Chinook reported 2Q19 financial and operational results that were largely in line, though can be summarized through the negative $1.7 mm in funds flow reported (CFPS -$0.01 vs. GMPFE -$0.01 vs. consensus $0.00). The corporation estimates total unbridled standing capability of ~4,000 boe/d, though current output is zero, as Chinook is further touched up by the Brookfield (Enbridge) McMahon plant outage, with 100% of its output offline since July 30th (to resume August 13th).
Companies: CHINOOK ENERGY
Chinook reported 1Q19 financial and operational results that were largely in line (CFPS $0.00 vs. GMPFE $0.00 vs. consensus $0.00).
Chinook reported 4Q18 financial and operational results that were largely in line (CFPS $0.00 vs. GMPFE $0.00 vs. Consensus $0.00).
Chinook reported 3Q18 financial and operating results which were mixed, with production of 4,807 boe/d eclipsing both GMPFE and consensus estimates by >6%, while CFO of ~$2.3 mm split GMPFE and consensus estimates of $2.4 mm and $2.2 mm, respectively.
2Q18 was quiet for Chinook, with financial and operating results largely in line with consensus expectations. Volumes during the quarter were negatively impacted by maintenance issues on Enbridge’s Oak 16” gathering line, resulting in 3rd party capacity constraints. If not for this restriction, 2Q18 volumes are estimated to have been 20% higher (~5,300 boe/d), in line with GMPFE’s prior forecast of 5,025 boe/d.
Chinook reported 4Q17 financial and operating results which were in line with both GMP FE and consensus expectations. Chinook commissioned the +25 mmcf/d expansion of its Birley/Umbach compressor station in 4Q17 bringing total capacity to 50 mmcf/d. Once 3 rd party restrictions ease in April 2018e, the company will finally have capacity to produce from all 13.0 (11.2 net) wells in the region. There are no further updates with regards to formal 2018e guidance at this juncture, as the company continues to defer formal guidance until commodity prices stabilize. Maintain $0.25/sh target price and reaffirm HOLD rating.
Recall, during 2Q17 Chinook was drilling 4 (3.63 net) wells at its Birley/Umbach NE BC property. In this update, Chinook announced that the drilling and completion costs per well were expected to approximate ~$4.24mm/well, slightly ahead of our type curve drilling and completion costs of $3.225mm/well.
Chinook announced second quarter financial and operating results that were in line with expectations. In light of the Company’s strategic alternatives process, we reiterate our Speculative Buy ranking and $0.50 per share target price on the stock though aim to provide a more fulsome review with potential changes to the sum of the parts components within our NAV methodology.
Impact: Slightly negative. Second quarter results lagged our forecasts, though were largely overshadowed by the closing of a material asset rationalization late in the quarter.
Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly reversed into summer, market likely to ignore financials for natural gas producers and look ahead to winter and formalization of sell-side 2018e estimates in coming months. Spot AECO natural gas prices recently crested C$2.60/mcf, and with a reasonable alignment of previously distressed NE BC Stn2 differentials, augmented by a withdrawal expected next week, view the market psyche as constructive and looking ahead, with the analogy that this market is shaping up to mirror 2012 still holding. That said, with crude oil poised to retest support levels, combined with strong stock price performance broadly observed YTD, we would characterize sentiment as slightly pessimistic in the near-term which could reduce or unwind momentum-based investment strategies that have worked thus far in 2016.
Companies: AAV ARX BTE BNP CPG ERF POU PEY PGF PWT PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS NVA PPY PMT PNE RRX RMP SRX SGY TOG TET ATU CKE GXE IKM LXE MQL PRQ SPE SKX TVE TVL YO ZAR
Chinook announced a divestiture of its non-Montney assets to Tournament Exploration for a ~70% shareholding in a recapitalized entity, the stock of which will eventually be dividended out to Chinook shareholders. Most importantly, this now isolates Chinook as a pure Montney levered growth vehicle, characterized by production of ~2,675 boe/d (19% oil & NGLs), 18.3 mmboe 2P of reserves, and 175 (122 net) sections of Montney prospective lands, coupled with the preservation of a strong balance sheet with ~$21 mm of cash and positive working capital post-deal.Directionally, we view this deal positively, though reiterate an unchanged 12-month target price of $0.50/sh.
