Sunday Blog, 31 October 2021
PRD LBE I3E ITE.V CHAR PPC ZPHR ZPHRF 88E EEENF PVR LOGP EME AXL AXL.V ADV WTE WMELF ECO EOG.V TLOU OEX MNRG UJO ZEN ORCA PXEN MSMN ANGS CRS HUR
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Predator Oil & Gas (PRD) announced interim financials for the six months to 30 June. The loss from operations was £0.9 million and the cash balance at period end was £2.3 million with a further £1.1 million held as restricted cash. Following a £1.3 million placing at 5p in July, the company says it is fully-funded for both the upcoming Morocco drill programme and the Pilot CO2 EOR project in Trinidad. I wouldn’t be at all surprised, though, to see another placing before the drilling starts. Now 6.25p, PRD has been covered each week in the private blog from around 1.3p up and has been quite a spectacular performer, reaching a high of 22.5p earlier this year prior to the MOU-1 well spud.
Longboat Energy (LBE) announced a material discovery at Egyptian Vulture and a minor discovery at Mugnetind. The operator Equinor's preliminary estimate of recoverable resources in the Egyptian Vulture discovery is 19 to 63 million barrels of oil equivalent and the oil-in-place volume has been estimated at 220 to 440 million barrels of oil equivalent. The well was drilled 20 km from the Åsgard field and 23 km from the Kristin field, both of which are also operated by Equinor and offer development options for Egyptian Vulture. The Mugnetind discovery, however, contains recoverable resources between 5 and 11 million barrels of oil equivalent, which is not considered to be commercial in isolation. Next well to be drilled is Ginny / Hermine, which is anticipated to spud before year end. More on LBE in the private blog.
i3 Energy (I3E ITE.V) announced a third quarter operational and financial update. Average production over the three months was approximately 13,740 barrels of oil equivalent per day with September averaging approximately 18,985 barrels of oil equivalent per day. Full-year 2021 net operating income is now forecast to be approximately $65.7 million. and $119.1 million is forecast for the next twelve months from 1 October 2021. I3E is now finalising its capital programme for the rest of this year and for 2022, following which it will commence deployment of free cash flow into an active, operated development drilling programme, which is expected to materially grow its production base in a positive commodity price environment. Dividend payments commenced this quarter and payment of the H1 2021 dividend was completed on Friday.
Chariot (CHAR) announced it has signed a Memorandum of Understanding with what it says is a leading international energy group, relating to the key terms of gas offtake and partnering between the parties in respect of the Anchois Gas Development within the Lixus licence, offshore Morocco. Key terms of the future gas sales agreement will be for around 40 million cubic feet per day for up to 20 years on a take or pay principle to underpin the development. In addition, an agreed framework process has commenced to establish a long-term partnership. The aim is to sign final agreements to implement the Anchois Gas Development with a targeted final investment decision in 2022 and first gas in 2024. Currently 7.85p, CHAR has been covered in the private blog over the last few months from around 5p up.
President Energy (PPC) updated in relation to its subsidiary Atome Energy PLC. Steps continue to be made with regard to the spin-out of Atome from the company and the intended separate flotation of Atome on the AIM market of the London Stock Exchange. Further announcements are expected to be made during the course of November both in respect of this and also the dividend in specie in respect of President's shares in Atome. Other important news coming up in the near future concerns the progressing to a conclusion of the farm-out in Paraguay. More on PPC in the private blog.
Zephyr Energy (ZPHR ZPHRF) announced a State 16-2LN-CC operations update. The well has now been completed via hydraulic stimulation in the Cane Creek reservoir and was stimulated in fourteen separate stages across 4,020 feet of horizontal lateral wellbore. Production testing operations have now commenced and Zephyr will provide initial results after the well cleans up and once an adequate amount of data has been obtained. ZPHR also announced approval for the formation of a new 25,000 acre Federal unit named White Sands, incorporating all the company's existing leases covered by its historic 3D seismic survey, including the lease on which the State 16-2LN-CC well is situated. Currently planned are a second well targeting the Cane Creek reservoir in 2022, a development well on a recently acquired lease located in the Cane Creek Field south of the unit in 2022 and an exploration / appraisal well targeting the unit's shallow Paradox formation in 2022 / 2023. Zephyr also is planning to immediately commission an updated competent person's report on its entire asset portfolio, both operated and non-operated assets, once production testing on the State 16-2LN-CC well has been completed in the coming weeks, so quite a lot coming up here.
