Interesting week. Reabold Resources (RBD) initiated a take over attempt for Deltic Energy (DELT), effectively saying to their shareholders swap your cash for a share of our assets. The DELT board was unimpressed and retaliated, saying they had a detailed understanding of a number of Reabold's investments, in particular, the West Newton project, which gave them serious concerns in relation to the technical viability, materiality and limited potential upside associated with various of these projects. Essentially what I’ve been saying about RBD and its assets for some time from much higher share prices than today.
DELT’s assets aren’t great either (Shell really only paid option money for its interests), but it does have a substantial cash balance, which is what RBD is after. It would appear Reabold are unable to carry out any further substantial placings now, perhaps because none of their “investments” have returned one single penny for the shareholders. But salaries (£600,000 each for the couple running it) have to be paid and DELT’s cash is needed.
Union Jack Oil (UJO) was collateral damage. Having got the share price nicely up on the back of a decent director buy, DELT’s statement pushed it back down. It’s a timely reminder though that these types of companies really should be seen only as plays on upcoming drills. Of course, they can be good. UJO’s shares have more than trebled in the last few months and I explain in my new book exactly how to spot these types of companies in advance, while at the same time excluding any potential loss makers. UJO was featured in the private blog a few months ago at less than one third of its current price.
A few changes in this blog. I’m going to reduce commentary on the small, lifestyle companies, unless there’s something particularly interesting or important upon which to comment, so it’s goodbye to the likes of AAOG, AST, MSMN, NTOG, ZEN, etc. Some do have amusement value, but they shouldn’t be legitimised or given an appearance of equivalence by being covered alongside other companies in the blog which have actual, potentially commercial, operations and projects. Also, henceforth, any comments about individuals will be in the private blog only. I'm also eliminating the podcast (which is essentially just a spoken version of the blog) and instead will put out on Twitter a possibly more useful two minute audio summary at the end of the day.
Back to the companies, UK Oil & Gas (UKOG) announced it has completed the purchase of the Horse Hill surface production equipment for £1.65 million. Interestingly it’s being paid as would a convertible loan note, so plenty more potential dilution to come.
Providence Resources (PVR) reported that Thomas Anderson holds 28.7 million shares, representing 3.4% of the issued ordinary share capital. The PVR share price has been firm of late, possibly indicating good progress in the Barryroe farm-out discussions.
Lekoil (LEK) announced execution of agreements covering the comprehensive infrastructure upgrades and field management services in relation to the planned upstream drilling programme in Nigeria. This one will all come down to the terms of the financing.
Actual financings announced were from Canadian Overseas Petroleum (COPL), which issued 68.5 million shares at 0.3p in a debt to equity conversion and Upland Resources (UPL) which announced a capital raise for its Asian and North African initiatives in the amount of £470,000 at 0.7p. Both though will require much more.
Predator Oil & Gas (PRD) announced the board appointment of Louis Castro, former chief finance officer at Eland Oil and Gas. The main news that’s awaited here is regarding the Morocco drill rig mobilisation. ADM Energy (ADME) announced the appointment of two oil and gas veterans, Darrell McKenna and Dr Satinder Purewal, as non-board advisory members to the company's technical team. They say big news is awaited.
President Energy (PPC) announced a drilling and work-over update. This is one I was warning about when it was being ramped to around 2.5p pre-placing when the oil price was down. The oil price has now recovered, but President’s share price has collapsed. What’s going on in these situations is something else I explain fully in the new book.
Enwell Energy (ENW) announced the spud of the SV-25 well. It has a target depth of 5,320 metres, with drilling operations scheduled to be completed by the end of the first quarter of 2021, eight and a half months away. For those wondering why it takes so long, the time to drill a well increases almost exponentially the deeper it goes.
Trinity Exploration (TRIN) issued a Q2 2020 operational update. Production levels were maintained and with operating breakeven at $22.60 a barrel, the company is now contemplating new investment opportunities. They want to focus on scaling the business.
Eco (Atlantic) Oil & Gas (ECO) announced audited results for the year ended 31 March 2020 and an update. It plans, subject to JV partner approval, to drill at least two exploration wells into light oil targets in 2021. This of course currently is aspirational, but let’s see.
Aminex (AEX) announced that the parties have agreed to extend the long stop date for satisfaction of the conditions to the farm-out from 14 July 2020 to 31 July 2020. Aminex and ARA Petroleum Tanzania remain hopeful that government approval for the farm-out will be received this month. The announcement is of relevance to AEX’s working interest partner, Solo Oil (SOLO), too.
My new book, mentioned above, explains exactly how it all works and exactly how you can make money out of these markets, using a method where risk doesn’t actually matter in the end from a trading perspective. The book is exceptionally frank and I think virtually all will find it extremely useful. You’ll certainly learn a lot. Details of how you can obtain a free copy and a trial of the private blog are at https://www.oilnewslondon.com/oilman-jim
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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.