Sunday Blog, 10 October 2021
Sunday Blog, 10 October 2021
PTAL EME SCIR BLOE PXEN UOG SENX ZOL CHAR LBE ADV DELT IOG AEX 88E EEENF PRD TRP PVR LOGP PPC
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PetroTal (PTAL) followed up on the previous week’s good news by announcing the 30 day initial production rate for well 8H at over 7,700 bopd. As of 3 October, during its first 30 days of operation, the well had produced 231,000 barrels and based on ongoing performance and an expected $45 per barrel of oil netback, the 8H well should pay out in approximately 45 days overall. After having being negative on it from the 30s down, I mentioned PTAL positively in the blog last November at 7.6p. It’s now 25.5p.
Note: Prior to 5 September 2021, the Sunday blog was hosted at Blogspot and the archives back to February 2018 can be found there.
Empyrean Energy (EME) announced it has awarded a contract for the well site survey over the Jade prospect on Block 29/11, offshore China, to China Oilfield Services Limited. Empyrean says it is in preparation for spudding of the Jade prospect well in mid-December 2021, but the company hasn’t yet been able to raise the necessary funds to do that. A small start was made last week with the receipt of £24,000 in respect of the exercise of 200,000 warrants at 12p, but it looks suspicious since the price in the market at the time was around 6p. The most credible explanation advanced on social media was from Michael:
Scirocco Energy (SCIR) announced a related party transaction. It’s with Gneiss Energy Limited, which is jointly owned by Carolyn Fitzpatrick and Jon Fitzpatrick, a former non-executive director of the company. Gneiss has been providing general management and financial advisory services to Scirocco since February 2018, but its work is now expanding. First, it will be providing financial advisory services related to the previously announced proposed sale of the SCIR's Tanzanian interests. Second, it will be providing support to Scirocco as it executes its new investment policy within the sustainable energy and circular economy markets. The scope of Gneiss’s brief is extremely broad and almost makes one think that other than fulfilling a statutory role, is the board really needed now. In this case, that’s not necessarily a bad thing.
Block Energy (BLOE) announced an operational update. Both production and revenues are down. Block is one I’ve been warning about for a long time, from as high as 17.5p. Here’s what I said about it back in July 2019:
As expected (see previous blog posts), reality hit Block Energy (BLOE) hard when the company announced the resumption of production at West Rustavi. For the first time production was stated in bopd (barrels of oil per day) rather than bbl/d (barrels per day) as previously. In fact, the well is only producing 295 bopd and the previous 1,100 bbl/d rate appears to have been mainly water. The company's paid PR was aggressively touting a thousand barrels of oil per day production to investors, who bought the shares up to 17.5p. Did BLOE never think they should correct that?
It’s a dodgy one, with many dubious characters involved and, unsurprisingly, the share price is now down over 90% to 1.65p (I warned about it again just a short while ago at over 3p). Luckily for the insiders, though, they were able to recently defeat a shareholders’ resolution to commission an independent forensic investigation into the affairs of the company. The game continues.
Prospex Energy (PXEN) is another company that’s managed to see off unwelcome shareholder scrutiny. It announced last week that Jarvis Investment Management’s resolutions had been rejected at the requisitioned general meeting and the board remains unchanged. I doubt any of it changes much for the shareholders anyway, since at these small / micro cap companies there is always such a long line of fees and expenses standing between investors and well-head economics. Board members design their own compensation packages too, with the invariable result of bloated G&A budgets financed via shareholder dilution, regardless of the returns generated for equity investors. The same comments apply to United Oil & Gas (UOG) and Serinus Energy (SENX), which also issued news last week. It’s really only the larger production companies (usually those expanding by acquisition) or the focussed, high-risk high-reward exploration ventures that give investors a fighting chance.
Finally, Zoltav Resources (ZOL) announced project finance for the East Bortovoy development. It’s coming from Sberbank, with many conditions. ZOL still sits there with a market capitalisation of £38 million, though, and I’m not sure everyone has read this latest announcement through to the end. It states:
…under the terms of the project finance there are conditions which…will require the Company to…streamline costs other than those related to the Project. As a consequence, it may be challenging for the Company to maintain…the listing of its ordinary shares on AIM….
…given the Company has for some time been unable to attract either public or bank finance, it is likely that the Company will be unable to maintain the listing of its ordinary shares on AIM beyond the next few months…
Reality is that delisted, ZOL’s shares most likely would be worthless. As I’ve said many times before, these types of companies’ shares are for buying and selling (not for holding) and they can be rather good for that.
Please be aware, the Sunday blog (this one) is free and focuses on those companies which have issued news during the week; the private blog (published separately) contains the trading ideas (more on that at Why subscribe?).
In the private blog this evening: CHAR LBE ADV DELT IOG AEX 88E EEENF PRD TRP PVR LOGP PPC and EME, although please note that commentary on all of these is not necessarily positive.