Sunday Blog, 29 May 2022
CLON ADV CHAR IOG PRD PTAL AXL PANR
Catching up on the last two weeks, Clontarf Energy (CLON) announced the spud of the Sasanof-1 exploration well, offshore Western Australia. The current schedule expects drilling through the target reservoir to occur, at the earliest, between 2 and 5 June. It’s potentially a big one, with numbers as high as 17.8 trillion cubic feet of gas and 449 million barrels of condensate being talked about. Clontarf raised £3.5 million via a placing of 1,400,000,000 shares at 0.25p to fund its acquisition of 10% of the Sasanof prospect (see earlier blogs) and the share price went as high as 0.8p thereafter. Back to 0.43p at the close on Friday, it’s now a pure gamble on the outcome of the drill.
The reality is that most drills fail: the play is to buy after the placing to finance the drill (often at a discount to the placing price) and sell before the well spud. That's how you make money with them. A reminder came from Advance Energy (ADV) last week, when it announced that the Buffalo licence will lapse on 27 May and the company will become an AIM Rule 15 cash shell. The game continues of course and Advance is already evaluating a number of new oil and gas opportunities, with what it says is an emphasis on materiality (i.e. large prospective numbers). ADV undertook a placing at 2.6p in April last year, following which the shares were highlighted in the private blog and could be picked up as low as 2p for some time thereafter. The share price reached 5.7p in January and I cautioned de-risking prior to the result on several occasions. It was an easy double or more for private blog subscribers who did that.
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Chariot (CHAR) announced an oversubscribed placing and subscription, raising gross proceeds of £20.4 million through the issue of 113,333,334 new shares at 18p. The company is focused on bringing the Anchois gas development online, with the intention of fast tracking towards material cash flows as quickly as possible and the majority of the proceeds of the fundraise will be utilised for this purpose. The front end engineering design project is ready to commence and the partnering process is underway: Chariot is looking for long term, strategically aligned partners in both upstream and downstream capacities and the next commercial steps will be negotiating and completing gas sales agreements and securing project finance. In tandem, the company will continue to advance its transitional power partnering and hydrogen projects. Chariot was covered in the private blog from as low as 5p. It’s now over four times that price at 21.9p.
IOG (IOG) announced an operational update. Over the past month, Blythe and Elgood condensate flowing into the Saturn Banks reception facilities has reached peak levels of up to 1,850 barrels per day. Unfortunately, an operational risk assessment has identified a drainage system deficiency, resulting in a shut-in of production. Following modification of the compressors, production is expected to be gradually restored to normal levels over the coming weeks. Average aggregate Saturn Banks gas production over the 30 days prior to the shut-in was 41 million cubic feet per day with an uptime of 74% at Blythe and 78% at Elgood, with a volume weighted average realised gas price of 100p per therm. IOG was covered in the private blog from as low as 9p and is now standing at 24.5p, having been as high as 46p in March.
Predator Oil & Gas (PRD) announced the publication by its subsidiary, Mag Mell Energy Ireland Ltd., of a “white paper” titled “Keeping Ireland's Energy Flowing,” which focusses on how Ireland can repurpose existing infrastructure at the Kinsale Head gas field to help insulate itself from rising gas prices and ensure security of energy supply during the hoped for transition to renewables. It’s essentially aspirational and PRD’s core activity remains its operations in Morocco, where the company aims to drill a further three wells this year to potentially prove up a high estimate of 708 billion cubic feet of gas net recoverable. Two potential farminees have been selected from initial responders for further discussions. Predator has been covered in the private blog from as low as 1.21p and has been quite a spectacular performer. At 9.25p, the share price is up significantly and reached a high of 22.5p prior to the MOU-1 well spud last year.
PetroTal (PTAL) announced its first quarter financial and operating results. Based on the 67 actual production days in the quarter, average production was 15,778 barrels of oil per day. Well 10H was completed on 30 January and accumulated production of 251,320 barrels in February, delivering pay back in just four weeks. Upcoming now is a $120 million fully funded capital program that could potentially generate up to $230 million of free cash flow this year, allowing PetroTal the optionality to redeem the remaining $80 million in bonds early and implement its strategy of returning capital to shareholders in the fourth quarter of 2022 or the first quarter of 2023. I mentioned PTAL positively when it was 7.6p. It’s now over six times that price at 45.8p.
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Finishing off, Arrow Exploration (AXL) announced results of the RCE-2 well testing on the Tapir block in the Llanos basin of Colombia. Net rates exceeded 800 barrels of oil per day. Completion of the C7 zone in that well effectively doubles Arrow's production and the company maintains its objective of achieving a production rate of 3,000 barrels of oil equivalent per day within 18 months of its AIM listing, which was completed in October last year.
Finally, Pantheon Resources (PANR) announced it has executed contracts for the Nabors 105AC rig to drill the Alkaid #2 well, which is scheduled to spud in July. This will be drilled horizontally to maximise flow rates and the numbers here should establish once and for all whether the project actually has the potential to be commercial or is just yet another AIM company’s multi-billion barrel fantasy.