The board of Hurricane Energy (AIM HUR OTC HRCXF) continues to taunt shareholders with warnings of their company’s imminent demise. Latest was the announcement on Friday that the directors have resolved not to exercise the company’s option to extend the bareboat charter of the Aoka Mizu FPSO for a period of three years from June 2022 to June 2025. The charter thus will expire in June 2022 and, should Hurricane be unable to agree an alternative extension for a shorter period, it may need to pursue a controlled wind-down of its business and cease operations at the Lancaster field upon the expiry of the charter in 2022, at which point the field would be decommissioned. The share price is now 1.177p and as regular readers know I’ve been warning about HUR all the way from the low 30s down.
Longboat Energy (AIM LBE) at last announced its RTO - with three separate counterparties. It’s acquiring a significant, near-term, low-risk exploration drilling programme on the Norwegian Continental Shelf, which is structured as three farm-in transactions. This is being funded by a proposed £35 million equity financing, the net proceeds from which will be used to finance the consideration for the farm-ins and costs associated with the drilling programme. Key will be the pricing of the placing. More on LBE in the private blog.
Continuing offshore, Jersey Oil & Gas (AIM JOG OTC JYOGF) announced a Greater Buchan Area Development Project operational update. The Concept Select Report has now been issued to the UK Oil and Gas Authority and the preferred development concept is for a fully electrified “Net-Zero” solution, estimated to emit carbon at a rate of less than 1kg of CO2 per barrel of oil equivalent produced, which Jersey says is significantly below the North Sea average of approximately 22kg of CO2/barrel of oil equivalent. The most important point in terms of anything ever actually happening with the project is JOG’s confirmation that a farm-out process is now underway with broad interest and participation from multiple parties.
Predator Oil & Gas (LSE PRD) announced operational highlights for the MOU-1 drill and a placing to raise £1.5 million at 15p. Proceeds raised are being assigned to evaluating and potentially acquiring rights to new business opportunities that the company has recently identified. Meanwhile, the estimated spud date for the MOU-1 well is between 15 and 27 June 2021 and drilling is estimated to take 14 to 20 days. More on PRD in the private blog, where I’ve been covering it every week since December 2019 from as low as 1.3p. It got as high as 22.5p on Friday.
IGas Energy (AIM IGAS OTC IGESF) announced the grant of planning consent for its Stoke-on-Trent geothermal project. It’s an interesting project that is expected to supply zero carbon heat to the city for many years to come. A new industry report, on the economic and environmental importance of the UK deep geothermal resource by the ARUP Group and REA, estimates that, with immediate government support, the UK could deliver 360 geothermal projects by 2050. IGAS could perhaps start carving a niche for itself here.
PetroTal (AIM PTAL TSX TAL.V OTC PTALF) announced 2021 first quarter financial and operating results. Net income for the quarter was $30.9 million against a net loss of $31.4 million in the first quarter of 2020. PetroTal now estimates it is operating materially above the original $90 million EBITDA budget for 2021 which assumed $50 / barrel Brent. Excluding hedging and true-up revenue, it is estimated that for every $1 a barrel above $50 / barrel Brent, EBITDA increases by $2 to $2.5 million, making PTAL potentially free cash flow positive for 2021. I mentioned PetroTal positively last November at 7.6p, after having been rather negative from the low 30s down. It’s now 15p.
Savannah Energy (AIM SAVE OTC SVNNF) announced a proposed acquisition, reverse takeover and suspension of trading. Savannah is in what it says are advanced exclusive discussions with ExxonMobil with respect to the proposed acquisition of its entire upstream and midstream asset portfolio in Chad and Cameroon. The proposed acquisition would include a 40% operated interest in the Doba Oil Project, and an effective c. 40% interest in the Chad-Cameroon oil transportation pipeline (for information, in 2020 the Doba Oil Project produced an average gross 33,700 barrels of oil per day and the Chad-Cameroon pipeline transported a gross 129,200 barrels of oil per day). The transaction would be classified as a reverse takeover, thus trading has been suspended, although there is no assurance that agreement between the parties actually will be reached.
Finally, Petrel Resources (AIM PET) announced preliminary results for the year ended 31 December 2020. It’s the usual tale of woe from chairman, John Teeling, who now says the company’s focus in the immediate future will be Iraq. Possibly of more potential benefit to shareholders is the statement that at the same time the company will open discussions with groups in other jurisdictions who might see Petrel as a way to monetise their oil and gas assets. I highlighted PET as a favourite several times in 2019 around 1p and it subsequently went as high as 26.5p on such “discussions.” It’s currently 2.6p, still up over 150%.
In the private blog this evening, CHAR OIGLF ADV IOG DELT LBE 88E EEENF PRD AEX AEXFF TRP RTWRF PVR PVDRF (LOGP) HUR HRCXF and SAVE SVNNF (but please note that commentary on all of these is not necessarily positive). More on that at: https://www.oilnewslondon.com/oilman-jim
Now, for United States readers and those in the UK and elsewhere who are interested in something different, I’ve just published the US Special Trading Course version.
The OTC Market, a US equivalent of AIM, differs from the UK in a significant number of respects, but some of these differences offer very significant advantages to the investor:
Unlike the UK, not all stock is tradable, in fact often just a small part of the total issued share capital can be bought and sold. Directors’ and control parties’ (affiliates’) stock is restricted and holding periods (6 months to 24 months for newly issued shares) mean that, unlike in London, they can't just do a placing and sell the stock straight into the market.
Strict disclosure requirements ensure much more information is out in the open, allowing for a far better assessment of the underlying realities of the companies.
Stronger regulation on the OTC now prevents most of the AIM type abuses which so disadvantage private investors. As just one example, promotional compensation needs to be disclosed (something which is strictly enforced), so you actually know what is independent commentary and what is paid for fluff. Names of all those undertaking promotional activity for the company now also have to be disclosed, removing many of the bad actors from the arena, the likes of which we see all the time in the UK touting worthless AIM companies for payment on their podcasts and in social media.
Crucially, without distributions and underwriters quietly active (something else we see all the time in London) stock prices move much further and faster.
The course is in 8 parts and you can check out the first part for just $1. Thereafter, it's $19.50 a part each week for the next 7 parts. You can cancel at any time.
There is also a Bonus section sent to you free of charge at the end of the course explaining all the oil and gas public company deal types, with particular reference to which are the best ones. For those interested in this sector, it could prove rather valuable.
Total cost equivalent in Sterling for the course is approximately £97. More information here: https://www.oilnewslondon.com/course
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The author may hold 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.