Sunday Blog, 5 February 2023

88E EEENF PANR PTHRF MATD MEN PRD IOG LOGP BEY PTAL PTALF

Catching up on recent news, 88 Energy (88E) announced its placing. Up to £8.1 million at a price per share of 0.55p to fund the drilling of Hickory-1 in early March. The well is said to have been significantly de-risked by recent Pantheon Resources (PANR) drilling and flow tests, interpretation of the Icewine-1 well logs and modern Franklin Bluffs 3D seismic data and associated AVO analysis.

PANR also issued news, aiming to make a case that its operations potentially are commercial. It is critical now for the company to get its share price up, otherwise it faces having to repay convertible bond holders in cash (which it does not have), or accepting an effective death spiral in its share price, the strength of which will also determine whether or not it will be able to raise further meaningful finance.

88E has been covered three times in the Private Blog as a company of interest: first, at around the 0.7p placing level to finance the Charlie-1 well (the share price subsequently reached a high of 1.48p prior to the spud); second, at around the 0.33p placing level to finance the Merlin-1 well (the share price subsequently reached a high of 4.7p prior to the well result); third, at around the 1.49p placing level to finance the Merlin-2 well (the share price subsequently reached a high of 2.817p prior to the spud).

I have no great faith in the actual viability of any of 88E’s projects; it’s just one that’s invariably been good for a pre-spud share price run. This time, though, it’s left little time between funding and spudding.

Petro Matad (MATD) announced a $6 million placing and subscription at 2.5p per share. The fundraising is primarily intended to enable the company to test the low-cost, high impact Velociraptor exploration prospect where it says success would be transformational for both the company and Mongolia. A firm date for the drilling of Velociraptor-1 is still awaited.

Molecular Energies (MEN) announced a Paraguay update. A drilling rig has been successfully procured and a contract signed. The estimated time for commencement of drilling now is in May and the drilling time projected to reach target depth is estimated to be 40 days from the time of commencement. The well is said by the company to have an unrisked recoverable oil in place estimate of 96 million barrels, with the entire complex having a total of 306 million barrels. 

Predator Oil & Gas (PRD) announced a MOU-2 drilling update. The well now is suspended above the target pending re-evaluation of the drilling mud programme required for an unexpected geological formation. Meanwhile, an extended MOU-1 perforating and testing programme is to proceed. Pre-drill objectives remain unchanged according to the company, as do potential estimates of gas resources.

PRD has been covered twice in the Private Blog as a company of interest: first, at around the 4p placing level to finance the MOU-1 well (the share price reached a high of 22.5p prior to the MOU-1 spud); second, at around the 5.5p placing level to finance the MOU-2 well (the share price reached a high of 12.3p prior to the MOU-2 spud).

IOG (IOG) announced a corporate update. Gross production in 2022, the company’s first year as a producer, averaged 27.4 million cubic feet of gas per day from first gas in March, with total revenue of £79.6 million. With CalEnergy, IOG has applied for nine blocks in five licences in the UK 33rd Licensing Round, all containing gas discoveries. Year-end cash was £32.4 million. Market capitalisation is £42 million.

Lansdowne Oil & Gas (LOGP) announced it has raised £300,000, by way of a placing at 0.5p, to meet its expected share of Barryroe costs, while awaiting the outcome of the application for a lease undertaking. Progress depends on Barryroe Offshore (BEY) being able to complete its convertible loan note funding and BEY’s last news was that issuance of the circular convening the EGM to approve the funding terms had been deferred pending discussions with certain substantial shareholders.

PetroTal (PTAL) announced increases in its 2022 year-end oil reserves. The company has recorded a 46% increase in 2P reserves value per share to £1.39, with 2P estimated ultimate recovery now over 108 million barrels. Seven 2P well locations have been added, extending the 2P reserve life to 22 years and the 2P after tax NPV-10 value has increased to more than $1.5 billion. I highlighted PTAL when it was 7.6p. It’s now over four times that price at 42p.

Try out the Private Blog:

Now, if you haven’t seen it yet, don’t miss “How the markets really work.” I believe you’ll find it eye opening. It's available on the Substack site at Core Information.

For those who find the article a little long and just want a summary of my trading approach, I’ve posted an abbreviated version of the last part of the last chapter below: