The (highly profitable) wait is over for shareholders in Predator Oil & Gas (LSE PRD), which announced last Wednesday that the Star Valley Rig 101 is now under contract and is being mobilised to Guercif to drill the MOU-1 well. Predator will issue a further update when drilling operations commence in the next day or two and, thereafter, drilling is estimated to take 14-20 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 closed at 15.75p on Friday.
Meanwhile, embracement of the energy transition continues apace. Scirocco Energy (AIM SCIR), owner of a 25% working interest in the Tanzanian Ruvuma gas project alongside Aminex (LSE AEX OTC AEXFF) which owns a 25% carried interest in that venture, announced its proposed investment into Energy Acquisitions Group, the first investment as part of Scirocco's revised strategy that targets opportunities within the energy transition in Europe. Energy Acquisitions will use the funds to acquire 100% of Greenan Generation and its 0.5 MWe anaerobic digestion plant in Northern Ireland. The plant creates biogas, a renewable energy source, and this is the direction in which SCIR now aims to go, targeting investment in a pipeline of such plants in the UK totalling around £30 million in value.
Scirocco also owns a small interest in Helium One (AIM HE1 OTC HLOGF), which aanounced the commencement of an exploration drilling programme at its 100% owned Rukwa project in Tanzania. Tai, a “must drill” three-way dip closure, is first and will be followed with two further exploration wells. These types of projects are now much more appealing to the market than conventional oil and gas, as demonstrated by HE1’s £112 million market capitalisation, and we now see companies such as even Mosman Oil & Gas (AIM MSMN) trying to profile themselves as being in this business.
Other questionable companies are jumping on the energy transition bandwagon too, as we saw recently with UK Oil & Gas (AIM UKOG OTC UKLLF) claiming to be “actively scoping” two new geothermal projects in the UK, together with a hybrid geothermal, solar and battery storage project at Horse Hill. UKOG was joined last week by Block Energy (AIM BLOE) which announced it had engaged engineers to "assess and potentially develop” geothermal, carbon capture, and hydrogen applications across their fields in Georgia. The actual commerciality of any of this is not discussed.
Chariot Oil & Gas (AIM CHAR OTC OIGLF), which now identifies as a “transitional energy company,” announced a change of name from Chariot Oil & Gas to simply Chariot. Of greater consequence, CHAR also announced that in addition to gross proceeds of $16.5 million (£11.7 million) raised through a placing of and subscription for new ordinary shares at 5.5p, its open offer has conditionally raised total gross proceeds of approximately $2.3 million (£1.6 million). More on CHAR OIGLF in the private blog.
Zephyr Energy (AIM ZPHR OTC VNHLF) announced updated Paradox project financials. Unfortunately, it slightly tarnished the credibility of these by “using a flat oil price of US$70 per barrel of oil equivalent” which values any gas component at more than 3.5 times its price. Zephyr is another one that is “greening” itself and announced the previous week that it “pledged to achieve 100% carbon-neutral operations by 30 September 2021,” to be achieved primarily by buying verified emission reductions.
ZPHR, like many other AIM companies, has recently applied to join the OTC QB, although in its case it already has a US trading symbol, VNHLF, and already trades on the OTC as a Pink. The QB upgrade costs $14,000 a year, plus a $5,000 application fee, but it’s difficult to see the actual need to “up-list” when companies such as 88 Energy (AIM & ASX 88E OTC EEENF) have been able to achieve a $1 billion daily volume on the OTC just as a Pink. It’s exactly the same trading system with exactly the same market makers regardless of designation and market success there really comes down to whether or not the companies know how to crack the promotional side. More on 88E EEENF in the private blog, where it’s been covered from the 0.40s and subsequently reached a high of 4.7p in March this year.
Eco (Atlantic) Oil & Gas (AIM ECO TSX EOG.V OTC ECAOF) announced a Guyana operational update. Eco says it is "ready and prepared to drill a well in 2022, subject to approval by the JV.” The question, of course, is Tullow Oil (LSE TLW OTC TUWLF)? An even more interesting question is what will happen tomorrow, when Hurricane Energy (AIM HUR OTC HRCXF) returns to ask the court to approve the restructuring and "cram down" the shareholders? Can the shareholder group, led by Crystal Amber Fund (AIM CRS), defeat or delay the Hurricane board with an alternative plan? The share price is now 1.2p and as regular readers know I’ve been warning about HUR all the way from the low 30s down.
Finally, i3 Energy (AIM I3E TSX ITE.V) announced 2020 year-end reserves for its Canadian subsidiary. Before-tax net present value of cash flows attributable to the proved reserves, discounted at 10%, is $97 million, more or less the same as the market capitalisation. The number for the proved and probable is $183 million. In addition to developing existing assets, i3E also is starting to make further production acquisitions and states an intention to become a dividend payer. This one is starting to gather quite a large following, particularly in Canada, but the key question here is that following the North Sea debacle, can the management really be trusted? More on I3E in the private blog.
In the private blog this evening, CHAR OIGLF 88E EEENF ADV IOG DELT LBE PRD AEX AEXFF TRP RTWRF PVR PVDRF LOGP PPC PPCGF HUR HRCXF CRS and I3E ITE.V (but please note that commentary on all of these is not necessarily positive). More on that at: https://www.oilnewslondon.com/oilman-jim
Contact me on Twitter @Oilman_Jim
Click “SUBSCRIBE” to receive these blog posts by email
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.