88 Energy (88E EEENF) announced execution of the rig contract for drilling of the Merlin-2 appraisal well at Project Peregrine. Permitting and planning remain on track for a spud now scheduled in February 2022. 88 Energy has identified several appraisal drilling locations to the east of the Merlin-1 well, closer to the shelf break where enhanced reservoir thickness and quality are expected. The company plans to announce the final drilling location and further details of the appraisal well in the coming months. Merlin-2 is targeting 652 million barrels of oil, with a geological chance of success of 56%. Now 1.6p, 88E has been covered in the private blog from the 0.40s, reaching a high of of 4.7p in March.
Providence Resources (PVR) and Lansdowne Oil & Gas (LOGP) announced operational updates in relation to the Barryroe field. A wellsite survey has been commissioned and the Marine Institute’s Celtic Voyager survey vessel mobilised on 24 October to Barryroe, where it will undertake a seabed, shallow geophysical and environmental baseline survey over the K area of the field. The site survey is expected to take up to 7 days depending on operating conditions. The companies believe they have a compelling proposition with regards to the Barryroe prospect, but to date have been unable to raise the necessary funding. More on PVR and LOGP in the private blog.
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Rounding off with the rest of the small cap oil and gas company news, Empyrean Energy (EME) announced further 12p warrant exercises totalling £90,000 (more on EME in the private blog), Arrow Exploration (AXL AXL.V) announced its first day of dealings on AIM (the company has raised £8.8 million in London to fund operations in Canada and Colombia), Advance Energy (ADV) announced an investor presentation in advance of its upcoming B-10 appraisal well (ADV has been covered in the private blog over the last few months from around 2p up, it’s currently 4.35p), Westmount Energy (WTE WMELF) announced final results (a loss for the year of £1 million) - industry news (not yet announced to the market) is of a dry hole at Sapote-1, offshore Guyana, in which both Westmount and Eco (Atlantic) Oil & Gas (ECO EOG.V) hold interests.
Tlou Energy (TLOU) announced an operational report for the quarter ended 30 September 2021 (the company progresses its three project areas), Oilex (OEX) announced the award of a well management services contract (it relates to the re-fraccing of the C-77H well and the drilling of two new wells), MetalNRG (MNRG) updated on its Italian waste to energy plant (the site has been cleaned and the technology items ordered), Union Jack Oil (UJO) announced a Wressle update ($1 million net revenues have been reached), Zenith Energy (ZEN) announced the successful workover of ROB-1, onshore Tunisia (a flow rate of 124 barrels of oil per day was recorded).
Orcadian Energy (ORCA) announced it has received three expressions of interest for the provision of a FPSO [floating production storage and offloading] for the Pilot development (the company anticipates announcing its preferred partner for the development of Pilot in due course), Prospex Energy (PXEN) updated on the Selva field development in Italy (delays and increased costs) and El Romeral in Spain (planned restoration of Rio Corbones-1 gas production was not possible), Mosman Oil & Gas (MSMN) announced the Stanley-5 spud (the company’s interest in the well is around 36.5% and drilling costs are around $350,000), Angus Energy (ANGS) announced the revised Saltfleetby competent persons report (the P90 sum of future cashflows to Angus is £31.7 million) and Crystal Amber Fund (CRS) announced an increased holding in Hurricane Energy (HUR) (it’s now up to 27.15%).
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The big advantage I have is that I know whether these companies are stock promotions or real projects, which enables the approach to be tailored accordingly. I have 40 years experience in the markets from both sides of the fence and my track record in assessing these companies speaks for itself.