: 88E, Australia: 88E, United States: EEENF) has completed a £4.1 million fundraising, which along with the company's existing cash reserves will provide the capital to fund 88E's share of the Hickory-1 well flow test at Project Phoenix, North Slope Alaska, which is planned to commence as early as possible in the Alaska 2023/24 winter operational season. Project Phoenix lies next door to the acreage of Pantheon Resources (United Kingdom: PANR, United States: PTHRF), whose own flow test is due to start soon. Like PRD, 88E is another old favourite, covered several times in the Private Letter, catching its share price run ups each time with its various Alaska wells. The amount of new stock issued in its recent fundraising is fairly easy for the market to absorb.
Finally, Carnarvon Energy (Australia: CVN, United States: CVONF) presents some attractive numbers. Evaluation of the latest 3D seismic data has resulted in its Bedout joint venture now targeting five strategic prospects containing a combined resource of 623 million barrels of oil equivalent. Nearby upside of 7.78 trillion cubic feet of gas and 1.25 billion barrels of oil has already been identified. Carnarvon has executed what it describes as a transformational divestment of a portion of its Bedout assets, leaving the company with around A$319 million in financial liquidity, comprising A$181 million in cash and a A$138 million future contribution to its Dorado development costs, numbers which compare well with a current market capitalisation of A$279 million.
More in the Private Letter.