A busy week for news. PetroTal (PTAL) completed its first horizontal well and announced an initial four day production rate of 6,200 barrels of oil per day. It's already spud its second horizontal well and is aiming for production of 10,000 barrels of oil per day by the end of the year with 20,000 barrels of oil per day targeted by the end of 2020. Market cap is currently £129 million, which actually isn't expensive at all if these objectives can be met.
Block Energy (BLOE) is another company drilling horizontal wells, but with rather less success. It announced an operations update and claimed to have successfully cemented casing at the 38z well. Completion of drilling operations is expected in around two weeks, so we should soon see whether they've been able to prevent fluid incursion, which comprised most of the claimed "production" at their previous well, 16z. Block plans to sidetrack three other wells, test one of the field's gas discoveries, and drill a new gas well, so this does have potential, but it's going to need to recover investor credibility.
UK Oil & Gas (UKOG) announced the commencement of its horizontal drilling operations. HH-2z aims to deliver a circa 3,200 ft horizontal section wholly within the Portland reservoir's most oil productive zone. The well is expected to reach its total depth around mid-November and be producing by year end. I reckon it could be good for over 1,000 barrels a day.
88 Energy (88E) announced its quarterly report and confirmed that the Charlie-1 well is to be drilled and tested in the first quarter of 2020 using the already secured Nordic-Callista Rig-3. This is a big one: total gross mean prospective resources across the seven stacked targets to be intersected by Charlie-1 are 1.6 billion barrels of oil, 480 million barrels net to 88E. As the placing shares from last month clear, I would expect to see this move higher.
More nonsense with Anglo African Oil & Gas (AAOG), who announced a non-binding indicative term sheet for an agreement which, if it were to complete and on bringing well TLP-103C into production, would provide up to 25 million dollars in off-take and prepayment financing. Unsurprisingly, their audience didn't read beyond the headline, wrongly interpreted this as financing of the drill and got spiked. The financiers, Riverfort and YA II almost certainly will have been selling into this volume, but whether they can sell sufficient shares at a high enough price to finance the drill is another matter entirely.
Petro Matad (MATD) announced results of testing at Heron-1. Peak production recorded during the test was 821 barrels of oil per day and through the period of the test, the well flowed at an average rate of 200 bopd. The company will next engage with the Mongolian government to secure an exploitation licence in order to be able to put Heron-1 on to production in 2020 and pursue the development of the discovery. They hope to secure tenure of a development area in Block XX with a view to transitioning Petro Matad from explorer to producer with revenue generation. It could be good, but all this (and the postponed exploration of Block V) has to be financed, so there's almost certainly a large placing coming up.
Eco (Atlantic) Oil & Gas (ECO) provided a Guyana operational update. Multiple prospects currently are being reviewed with further high graded candidates under consideration for a 2020 drilling programme. Hannam & Partners have calculated an un-risked value of £12 a share and for the 5 most material prospects a risked net asset value of 216p a share. Eco are fully funded for their current planned activity and, interestingly, Hannam & Partners think management would sell for the right price.
Angus Energy (ANGS) suddenly decided they needed to provide for decommissioning liabilities, in particular £1.25 million for the Saltfleetby field, which they got for "free." They're financing all this with a £1.5 million convertible loan note facility from Riverfort Global Opportunities, who almost certainly will now just start selling shares. It's a strange, rather contrived sounding announcement they’ve put out and somehow I think there's a bit more to this story.
Red Emperor Resources (RMP) issued its quarterly report. They’ve appointed a new man, John Begg, and are now conducting due diligence on a number of new projects. Cash currently is approximately equal to market capitalisation. I'm sure that a new deal will go in and they'll ramp it, so it's perhaps not a bad speculative opportunity at this level. There could of course be another placing first.
Finally, it might be worth keeping an eye on Cadogan Petroleum (CAD), which announced a general meeting on 15 November to consider resolutions proposed to remove certain directors. The requisitioners are not happy with the company’s share price, which is not an unreasonable position when net assets are stated at nearly $52 million and the market capitalisation is only £12 million. It could be interesting.
In other news, Serinus Energy (SENX) announced resumption of Moftinu gas production and an extension of the Satu Mare exploration phase, Coro Energy (CORO) and Empyrean Energy (EME) announced operational updates, Lekoil (LEK) announced an Otakikpo update, Nu-oil & Gas (NUOG) announced the returning of an interest in Enegi Oil Inc., Echo Energy (ECHO) announced a proposed acquisition, Hardy Oil (HDY)announced board changes, President Energy (PPC) announced an acquisition and subscription, ADM Energy (ADME) announced directorate changes and an OML 113 update, Oilex (OEX) announced an issue of securities, Zenith Energy (ZEN) announced a private placement in Norway, a further reduction of debt and increased participation in the Norwegian private placement, Attis Oil & Gas (AOGL) announced an update on its investee company, Petroteq Energy Inc., and new acreage, a drill programme and an issue of equity, JKX Oil & Gas (JKX) announced that the 2nd 2015 Poltava rental fee claim is closed for PPC, Alba Mineral Resources (ALBA) announced a Horse Hill update, Range Resources (RRL) announced the sale agreement for drilling rigs signed and its voluntary delisting from the ASX, Serica Energy (SQZ) announced receipt of the OFAC license and an assurance for Rhum and SDX Energy (SDX) announced the commencement of drilling operations in Morocco.
Contact me on Twitter @Oilman_Jim
Click “SUBSCRIBE” to receive posts by email
The author holds one or more investments in one or more of the companies mentioned so this post cannot be viewed as independent research. This post does not constitute investment advice or a recommendation to buy or sell and may be incorrect or outdated.