Painted Pony announced that it has entered into an agreement to sell a 75% working interest in 11,280 gross acres (8,460 net), within the company’s NE BC Montney portfolio, for $45 mm in cash. Management has intimated that this transaction has no associated production or PDP reserve value, and thus the company has opted to make no changes to its formal 2019 guidance at this time. Playing its cards close to its chest, the company did not unveil any details as to which block of land this represents, though it’s expected that more information will be revealed upon close of the transaction; currently slated for October 31, 2019. Proceeds from this transaction will be earmarked for debt repayment, which would see the company’s net debt position improve markedly, with our estimated total debt balance of $373 mm exiting 3Q19, poised for a 12% reduction upon successful close. Further, its expected 2019e D/CF (trailing) will fall from 4.6x to ~4.0x.
Companies: PAINTED PONY PETROLEUM
Painted Pony reported 2Q19 results that were well behind consensus expectations on both a production and AFFO basis. Volumes of 48,978 boe/d trailed “street” estimates by 4% while AFFO of $9.1 mm, or $0.06/sh, lagged consensus at $13.3 mm, or $0.08/sh. With more shut-ins and commodity price volatility ahead, Painted Pony is reducing its 2019 guidance to 49,000-51,000 boe/d on spending of $80-$95 mm. For scale, prior guidance was 54,000-56,000 boe/d on capex of $95-$110 mm. July volumes were 52,350 boe/d. Management is in discussions with large industrial customers for the delivery of natural gas, which could lead to improved physical and financial diversification of its realized gas pricing. The company is also contemplating asset dispositions (both core and non-core) which could help improve a severely challenged leverage position. Mr. Rick Kessy, COO, is leaving the company and will be replaced by incoming VP Operations and Development, Mr. Mike Backus.
Painted Pony’s 1Q18 production of 60,703 boe/d matched our forecast, while cash flow of $46.4 mm, or $0.29 per share, was slightly higher than GMP FE and consensus estimates. In keeping with the recent theme of spending within cash flow, the company has reduced its 2018e capital program from $185 mm and 61,000-63,000 boe/d, to $145-$165 mm and 58,000-60,000 boe/d. The midpoint of the revised guidance range would imply a 16% decrease in capital, though volumes only roll back by 5%. The company’s bank line was reduced $50 mm, to $400 mm, but is now more flexible with all financial covenant requirements removed. Drawings on this LOC at the end of 1Q18 totalled $164 mm.
Painted Pony’s first well drilled into its 36-section Montney block at Beg was tested for 6.6 days and finished with a 24-hour flow rate of 1,900 boe/d, including 9.5 mmcf/d of natural gas and an estimated 340 bbl/d liquids (60% condensate). Given this result, combined with offsetting competitor activity, management believes this entire block is prospective for Montney development. Future plans for this area remain under consideration, but could include: 1) further development which would require a 15-20 km long pipeline to connect to the AltaGas Townsend facility, or 2) the outright sale of this block to pay down debt and focus on its core Montney holdings.
In line with many within its peer group, Painted Pony has announced a 2018 capital program bound within cash flow. The 2018e program, which currently contemplates spending $185 mm to drill and complete 29.0 and 31.0 net wells, respectively, is expected to generate volumes of 61,000 – 63,000 boe/d. Captured within the substantial production growth noted above, is an increased liquids weighting. The company forecasts a 47% YoY increase in liquids production, 50% of which will be high yield condensate. With stubbornly low western Canadian natural gas prices persisting in 4Q17e, the company voluntarily shut-in ~9,000 boe/d. As such, 4Q17e volume targets have drifted downwards to between 51,000 – 53,000 boe/d, falling short of GMP FE’s former view of ~55,000 boe/d.
Impact: Slightly positive. While there will be no changes to our formal estimates as a result of this update, the underlying risk of the Company growing from 16,600 boe/d in 2Q16 to 40,000 boe/d by the end of the year is significantly reduced with confirmation of corporate volumes at 30,000 boe/d over the past 5 days.
