Sunday Blog, 7 November 2021
PPC ECO EOG.V WTE TLW HE1 HLOGF EDR UJO EME JKX PVR LOGP CHAR ADV LBE DELT AEX IOG 88E EEENF PRD TRP BOIL CEG VOG LEK AST PTR PHAR SOU SAVE ZEN SLE EDR WEN
This newsletter is about interesting energy companies which can make you money. To receive it free in your inbox each week, click here:
President Energy (PPC) announced an operations update. The first new oil well in Puesto Guardian has spud, two new workovers of gas wells have commenced in Rio Negro (both fields are in Argentina), work-over of the Triche well is now in progress in Louisiana and completion of the Paraguay farm-out is expected this month. Further news from President concerned its subsidiary, Atome Energy plc, which is to be spun out and floated on AIM, with PPC’s share holders receiving a dividend in specie in respect of President's shares in Atome, which is targeting the potential of green hydrogen and ammonia. On Friday, it announced signature of a memorandum of understanding with ANDE, the national electric power company of Paraguay, for supply for up to 250 megawatts of power. There is more on PPC in the private blog.
Eco (Atlantic) Oil & Gas (ECO EOG) and Westmount Energy (WTE) announced Sapote-1 well results. Westmount’s announcement was straightforward: “the well encountered non-commercial hydrocarbons in one of the deeper exploration targets.” Eco put a more positive spin on the failure stating: “the well recorded hydrocarbon shows while drilling, and in the logging sequence, in a deeper interval than anticipated, but had no shows in the upper primary objective horizon. With sidewall coring and wireline logging complete, ExxonMobil will now work to define the reservoir properties, including porosity and permeability, and the cored samples will be analysed for hydrocarbons.” But be cautious when it comes to ECO. Here is what I said about it in November 2019:
Eco (Atlantic) Oil & Gas (ECO) announced an update on the initial analysis of the Jethro and Joe wells and the share price more than halved. This is a prime example of why you should never fully believe any of these companies - and always take profits or de-risk. This is a permanent statement in the blog and I really can't emphasise the importance of this enough. All I can say in this case is that it is inconceivable that Tullow Oil (TLW) and hence ECO did not know it was heavy oil before the announcement. Remarkably, indeed shockingly, Gil Holzman, CEO, was promoting ECO to private investors at a London South East promotional event the day before.
And in February 2020:
Eco (Atlantic) Oil & Gas (ECO) announced what appeared to some to be a positive reserves report, but in fact it was not. Whereas very few investors would ever actually read the 74 page CPR filed at SEDAR [the system used for filing securities related information with the Canadian authorities], those that did would have noted the following: "The results from the drilling of the Jethro 1 and Joe 1 wells indicated the presence of oil and gas; however, the level of testing of these hydrocarbon accumulations was not sufficient to change the category of those resources from Prospective to Contingent." So it's still all down to future drills and the big question now is whether majority partner Tullow Oil (TLW) will want to proceed. Remember, I warned in the blog three weeks ago Tullow’s trading statement and operational update stated that “exploration costs written off…include Jethro, Joe and Carapa well costs in Guyana” and that ECO should be asked some hard questions now, but all they really tried to do was to continue to promote it, the same as when they were failing to inform investors that what they had found was actually heavy oil. End result is that the share price, which was already down significantly, has nearly halved again over the last month.
Helium One Global (HE1 HLOGF) announced the commencement of its Phase 2 seismic campaign, which will consist of approximately 200 kilometres of 2D, targeting northern extensions of known structural highs that can act as a focus for helium charge. Mobilisation of the survey and line clearing crews has commenced with the aim of maturing additional drillable prospects for the planned 2022 drilling campaign, when Helium One plans to mobilise a conventional drilling rig to test new targets alongside a re-drill of the untested targets at Tai. Back now to 7.3p from a high of 29p in July, let’s see if the share price can put in another run next year.
Egdon Resources (EDR) and Union Jack Oil (UJO) announced the refusal of planning consent for Biscathorpe. These refusals by planning committees in respect of onshore UK oil and gas projects, even when the applications have been recommended for approval by planning officers, are becoming more and more common, for the simple reason that there are virtually no votes to be gained by approving them, but plenty to be lost by doing so. Along with other oil and gas companies operating onshore UK, EDR and UJO will have to try to get the planning consent on appeal if they want to proceed with the project.
