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Oilman Jim's Private Blog



Updated: Nov 4, 2019

I've mentioned Independent Oil & Gas (IOG) positively several times recently both in the blog and on the podcast and they issued an excellent RNS on Monday confirming progress.  As anticipated, they announced the completion of the farm-out transaction with CalEnergy Resources and the final investment decision on phase 1 of the core project, comprising 410 billion cubic feet of 2P+2C reserves and resources across six discovered UK Southern North Sea gas fields.  The core project is projected to deliver over half a billion pounds in pre-tax cash flow net to IOG and, with the shares still trading below the 20p offered by RockRose Energy (more on them later), I think there's still quite a lot to go for with IOG.

Not such good news for shareholders at Reabold Resources (RBD) unfortunately. Certain legal and administrative issues have caused a delay to entering into a binding equity swap agreement with the Rathlin shareholders. Indeed, after completing a 24 million pound placing in anticipation, they now say there can be no assurance that the proposed equity swap will even be completed.  The shares fell below the 0.9p placing price on the news, but somehow I don't think that will be of much concern to many who took part in the placing, who are suspected to simply have been covering short positions taken out at much higher prices.  It's bad news though for those who paid up to 1.75p in all the manufactured excitement and now have lost half their money and, ironically, many will have bought their shares from those who were forward short selling in anticipation of the placing, even later leaking news of it to force the share price down further for maximum profit.  Worst thing is, this seems to happen every time there's a placing at Reabold, which is quite often.

I3 Energy (I3E) has become another leaky ship.  Its shares rose over 50% in the 3 trading days before the announcement of the Serenity oil discovery.  Anyway, it was a strong announcement and nearly doubled the share price before the details started to be examined. Concern is that progression of the reserve-based lending facility necessary to develop Liberator will require successful drilling at Liberator and the Company is obligated to enter this facility no later than December 2019 in order to remain in compliance with the terms of its junior loan note facility.  

On the bright side, RockRose Energy (RRE) also issued a RNS noting the announcement made by I3E and stating that it will be working to understand fully the implications for the Tain development project in which RockRose has a 50% interest, including the possible impact on potentially recoverable volumes.  This of course has led to takeover speculation and what can be said with certainty is that the I3 share price will remain highly volatile.

Columbus Energy Resources (CERP) announced the grant of Ministry approval for its Saffron prospect spud.  The well is targeting 77 million barrels of oil and is expected to take approximately 30 to 45 days to complete and evaluate.  With a market cap of 31 million, it's worth checking out.  There could be some upside here.

Block Energy (BLOE) announced the completion of drilling at well 38Z. They say that field observations at the well site indicate multiple natural fractures, and oil shows were encountered during drilling. But this isn't meant to be an exploration drill, the only issues here should be flow rates and water cut, so the choice of words may to some be concerning.  Anyway, Jon Fitzpatrick of Glasgow must like it: he's just bought 3.8% of the company.  

Echo Energy (ECHO) announced that the location for the first well of its four well exploration programme has been selected and construction works are now being finalised. They expect drilling to commence on schedule during December, possibly before.  As an investment, the company has been a disaster, but let's see if this time it can break its run of constant bad luck.

RiverFort Global Opportunities (RGO) issued an investment update.  It's not an oil and gas company as such, but finances many of the smaller ones by taking convertible loan notes. The current client list comprises Savannah Petroleum (SAVP), UK Oil & Gas (UKOG)Anglo African Oil & Gas (AAOG) (via an investor sharing agreement in its case) InfraStrata (INFA)Angus Energy (ANGS) and Ascent Resources (AST).  If you're into these type of companies, then you can get in on an even better basis through RiverFort, since its net asset value of 0.113p per share is 50% more than the current share price of 0.075p.  And with RiverFort holding convertible loan notes and investor sharing agreements, it doesn't really have any downside risk.

Tower Resources (TRP) announced an operational update.  It's signed a contract for the site survey at the intended well location on the company's license in Cameroon and hopes this is the final operational step before commencing drilling operations.  The well of course is subject to financing and the key news here will be that of a farm-out.  Let's see.

Cabot Energy (CAB) offers a cautionary tale.  It has announced the proposed cancellation of admission of its Ordinary Shares to trading on AIM on Tuesday 3 December and the shares which were as high as 16p in the last year have collapsed to 1.5p bid.  This is a risk for all small public companies with a majority shareholder, who no longer sees commercial advantage to a stock market quotation, and helps to illustrate why some small oil and gas companies appear to the unwary to be unexplained bargains.

Finally, the new investors at Petrel Resources (PET) want to increase their stake to 51%.  Thereafter, it's anticipated that a flow of potential investment proposals will be offered to Petrel.  I mentioned this company  as a buy a few times at around a penny and it shot up to nearly 10p.  The big initial profit has been had here, but it's always worth keeping an eye on this.

In other news, Global Petroleum (GBP) issued its September 2019 quarterly report, Nostrum Oil & Gas (NOG) announced an operational update for the first 9 Months of 2019, Europa Oil & Gas (EOG) announced a farm-out update, Petroneft Resources (PTR) announced an operational update, Range Resources (RRL) announced a quarterly activities report, an independent expert’s report and a letter to shareholders regarding ASX delisting, Sound Energy (SOU) announced the signature of a MOU relating to a gas sales agreement, Hardy Oil & Gas (HDY) announced a transfer of listing, Eland Oil & Gas (ELA) announced an operations update, IGas Energy (IGAS) announced a joint broker appointment, Oilex (OEX) announced an expanded equity capital raising, Lekoil (LEK) announced the OPL 310 licence extension terms fulfilled, Attis Oil & Gas (AOGL) announced the resignation of a director, Bahamas Petroleum Company (BPC) announced the cancellation of existing options and the grant of new options, Andalas Energy & Power (ADL), Baron Oil (BOIL) and United Oil & Gas (UOG) announced a UKCS 31st round update, Zenith Energy (ZEN) announced completion of financing, President Energy (PPC) announced a group update, Upland Resources (UPL) announced its annual report and financial statements for 2019, Touchstone Exploration (TXP) announced an increase of its term credit facility, ADM Energy (ADME) announced a conditional subscription update, Mosman Oil & Gas (MSMN) announced final results and Cadogan Petroleum (CAD) announced the extension of its CEO’s mandate.

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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.

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