A short week, but plenty of interesting news. Rockhopper Exploration (RKH) announced final results. At 1 April this year, it had $21.9 million cash, having sold its Egypt assets, and is now focussed on the Sea Lion Falkland Island development. Market capitalisation is £35 million; net assets per the balance sheet are $396 million.
88 Energy (88E) announced a large condensate discovery, unfortunately Premier Oil (PMO) viewed it as non-commercial and decided to exit. That's the oil business and prudent traders don’t hold for the end result. I highlighted 88E as a favourite several times around 0.7p and it more than doubled to over 1.4p. As I've always said, it's critical to take profits, de-risk and never get greedy.
Chariot Oil & Gas (CHAR) issued a strategic update. They now intend to focus on monetising near term potential of the Lixus licence and maximising value for investors by developing a Moroccan gas business. Their 2019 year-end unaudited cash position was $9.6 million, with no debt and no remaining work programme commitments. Market capitalisation is £7 million.
RockRose Energy (RRE) delivered a strong set of results. At the year end, total cash was $375.5 million, of which $59.7 million was restricted. Pro forma adjusted earnings before interest, tax, depreciation and amortisation was $162.4 million. The Company's current expectation is that in 2020 unit operating costs will fall to below $30 per barrel of oil equivalent. With its heavy burden of upcoming decommissioning costs, RRE remains a highly geared play on oil and gas prices.
After the Chinese debacle which knocked the share price to the floor, Providence Resources (PVR) has now agreed non-binding and non-exclusive heads of terms with the Norwegian company, SpotOn Energy, in relation to the farm out of the Barryroe oil and gas field. SpotOn has been given a period of exclusivity until 31 October 2020 during which time they will agree an appraisal work programme for the Barryroe field and develop commercial terms with the aim of concluding a binding farm out agreement. As a sign of good faith, they put up £300,000 of a £2.7 million fundraising at 1.5p, which will fund PVR through to April 2021, Barryroe 20% partner, Lansdowne Oil & Gas (LOGP), already being funded through to the end of this year. It's a step forward, but very far from conclusive.
In contrast, Canadian Overseas Petroleum (COPL) appears to be taking a step back. The joint venture company which owns OPL 226 is being sued by Essar Mauritius, who are claiming $63 million of damages in respect to amounts invested in the OPL 226 project. Unfortunately for COPL, the claim has been filed in the High Court of Justice of England and Wales, where the judges are unlikely to be persuaded by the usual type of statements made by Mr. Millholland. Could eventually be lights off here now.
Nostra Terra Oil & Gas (NTOG) had a busy week with four announcements. Looks like Matt Lofgran is going to save his salary by taking 10.8% of the company for £80,000. The latest placing has been done at just 0.25p per share, but none of that matters. The value to those involved lies in virtually always being able to raise money just by lowering the share price at which that is done. That’s the worth of a public listed company to those who control the board, its ability to raise cash and keep paying them, and that’s why people fight to get control of these things.
To keep us all further amused, Zenith Energy (ZEN) announced a quick £525,000 placing at 0.7p, while waiting for the 2.5p "premium placing." This company appears to raise money almost every single week, but what actually happens to all the cash? I suspect this will all end in tears.
Ascent Resources (AST) says that the defaulting placee has agreed to pay up. Guess they must now have been promised that those in charge can ramp them out of it. To that end the receipt of a letter of intent for litigation funding was announced. It doesn’t amount to anything at all, in fact it’s barely worthy of a RNS and could even be said to be misleading, but at least it gives those who promote these things at the bottom end of the market something to talk about and try to get the dissatisfied 5p placees out. Hasn’t worked yet though. All involved here are tired and starting to look like they’re past it now.
Block Energy (BLOE) is mothballing West Rustavi. The whole thing is, and always has been, completely unviable. I've been calling this one out as a scam for a year now and, despite personal attacks plus threats from people connected to the company, I've continued to state my views firmly. Following yesterday's announcement, I suspect Block will just fade away now. Interestingly, shareholder Georgia Oil & Gas (of the British Virgin Islands) was selling before this announcement, just as it has done immediately before previous bad news. It’s now trading around 10% of last year’s placing price.
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I’ve been involved in the markets for a long time. I bought my first shares in the 1970s and I’ve worked in the financial sector since the early 1980s. My particular knowledge is of the stock markets and I’ve been actively involved in these, both in the UK and the US for over 40 years from both sides of the fence. I’ve also had significant involvement in the oil and gas industry along the way, from drilling wells to negotiating farm-outs to majors.
Small cap speculative companies exist to enrich their insiders, not their public investors, and everything those involved do is for their benefit, not yours. The vast majority lose with these companies, but some do profit and you can be one of those too. The link is https://www.oilnewslondon.com/trading
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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.