Painted Pony reported 2Q16 production and cash flow that overlaid our estimates. As expected, the Company has formally increased its 2016 capital spending guidance to $199 mm from $179 mm previously, as a result of early commissioning of the AltaGas Townsend facility, which will naturally necessitate more wells to achieve the unchanged 40,000 boe/d 2016e exit marker. Current volumes through the Townsend facility are tracking the new ramp-up schedule while total corporate volume guidance of 23,000 boe/d in 3Q16e appears to be running hotter than our prior forecast. Based on reduced well costs reverberating through our RENAV methodology, we have increased our target price to $13.00/share.
Impact: Positive, while cash flow and production were in line for the quarter, it appears current production is putting the Company on track to beat our prior 3Q16e forecast.
Painted Pony announced that it has entered into an asset exchange agreement with a large industry partner consistent with Progress-Petronas. The exchange encompasses a mutual 15.4 net sections (9,856 net acres), primarily at Daiber, wells and a working interest in a facility owned and operated by Progress-Petronas. The deal will net Painted Pony an additional 5.4 mmcfe/d which will have to be tied-in to the Company’s infrastructure and will, most importantly, bestow 100% WI in the land and wells acquired in the swap. We have made no changes to our estimates in light of the deal and as such continue to offer an Outperform ranking and 12-month target price of $12.50 per share, recently revised in our Facts dated July 20, 2016, concurrent with the Company’s announcement of an early start-up of the 198 mmcf/d Townsend facility
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 PNE RRX RMP SRX SGY TET ATU CKE GXE IKM LXE MQL PRQ SPE SKX TVE TVETF YO
Painted Pony announced first gas sales out of the Townsend facility with targeted ramp up to 50 mmcf/d in August, 100 mmcf/d in September, and 150 mmcf/d in October. Increased volumes forecasts paired with lower anticipated capital lease fees drives a 12% and 6% increase to our cash flow estimates in 2016e and 2017e respectively. Outperform recommendation is reconfirmed on an increased target price of $12.50 per share (previously $10.50 per share).
Impact: Positive, as early completion of the Townsend facility derisks a major component of the Company's production ramp up. Additionally, lower capital lease fees as a result of an extended amortization and slight efficiencies gained will manifest in higher corporate cash flows moving forward, all else equal.
With this publication we highlight forecast revisions associated with our commodity price update (Natural Gas Update; Crude Oil Update), reaffirming a view of commodity price recovery in 2017e. In the interim until then, 2016e Canadian oil price realizations are up ~11% in the synthetic and Edmonton Light streams, with heavy WCS crude up ~20% which is amplified by Canadian oilsands output curtailments. While 2016e Canadian natural gas prices are projected to be ~20% lower, we expect much of this effect to be mitigated by strong hedging positions this year, and remain focused on price recovery next year with very strong increases reflected in both the strip and our revised forecast. Overall, broad valuations are flat to slightly higher coming out of this exercise, with oil/ liquids levered entities observing the highest 2017e CFO uptick. We remain constructive on the space, though the market will need to look past a trough of potentially weak pricing this summer.
Companies: ARX CPG ERF TOU POU CJ PPY SRX LXE
Painted Pony reported 1Q16 production and cash flow that were in line with our estimates.
