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Oilman Jim's Private Blog



Union Jack Oil (UJO) and Reabold Resources (RBD) announced a positive update on operations and progress in respect of the planned near term drilling of the West Newton B-1 well, its subsequent testing and the completion of the extended well test at the A-2 well. Initial drilling operations at B-1 are expected to commence in the next few weeks and the combined testing programme at both the B-1 and A-2 wells will follow the B-1 drilling. Union Jack (along with Egdon Resources (EDR) and Europa Oil & Gas (EOG)) issued other news regarding Wressle and Reabold issued a further announcement regarding Romania, but from a share price perspective, it’s the forthcoming events at West Newton that matter.

Hurricane Energy (HUR) delivered further bad news. Their technical committee has concluded there is a reasonable probability that the oil water contact in the Lancaster field is shallower than the range of oil water contacts envisaged in the 2017 Competent Person's Report. Consequently, Hurricane believes there is a risk of a material downgrade to estimated reserves attributable to the Lancaster Early Production System, and that there will also be a material downgrade to estimated contingent resources across the West of Shetland portfolio. I did warn readers.

Bahamas Petroleum Company (BPC) and Columbus Energy Resources (CERP) announced the completion of their merger. The big event coming up is the drilling of their Bahamas licence, subject of course to finance. Let’s see if they can do it without convertible loan notes. The merger also is of interest to Predator Oil & Gas (PRD), who are hoping to get hold of their Trinidad assets on the cheap.

United Oil & Gas (UOG) announced it has been assigned Tullow's 80% equity in the Walton Morant licence for a nominal fee, leaving United as operator and 100% equity holder. The initial exploration period has been extended for 18 months by the Government of Jamaica and a work programme is underway. The hope is to find a farm-out partner prior to 31 January 2022, when the final drill-or-drop decision is required, something which to date has eluded both United and Tullow.

Red Emperor Resources (RMP) announced its AIM Rule 15 cash shell status. For those unsure what that means, it is required to make an acquisition which constitutes a reverse takeover within six months from 21 July 2020. Alternatively, it can seek to become an investing company, which requires among other things the raising of at least £6 million. If neither of those happens, the company's shares will be suspended from trading. If a re-admission transaction has not been completed within a further six month period, admission to trading on AIM of the company's shares will be cancelled. It might sound boring and technical, but it’s important to know this stuff to avoid ending up with suspended or delisted shares that are effectively worthless, which often can happen to the unwary who are ramped in prior to the suspension. Fortunately, Red Emperor is in a good position, with cash at bank of approximately A$4.6m at the end of June and its next announcement is awaited with interest.

I3 Energy (I3E) announced a proposed £30 million fundraise to finance its acquisition of Canadian production. The offer is at 5p per share, but the millions upon millions of repriced warrants issued to note holders and management and now exercisable at 0.01p per share remain in place. It’s a massive avoid in my opinion.

Canadian Overseas Petroleum (COPL) announced that ShoreCan and Essar Mauritius have signed definitive agreements resolving their dispute. This is an important announcement for Canadian Overseas since they end up with an effective 5% carried interest on all costs relating to the drilling of the first well on OPL 226. They also have the option to increase their interest to 15% by paying their additional pro-rata share of the costs, which is exercisable within 90 days from the completion of the first well. It’s now down to valuation.

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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.

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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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