Empyrean Energy (EME) announced an operations update in respect of the drilling of the Jade prospect, offshore China. It says it has made significant operational progress towards spudding the LH 17-2-1 exploration well in December 2021, with three teams being formed to work in a phased manner to coordinate and manage the drilling. What there is no mention of is financing, even though Empyrean’s 2 September RNS made clear that the company will require further funding, via a joint venture, exercise of warrants or from an equity raising in order to enable it to undertake the drilling of Jade. Warrant exercises to date have raised only £387,000, so there’s a lot more cash yet that needs to be found. Further on EME in the private blog.
JKX Oil & Gas (JKX) announced notice of a general meeting to approve cancellation of the admission of its ordinary shares to trading on the London Stock Exchange, a repurchase agreement as part of a tender offer for up to 40,096,476 shares at 42p, cancellation of the company's share premium account and re-registration as a private limited company. Obviously, the directors say all this is in the best interests of the company and its shareholders, citing as key factors that the company has not been able to utilise its listing to raise finance or to use its shares as consideration to fund investment owing to negative investor sentiment, and that the regulatory burden, management time and costs associated with maintaining admission of the shares are disproportionate to the value provided by the listing. There is also the challenge that the free float is only 21.9% and the listing rules require 25% of the company's shares to be in public hands, which could only be achieved by directors or shareholders with more than 5% holdings selling shares, which apparently they do not want to do. The tender offer for those outside the inner circle is not generous, but the alternative is being left holding shares for which there is no public market.
Providence Resources (PVR) and Lansdowne Oil & Gas (LOGP) announced an operational update. The seabed, shallow geophysical and environmental baseline survey over the K Well drilling location of the Barryroe field has concluded. The survey is part of the strategic review of Barryroe, the company says, and the results will be interpreted and incorporated. The key issue of course is funding, something which has eluded Providence and Lansdowne for a number of years, although the lack of it has never held the companies back from promotion. More on PVR and LOGP in the private blog.
To receive the private blog free of charge for the next 14 days, click here:
In the private blog this evening: CHAR ADV LBE DELT AEX IOG 88E EEENF PRD TRP PVR LOGP PPC EME and BOIL, although please note that commentary on all of these is not necessarily positive (more about the private blog at Why subscribe?).
Rounding off with the rest of the small cap oil and gas company news, Challenger Energy (CEG) announced interim results for the six months to 30 June (a loss of £12,292,000), Victoria Oil & Gas (VOG) announced interim results (a loss of $2,293,000), Lekoil Nigeria announced it has sent a letter to Lekoil (LEK) (“unless a satisfactory response is received immediately, they will initiate requisite steps to enforce the interests of all minority shareholders”), Ascent Resources (AST) announced a Cuba update (two month extension to the memorandum of understanding which it has signed with CUPET).
Petroneft Resources (PTR) announced the appointment of an independent non-executive director (it’s Eskil Jersing, previously CEO of Wentworth Resources and Sterling Energy), Pharos Energy (PHAR) announced cabinet approval of the El Fayum amendment ( includes an increase of the cost recovery petroleum percentage and an extension of the exploration term), Sound Energy (SOU) announced a Phase 1 LNG sale and purchase agreement extension (now 1.35p, I have been warning about SOU all the way from 40p down), Savannah Energy (SAVE) announced first gas sales to FIPL Afam (First Independent Power Limited's power plant in Nigeria).
Zenith Energy (ZEN) announced completion of a subscription for new shares (272,727,273 at £0.011 to raise gross proceeds of approximately £3 million), San Leon Energy (SLE) announced an update on the investment in the Oza Field, Nigeria (completion operations at the Oza-1 well tested at a stabilized flow rate of 2,463 barrels of oil per day), Egdon Resources (EDR) announced preliminary results (a loss of £1,681,635 with initial production guidance for 2021-22 of 240 barrels of oil equivalent per day) and Wentworth Resources (WEN) announced the appointment of a chief operating officer (it’s Aaron LeBlanc, who has experience in Tanzania).
Note: 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 actual trading ideas. There is a charge for the private blog, but I believe you will find the information within it is worth many times its cost. There is no minimum subscription term and you can unsubscribe at any time. There is also a 14 day free trial, so you have absolutely nothing to lose by trying it out.
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.