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Oilman Jim's Private Blog



Pantheon Resources (PANR) announced the spudding of the Talitha #A well on the North Slope of Alaska. PANR estimates the well will target in the region of a billion barrels of recoverable oil potential across the multiple stacked primary and secondary objectives. Drilling and testing operations at Talitha #A must be completed prior to the onset of Spring when temperatures warm up and the ice road begins to thaw. Historically, the drilling season ends late March. Let’s see what happens.

Bahamas Petroleum Company (BPC) issued a lengthy announcement headed “Funding Strategy: Reconciliation & Put Option” which I doubt many will read in full. Bottom line is that large numbers of shares are being and will be issued. Perhaps OK if the well comes in, but the Perseverance #1 has a very low chance of success and failure could result in a share price bloodbath. The profit to be had here would have been in the run up to the spud, but their financing approach prevented any such run happening.

88 Energy (88E), due to start drilling its Alaska well next month, announced the purchase of the Umiat Oil Field located on the North Slope. This is an old field drilled in the 1940s and was previously classed as non-commercial. 88E must see it differently. The share price got up to over 0.66p following the news, more than double the recent 0.33p placing price.

Independent Oil & Gas (IOG) announced a corporate and operational update. Phase 1 remains on schedule for first gas in Q3 this year. The Blythe and Elgood offshore pipelay campaign was executed in Q4 2020, detailed well design will complete in this quarter and the first development well is expected to spud by early Q2. Platform fabrication also is expected to complete in Q1, before installation in Q2 and the gas sales tender process is being prepared, with ECC appointed as advisor. It looks like they’re getting there.

PetroTal (PTAL) announced a contemplated $100 million bond issue and an operations update. Subject to, among other things, market conditions, a new $100 million senior secured three year bond issue may follow. The proceeds of the potential bond issue will be used to settle in full the cumulative oil price difference liability owed to Petroperu (approximately $16.6 million), to finance the ongoing development of PTAL's Bretana oil field, to provide funds to support the company's hedging program and to finance potential synergistic acquisitions. They also announced that oil production has increased to an average of 10,025 bopd, with optimisation continuing. I mentioned PTAL positively a number of weeks ago at 7.6p, after having been rather negative from the low 30s down. It’s now more than doubled to 16.25p.

Hurricane Energy (HUR) announced a trading and operational update. Production for the final four months of 2020 averaged 12,500 bopd. Revenue for the year ended 31 December 2020 was $179 million and year-end net free cash was $106 million. HUR is currently engaging with its stakeholders on a proposed development plan for Lancaster and, as pointed out in their December announcement, suitable funding arrangements will need to be entered into, which Hurricane says present a risk of dilution to existing shareholders from a possible restructuring and/or partial equitisation of the convertible bonds. If no agreement can be reached with the stakeholders on additional investment, the field may then be decommissioned, with potentially no value returned to shareholders. Like PTAL, HUR is another one I was cautioning about from the low 30s down. Unlike PTAL, I did not see a recovery point for HUR and its share price is now down to just over 2.5p.

Union Jack Oil (UJO), Egdon Resources (EDR) and Europa Oil & Gas (EOG) all issued announcements regarding Wressle. The work-over rig has been mobilised and operations to re-complete and re-perforate the well have commenced. Operations are expected to be completed to enable the Ashover Grit reservoir to be flowed prior to the end of this month. It’s expected to produce 500 bopd, increasing UJO’s net production by 200 bopd and EDR’s and EOG’s by 150 bopd each, when fully on stream. This, though, is now more or less discounted in these companies’ share prices and upside for the higher capitalised UJO and its joint venturer, Reabold Resources (RBD), now depends upon the outcome of flow testing the West Newton wells.

UK Oil & Gas (UKOG) announced a Horse Hill oil field update. The flagship HH-2z horizontal oil production well is now being reconfigured into a water re-injection well. I expect focus will now shift onto their “potentially transformational” Turkish drilling campaign and that Horse Hill (plus all the other complicated UK oil and gas assets) will quietly be forgotten. In that connection, formal Turkish government consent for UKOG's acquisition of a 50% interest in the Basur-Resan licence has now been granted via official decree. Their announcement on Friday sings the praises of Turkey’s operational environment. It will be interesting to see what they have to say about it in a year’s time.

Tower Resources (TRP) announced a placing at 0.325p to raise £1.25 million. As always, the company is continuing discussions with potential farm-out partners for its Thali license in Cameroon and hopes to have a more substantial announcement to make in due course. MetalNRG (MNRG) announced completion of its oil and gas transaction. Unfortunately, it turns out not to be very exciting and the news had little market impact. Finally, Wildcat Petroleum (WCAT) announced the appointment of Pello Capital to support their efforts to market Wildcat to new investors. They seem to have done quite a good job and WCAT hit 1.57p on Wednesday, up several times from the price when I first mentioned it a couple of weeks ago.

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For those who are not familiar with me, I focus exclusively on small cap oil and gas companies and I know this sector inside out. I have been involved in the stock markets (both UK and US) since the early 1980s and understand exactly how the finance and promotion game works. I also have many years’ operational and corporate experience in the oil business, which enables me to see very quickly whether or not these companies are telling the truth. I share my take on companies and the markets and, as those who follow me know, I’m rarely wrong about these matters.

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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.

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