It’s been an interesting week, with some very good news and some very bad. To start off, Savannah Petroleum (SAVP) was able to announce that, at last, it has completed the Seven Energy transaction. This now gives Savannah a material producing asset base to complement its Niger exploration and development assets, in respect of which it aims to recommence activity in 2020, with expected delivery of first oil from R3 East and a multi-well exploration drilling campaign. This was financed by institutions two years ago at 35p per share and I expect to see the share price now start to work its way up from the current level of 26p.
Reabold Resources (RBD) and Union Jack Oil (UJO) advertised upgraded potential volumes at West Newton in a pre market RNS first thing Monday morning and spiked the early buyers. Union Jack slid down from nearly 30p to under 20p by the end of the week and the coup de grace was delivered just after market close on Friday when it announced that it is in the process of taking market soundings from investors in regard to an equity placing of up to £5 million. Investors are not happy and are hoping that it’s not below the last placing price of 17p. More on what’s going on here in the private blog.
Amerisur Resources (AMER) announced a recommended cash acquisition by GeoPark Colombia. Each Amerisur Shareholder will receive 19.21p cash per share. It’s less than people were hoping for, but significantly higher than the 12.1p price at which the shares were trading before bidding opened. It’s also a small profit for those who bought in the 17s and 18s over the last few months. The board undoubtedly tried for a better price (directors and institutions were in much higher) but South America is not the best place to be right now unfortunately.
Anglo African Oil & Gas (AAOG) reported that it has entered into a rig option agreement, but the rig might not be available until 30 March 2020. Unfortunately, November turned out to be the date for a rig agreement, not the rig arriving as investors had hoped. The problem for them though is that paying for the drill depends on Riverfort selling shares at a higher price than now and how does that situation come about? Slippery language isn't working anymore for these companies and I see only one way for the Anglo African share price now, which is to decline further. I’ve been warning about this one all the way down from just under 20p and the shares hit an all time low of 2.4p on Friday.
On a brighter note, UK Oil & Gas (UKOG) announced the successful completion of its Horse Hill horizontal drill. A total of approximately 2,500 ft of horizontal trajectory was drilled within the reservoir's most oil productive zone, which gives around 70 times greater exposure than in the vertical discovery well. This is why HH-2z is capable of delivering significantly greater flow rates than those seen in the vertical well. HH-2z is now being prepared for an extensive extended well test, which is expected to commence in the coming weeks and I expect to see some impressive numbers being reported here soon.
Sound Energy (SOU) announced that James Parsons and Simon Davies have confirmed their decision to leave the Company. This follows on from the announcement that the CFO is leaving and not being replaced. Last week's announcement was deliberately drafted to make people think the sale of the Morocco assets is a certainty. So, it's the end game here now and it appears that they're trying one last ramp before lights out.
Interesting developments at Cadogan Petroleum (CAD). Requisitioning shareholders had an overwhelming majority (93.08% to 6.92%) at the general meeting, thus Adelmo Schenato and Enrico Testa have been removed as directors of the Company with immediate effect, Fady Khallouf, Lilia Jolibois and Jacques Mahaux have been appointed to the board, Zev Furst has tendered his resignation as a director, Fady Khallouf is succeeding Guido Michelotti as CEO of the company and Michel Meeus, a non-executive director of the company and one of the requisitioners, has been appointed as chairman. One of the complaints against the old board is that the company has continuously underperformed and the company’s share price has not materially improved in recent times. The market capitalisation is £13 million and net assets (including around $14 million cash) are nearly $52 million, so there is significant upside here.
Eco (Atlantic) Oil & Gas (ECO) announced an update on the initial analysis of the Jethro and Joe wells and the share price more than halved. This is a prime example of why you should never fully believe any of these companies - and always take profits or de-risk. This is a permanent statement in the blog and I really can't emphasise the importance of this enough. All I can say in this case is that it is inconceivable that Tullow Oil (TLW) and hence ECO did not know it was heavy oil before the announcement. Remarkably, indeed shockingly, Gil Holzman, CEO, was promoting ECO to private investors at a London South East promotional event the day before. If you believe people can be judged by the company they keep, then him sharing a promotional platform with Matt Lofgran of Nostra Terra Oil & Gas (NTOG) possibly says it all.
Coro Energy (CORO) and Empyrean Energy (EME). announced their Tambak-1 well intersected the intra-Muda reservoir of the Mako field as expected and data have established the well as a successful appraisal of the Mako gas field. The interesting part is coming up for CORO and EME, since their Indonesian well now will be drilled to a total depth of around 4,005 feet to test the potential of the Tambak prospect, which is estimated as having a mid-case prospective resource potential of 250 Bcf and a geological chance of success of 45%. The impact of this drill to date has actually been negative for the share prices of both companies, but perhaps an exploration success can galvanise them.
On the subject of Indonesia, Baron Oil (BOIL) announced that it has entered into a non-binding agreement to acquire SundaGas, which owns the Chuditch Block, offshore Timor-Leste, and the Telen Block, offshore Indonesia. The vendor will receive 66.67% of Baron before the fundraising. There is no indication yet as to what type of financing they will do, for what amount and at what price, so we’ll have to wait for the details to form an assessment. The shares are now suspended pending the publication of an admission document.
Finally, there’s been a lot of interest in the new private blog and some confusion too, so let’s try to clarify everything. Currently I record two podcasts each week, one mid-week and one at the weekend, and I write a blog on Sunday. All these remain the same, unchanged and free of charge. The private blog contains the information which cannot be published in the public blog and podcasts due to legal constraints and it also includes my actual trading ideas with full reasoning. It is sent out immediately by email as events dictate so you receive the information straight away. There is a charge for the private blog, but I think you’ll find the information within it is worth many times its cost.
For those who are not familiar with me, I focus exclusively on small cap oil and gas companies and 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. It's not investment advice that I offer and if you want that, you should speak with a financial advisor. I share my take on companies and the markets and, as those who follow me know, I'm rarely wrong about these matters. This is the link to subscribe: https://www.oilnewslondon.com/oilman-jim
In other news, Oilex (OEX) announced an extension of the bid closing date for Cambay, Aminex (AEX) issued a Ruvuma joint statement with Solo Oil (SOLO) who also announced the appointment of an independent non-executive director, Columbus Energy (CERP) announced a medium term funding agreement and the extension of the Inniss Trinity IPSC, SDX Energy (SDX) announced the commencement of production at South Disouq and a directorate change, Predator Oil & Gas (PRD) announced a CO2 EOR Trinidad update, Alba Mineral Resources (ALBA) announced a Horse Hill update, Echo Energy (ECHO) announced the completion of an acquisition, Range Resources (RRL) announced a continuous disclosure update and a Trinidad tax appeals update, Canadian Overseas Petroleum (COPL) announced Q3 2019 results, Touchstone Exploration (TXP) and Serinus Energy (SENX) announced third quarter 2019 results, President Energy (PPC) announced the expiry of Decree 566 and oil prices in Argentina returning to normal, Zenith Energy (ZEN) announced the filing of quarterly results, Lekoil (LEK) announced the acknowledgment of the OPL310 licence extension payment, The Parkmead Group (PMG) announced preliminary results for the year ended 30 June 2019, Cabot Energy (CAB) announced directorate and management changes and Angus Energy (ANGS) announced a Balcombe update.
Contact me on Twitter @Oilman_Jim
Click “SUBSCRIBE” to receive posts by email
The author holds 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.