Impact: Positive. The transaction supports the broader corporate strategy of a Montney focused growth vehicle at Birley/Umbach and Gold Creek. We expect the Montney pure play entity ahead to look compelling in terms of resource leverage within an NAV-rich premise, though will not trade at a discount valuation over the next 18 months.
Impact: Neutral to slightly positive. We view the $7.5 mm transaction as not overly material, though a potential positive data point in terms of the current state of the broader A&D environment, which would be notionally positive given Chinooks near-term rationalization stratagem.
Chinook released first quarter financial results that were strong from a volume perspective though trailed our expectations financially.
With this publication we briefly summarize our projections for 1Q16e quarterly results for the Junior E&P (Intermediate, Mid & Small Cap) segments of our coverage universe
Companies: AAV ARX BTE BNP CPG ERF POU PEY PGF PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PMT PNE RRX RMP SRX SGY TOG TET ATU CKE GXE IKM LXE MQL RE SPE SKX TVE TVL YGR YO ZAR
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Hargreaves’ AGM statement confirms a positive start to FY21, building on the resilient FY20 performance. Trading is in line with expectations, the Industrial Services business has won a number of new contracts, and Hargreaves Land is said to be close to announcing the completion of its first plot sale at Blindwells. In our view, the shares are yet to reflect the earnings growth forecast for the next three years or the prospect of a 20p total dividend, which is expected to be paid first in FY22 as previously restricted HRMS profits are distributed. A further update on trading will be provided in early December, ahead of interims at the end of January.
Companies: Hargreaves Services plc
DGO has reported another strong set of quarterly results despite the extremely challenging operating environment. When many in the industry have been forced to decrease, suspend or eliminate their distributions, DGO has increased its dividend for the second consecutive quarter to 4¢ per share (an 11.5% dividend yield). The Q3/20 dividend represents a 7% increase on Q2/20 and a 14.3% increase in 2020. Production during Q3/20 increased 17% YoY to 107kboepd, following a full quarter of production from the Carbon Energy and EQT acquisitions. DGO's Smarter Asset Management programme continues to generate value, maintaining legacy production flat for the ninth consecutive quarter. The Company's robust hedging strategy continues to deliver results, with Q3/20 Adjusted EBITDA increasing 10% QoQ to US$75m and a Q3/20 EBITDA margin of 52%. We maintain our BUY recommendation and our price target at 138p, a 29% premium to the current share price.
Companies: Diversified Gas & Oil PLC
Trifast has released an interim trading update which highlights trends that have continued from the AGM statement in September with trading slightly ahead of the Group's base case assumptions for FY21 of revenue down c.16% YoY. September was the strongest month in the Group's first half and the press release indicates that October has also started well for sales and orders. The trading update indicates resilience in the business considering the tough trading environment.
Companies: Trifast plc (TRI:LON)Trifast plc (25D:BER)
Savannah Resources today releases its results for the period ending June 2020. Although for a mining company in development phase Interims are not so critical they do provide a useful line in the sand to assess progress. Savannah's key focus is the Mina do Barroso project in Portugal and here, despite the global pandemic, progress has been made. Firstly, The Environmental Impact Assessment (EIA) and Mine Plan have been submitted to the authorities as part of the project approval process and these updates will be incorporated into the Definitive Feasibility Study (DFS); Secondly, metallurgical test work was carried out which aids the offtake negotiations which remain ongoing; Finally, the production of the DFS remains on track for 2021. In addition to all of the project specific work Savannah has been proactive with the communities in Portugal in demonstrating the benefits a mining project will bring to the country at a local and national level as well as an agreement at a regional level with EIT InnoEnergy; this EU-linked group will help to secure commercial partners and finance for Mina do Barroso as part of the European Commission's battery initiative.
