Companies are now saving up their good news for next year, but there were still plenty of interesting announcements last week. Anglo African Oil & Gas (AAOG) CEO, James Berwick, resigned on Monday and the share price now is down to around half a penny. They're only going to "commence a search for a new CEO at the appropriate time” so it’s looking like things are over at this company. It’s a good result for those who paid attention to what I've being saying about Anglo African over the past year and shorted it. Most though were simply very angry with my comments. As Mark Twain said: “It’s easier to fool people than to convince them that they have been fooled.”
Another winner for shorts over the last six months is Block Energy (BLOE), which ramped up its share price in anticipation of a placing on the basis that it was producing 1,100 barrels of oil per day and didn’t need a placing. In fact, as I warned numerous times, the production was mainly water and the price collapsed once the truth was admitted by the company. Block announced an operations update on Tuesday in relation to its latest well, but I would guess that having been spoken to very firmly by the regulators, it's taking no chances now, disclosing only that the well is "flowing" and not even mentioning the word “oil” this time. It’s remarkable looking back on this now, how aggressively I was attacked at the time by those peddling the false stories and also by those who wanted to believe them.
A third disgrace is Sound Energy (SOU), which I've been calling down from the mid 40s. It announced yet another "keep the lights on" placing on Wednesday, this time at 2p, but it's still capitalised at £26 million, so has plenty of room to fall further, which it may well do since the sale of its assets now sounds very far from certain. A big success for those who shorted it though.
A further company attracting controversy is United Oil & Gas (UOG), where some placees who were sitting on losses have gone on a ramp. The claims being made on social media were so excessive that the company was forced on Friday afternoon to issue a RNS disclaiming them and emphasising that sustainable production rates could be significantly lower than the initial test. The group responsible for the statements which prompted the RNS has previously been distributing other misleading information and I would strongly suggest taking the time to read carefully and understand fully all the RNS announcements from United Oil & Gas and Rockhopper Exploration (RKH). On the brighter side for those stuck in at higher levels, if the pump continues to work temporarily, it could provide an opportunity to get their money back.
More realistic news from Touchstone Exploration (TXP) which announced strong test results from its COHO-1 well, plus an oil discovery. In the New Year, they're going to comprehensively test the the Cascadura-1ST1 well and, if the findings are positive, it will set up a development drilling program. Still to be resolved though is how this would be funded.
Union Jack Oil (UJO) and Reabold Resources (RBD) announced that extended well test operations are to be recommenced following receipt of the required regulatory approvals. The market was not impressed unfortunately and the share prices of both companies dipped, although Union Jack looks to be the firmer of the two now.
Solo Oil (SOLO)’s production acquisition is looking uncertain. They’re now trying to renegotiate terms with ONE Dyas to reflect changes since signing, but there are no guarantees that new terms can be agreed and the deal may not proceed. No market changes here though since the shares currently are suspended.
Prospex Oil & Gas (PXOG) announced the possible acquisition of a minority stake in a Spanish gas power project. They say they believe their current market cap represents a fraction of Prospex's underlying value, unfortunately, the market probably won’t believe that and the financing for all this is likely to be at an even lower price next time.
Echo Energy (ECHO) announced mobilisation of the rig to drill the Campo Limite exploration well, which is due to spud before year end. The operator’s estimated volumes for gross gas initially in place for the Campo Limite area is 48.9 billion cubic feet P50 mid case. Estimated geological chance of success is 70%. Let’s see if luck changes over the New Year for this part of Mr. Parson’s self styled “holy trinity.”
I'll be back next Sunday with a full blog and podcast and if you'd like to know my actual trading ideas, then subscribe to the private blog at https://www.oilnewslondon.com/oilman-jim The next issue will be sent out on Friday.
In the meantime, I wish you all a very Merry Christmas.
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.