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 PNE RRX RMP SRX SGY TET ATU CKE GXE IKM LXE ROAOF MQL RE SPE SKX TVE TVETF YGR YO
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Wickes to demerge from Travis Perkins and list on the Main Market. Expected 28 April. Advance Energy to complete an RTO on AIM indirectly acquiring up to 50% of Carnarvon Petroleum Timor which holds a 100 per cent. working interest and is the contractor under the Buffalo PSC, offshore Timor-Leste. Carnarvon Petroleum Timor is a subsidiary of ASX listed company, Carnarvon Petroleum Limited. The net proceeds of the Placing of approximately £20.01m (approximately US$27.51mm) will be used to fund the Acquisition. Due 19 April. NFT Investments plc is an investment company that specialises in non-fungible tokens (NFT). Has applied for admission to the Access segment of the AQSE Growth Market. No funds being raised. Due 16 April. Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 2021. Segun Lawson, President & CEO, stated: “Thor Explorations has advanced significantly, in both project development and capitalisation since the acquisition of Segilola in 2016. This year, the Company is well positioned to achieve two major milestones with the commencement of gold production at Segilola in Nigeria and a maiden resource at Douta in Senegal, as well as continuing to progress our highly prospective Nigerian exploration portfolio on the Ilesha Schist belt.” MAST Energy Developments (MED) is to IPO on the Standard List on 14th April 2021 under the ticker MAST. The company has raised £5m giving a market capitalisation on listing of c. £23m. MED is currently a 100% subsidiary company of AIM quoted, Kibo Energy*. MED was established to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market. PensionBee has confirmed its intention to float on the High Growth Segment of the Main Market of LSE. The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration, in each case as at 28 February 2021. The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April 2021. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance.
Companies: GOOD FIH SRT NFC RFX ARCM ACRL EQLS ORPH VRS
NFT Investments plc is an investment company that specialises in non-fungible tokens (NFT). Has applied for admission to the Access segment of the AQSE Growth Market. No funds being raised. Due 16 April. Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 2021. Segun Lawson, President & CEO, stated: “Thor Explorations has advanced significantly, in both project development and capitalisation since the acquisition of Segilola in 2016. This year, the Company is well positioned to achieve two major milestones with the commencement of gold production at Segilola in Nigeria and a maiden resource at Douta in Senegal, as well as continuing to progress our highly prospective Nigerian exploration portfolio on the Ilesha Schist belt.” MAST Energy Developments (MED) is to IPO on the Standard List on 14th April 2021 under the ticker MAST. The company has raised £5m giving a market capitalisation on listing of c. £23m. MED is currently a 100% subsidiary company of AIM quoted, Kibo Energy*. MED was established to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market. PensionBee has confirmed its intention to float on the High Growth Segment of the Main Market of LSE. The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration, in each case as at 28 February 2021. The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April. Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc. With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m Expected April 2021. Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance.
Companies: RCN NCCL PRIM ORR AVCT TLY RENX CMCL ARO
The UK market showed a continued recovery in the first quarter albeit the indices are still well short of their all-time peaks, unlike many of their international peers. The FTSE 100 has risen by 1,186 points (21.4%) since the end of October and the FTSE 250 by 4,304 points (25.0%). The comparable performance since the start of the year is less spectacular- the FTSE 100 has risen by 253 points (3.9%) and the FTSE 250 has risen by 1,070 points (5.0%). The factors behind the sustained rally are familiar. The belief that the roll-out of the vaccine and some relaxation of lockdown limitations will lead to a significant economic recovery, compared to the collapse seen in the first half of 2020, due to lockdowns. Indeed, the recent economic picture is becoming more optimistic than previous expectations. According to the ONS, the economy grew a little more than initially estimated in Q4 last year. This means GDP for 2020 as a whole contracted by 9.8%, revised up marginally but still the worst contraction on record. Markets, in general, have focused upon the potential scope and extent of the recovery. The sectors and stocks that have outperformed have been seen as ‘recovery’ plays with a rotation from stocks seen as ‘lockdown’ winners into those set to benefit from the ‘unlocking of society’ and/or exposed to the consumer. We expect 2021 will continue to be a “stock-picker’s” market. The sharp increase in the household savings ratio in Q4 highlights the scope for a recovery driven by expenditure. As further lockdown limitations are lifted, evidence of this growth will help to underpin the more optimistic outlook for Q2 and beyond.