Companies: Savannah Resources Plc
Phoenix today updates its resource for the Empire deposit in Idaho after the summer's drilling (32 additional holes). The new Measured and Indicated (M&I) Resources stands at 22.9Mt grading 0.4% copper, 0.2% zinc, 10.3g/t silver and 0.32g/t gold (up from 19.3Mt grading 0.4%, 0.2%, 11g/t and 0.35g/t respectively from the last calculated resource in May 2020) plus a further 10Mt in the Inferred category at similar grades. M&I resources now stand at 173kt copper equivalent (current metal prices) against the previous M&I resource estimation at 155kt copper equivalent.
Companies: Phoenix Copper Ltd. (United Kingdom)
Since the group is in the middle of a major reorganization, the strong cash generation will help generate interest in the strategy update scheduled for 2021. The CFO stood at $10.4bn, vs $2.5bn in Q2, thanks to the oil price rebound, positive working capital movements and Shell cashing in on trading derivatives. Net debt was down by $4bn, enabling the group to announce a 4% increase in the quarterly dividend to $16.65cts.
Companies: Royal Dutch Shell Plc Class A
H1 2020 saw extreme commodity price weakness, but was still a productive period for President, especially for its balance sheet, with debt more than halving to US$15m following a placing, strategic subscription and debt-to-equity conversion. This leaves President on a sound financial footing, well positioned to ride out sustained lower prices if necessary while delivering the growth potential within its core Argentine business, further evidence of which was provided with today’s positive drilling update. We are cutting our price target by 10% to 3.5p due to lower near-term production forecasts, but this is still more than double the current share price with further operational catalysts on the near-term horizon.
Companies: President Energy PLC
Q3 trading statement
Companies: HNTIF 0YT HTG
After laying out the new strategy, the focus has shifted back to current operations. The group managed to reduce its net debt by $500m (to $40.4bn) with Brent averaging $43/bbl and particularly weak refining margins. This demonstrates the group’s ability to reach the cash balance point target of $40/bbl and hints at a buyback programme in 2022.
Companies: BP p.l.c.
Savannah has published interim results to June. The main takeaways include a 30 September cash position of £3.2m, divestment of its Oman copper assets (announced September), and the news that Savannah is working on responses to the regulator, following the latter’s initial review of the Barroso EIA (submitted in May).
The chairman’s statement is also of interest, making the point that there’s been a major change in ‘sentiment towards electric vehicles, the lithium ion industry and most recently the battery raw material supply sector’.
We would add to this statement that the debate over whether spodumene projects (hard rock lithium like Barroso) are more or less strategic than brine projects is somewhat redundant. The upcoming shortage of lithium plus the battery industry’s capital commitment to both hydroxide and carbonate means both will be required and both are at risk of shortage. We continue to recognise Barroso’s strategic importance to the European lithium battery supply chain and reiterate our 10.2p target price.
Trans-Siberian Gold's (TSG) Q320 results show improved year-on-year and quarter-on-quarter top line results, despite a reduced operational performance, largely due to higher gold and silver prices and increased tonnages. Gold grade and silver grades from the Asacha Gold Mine for the first nine months of the year are slightly lower than we had expected [due to Q1 performance]. Production levels above are expectations, which has negated the impact of the lower average grade for the first 9 months. We raise forecasts and our target price to 184p.
Companies: Trans-Siberian Gold PLC (TSG:LON)Trans-Siberian Gold PLC (UJ1:FRA)
Valeura Energy (VLE CN/VLU LN): Selling Turkey shallow – Valeura is selling its producing shallow conventional gas business to TBNG for a cash consideration of US$15.5 mm, plus royalty payments of up to an additional US$2.5 mm.
Increased estimates of of gas discovery offshore Turkey – The Tuna-1 discovery in the Black Sea is now estimated to hold 14.2 tcf (up 3 tcf compared to previous estimates).
FAR Limited (FAR AU): Financial update – FAR continues to be in default with regards to its obligations in Senegal. The company is in a default position of US$29.6 mm (excluding interest). FAR had US$59.0 mm unrestricted cash at hand at 30 September 2020.
Tullow Oil (TLW LN): Approval to sell Uganda – Tullow has received government approvals with regards to the sale of Uganda to Total. The transaction is expected to close in the coming days.
EVENTS TO WATCH NEXT WEEK
27/10/2020: Bp (BP LN) – 3Q20 results
29/10/2020: Royal Dutch Shell (RDS LN) – 3Q20 results
29/10/2020: Aker Bp (AKERBP NO) – 3Q20 results
29/10/2020: Repsol (REP SM) – 3Q20 results
30/10/2020: Lundin Energy (LUNE SS) – 3Q20 results
30/10/2020: Seplat Petroleum (SEPL LN) - 3Q20 results
Companies: FAR VLE TLW
Oil retreated as a further increase in Libyan output threatens to return more supply to a market that is already grappling with a pandemic-induced slump in demand.
Crude futures fell 1.9% in New York on Friday and posted their first weekly decline in three. Libya lifted force majeure on its Ras Lanuf and Es Sider ports and oil output will surpass 1 million barrels a day in four weeks, according to the state-run National Oil Corp. The announcement came as prospects for more Libyan output increased following the signing of a permanent cease-fire agreement.
Prices were already on the decline as talks appeared to stall on a US stimulus deal before the election, with House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin trading blame for the impasse. A deal would have injected a sorely needed boost to demand, with positive catalysts for prices harder to come by heading into the end of the year.
US benchmark crude futures declined 2.5% over the week as a resurgence of coronavirus infections spurred governments around the world to renew tighter lockdown restrictions. While comments from Russian President Vladimir Putin signalling openness to delaying a planned OPEC+ output hike helped bolster prices, the continued return of Libyan production complicates the group's tapering strategy.
West Texas Intermediate for December delivery declined 79 cents to settle at $39.85 a barrel.
Brent for the same month declined 69 cents to end the session at $41.77 a barrel. The contract fell 2.7% over the week.
Despite the prospect of more Libyan supply returning to the market, Brent's structure remained firm. The spread between the global benchmark's nearest contracts strengthened on Friday to its narrowest contango since late July
Meanwhile, traders' attention is shifting toward the outcome of the US election in November, which could have varying implications for US supply. Presidential candidate Joe Biden said fossil fuels need to be phased out over time, a comment seized on by Donald Trump as a threat to the industry. But there is debate over how much such a policy would impact oil prices in the near future.
Other oil-market news:
Venezuelan crude inventories have surged 84% over the past three weeks as the threat of US sanctions ward away buyers of the nation's most important commodity. That raises the risk that state-run PDVSA will have to start shutting in production again, and is the latest sign that Venezuela's oil industry is on the verge of collapse.
Oil and gas output in Norway, western Europe's biggest producer, could rise to a record by the middle of the decade as new fields come on stream, according to consultants Rystad Energy AS.
Companies: FOG PVR 88E DGOC EME TRIN UOG
Shanta Gold (AIM: SHG) has announced this morning its production and operational results for the quarter ended 30th September 2020 – see Fig 1. Overall this was a robust performance (from one of the most consistent operators in the sector) in the face of the pandemic and a very busy quarter for the company at corporate level. QoQ production fell to 19,973 oz and AISC rose to $883/oz – both caused by a temporary drop in grade – but the ongoing strength in the gold price resulted in a 16% and 46% increase in EBITDA QoQ and YTD respectively. There was an increase in net debt to $5.1m which can be explained by the $7.1m cash outlay for the West Kenya projects as well as the reduction in the hedge book (they also have $5.9m of gold dore in the gold room). The company remains on track to hit its full year guidance of 80-85koz of production at an AISC of $830-880/oz which would make it the third year in a row they have hit their unaltered guidance for the year. This would be a remarkable achievement for a major gold miner operating in a developed market let alone one operating in the South West corner of Tanzania. Likewise the fact the company has recorded zero lost time injuries makes it nearly three years in a row with no LTIs. With the greenlight for Singida and a scoping study completed for the West Kenya Project during the quarter, the company can look forward to leveraging this operational expertise across a larger and longer life production base (c.220Koz of annualised production). We continue to believe the market is still to wake up to this given a market cap of US$219m, next to no debt and EBITDA annualising at $90m.
Companies: Shanta Gold Limited
Forecast and valuation update
Companies: HUR HUT HRCXF