Companies: AMYT ARBB BPC BAG BVC BEG BONH BLVN BRSD CML CWK CRPR EYE ECHO FDM FAR FA/ GPH GSF HUW INSE JDG KAPE KP2 MACF MPAC MNZS NESF NBI OTMP OBD PREM QFI RUA SCS SEN SOS SUR TON TOU TXP TGL TCN UEM VLS WYN
Pantheon Resources indicated that the Talitha #A well is flaring gas from the Kuparuk section as the well cleans up. Key operational data: That gas is being flared is highly encouraging. This is an early indicator that the well's completion operations have been effective. It is also absolutely necessary for these wells to have a high gas content because it is the expansion of gas that will provide energy that will push the oil up the wellbore to the surface. It also critical that the gas has sufficient energy to “clear up” the well, which involves clearing it of relatively heavy drilling and completion fluid. The previously announced over pressure of the Kuparuk formation created drilling challenges because it was unexpected. However, that overpressure will, in our opinion, favour well productivity.
Companies: Pantheon Resources plc
Companies: ARG ADT UKOG PHAR UNG CYAN FA/ SNX VRE SHED
2020 brought a new chapter in the corporate development of Shanta in our view. The company still produced 83koz at an AISC of US$841/oz as per guidance for the third year in the row and did it with a best-in-class safety record. However, they also resolved for growth through the commissioning of Singida and the delivery of a scoping study for the West Kenya Project. They added 14% to the capacity of the flagship NLGM operations (which we believe the market has missed), restored the balance sheet and removed the hedge book. Finally, a maiden dividend was declared. We prosecute the investment case whilst adjusting our forecasts to take into account company guidance and a gold price forecast of $1750/oz. We maintain our Target Price at 30p.
Companies: Shanta Gold Limited
EQTEC provides engineering and design services and sells its EQTEC Advanced Gasification Technology to waste-to-value operators and enterprise partners. Its solutions are proven to process a wide variety of feedstock, including municipal waste, agricultural waste, biomass and plastics, with no hazardous waste or toxic emissions. EQTEC’s solutions produce a pure high-quality synthesis gas (syngas), capable of being used for the widest applications in the creation of energy, hydrogen and biofuels The company works together with multiple parties involved in projects including developers, waste owners, building contractors and funders with a view to ultimately providing its advanced gasification technology, associated engineering & design services and O&M services.
Companies: EQTEC PLC
JOG has completed the acquisition of a 12% interest in UK licence P2170, announced in Q4. This transaction includes minimal upfront payment and raises JOG’s stake in the Verbier discovery and a number of high-impact exploration prospects to 100%, consolidating its Greater Buchan Area position and simplifying the recently launched farm-out process. This process should complete by year-end and is critical to unlocking the major upside potential that exists from the GBA development. No change to our 570p risked-NAV and price target.
Companies: Jersey Oil & Gas PLC
Today's news & views, plus announcements from AAL, BLND, JMAT, SGRO, DNLM, OSB, SNN, ASC, BGO, EMAN, PMI, SOLG
Companies: Bango plc (BGO:LON)SolGold Plc (SOLG:LON)
In the past few weeks, all the listed multi-national pharmaceutical companies have reported results for 2020, which has given us the opportunity to update our industry statistics and drug database. This report provides the first, snapshot publication of global and US rankings of the top 20 drug companies for 2020. Comparisons are made with historical data to show how different company strategies have evolved. In addition, summary analysis has been provided for the sales evolution of therapeutic biopharmaceutical drugs, which saw sales rise 5.6% to $245bn, representing 26% of the market, driven by antibody-derived drugs.
Companies: AVO ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PXC RECI STX SCE TRX VTA YEW
• 1Q21 production was 7.3 mbbl/d, in line with guidance of 7-8 mbbl/d, with production negatively impacted by downtime at the 4H well. A pump has been replaced at the 4H well that has since been producing ~2,300 bbl/d vs 1,872 bbl/dd prior to the pump failure. Production at the end of March had been restored to 8,275 bbl/d. • The 7D deviated well has already been spudded and is expected to take approximately 35 days to drill. • The company continues to expect production to reach 18-19 mbbl/d by YE21. • Following the repayment of US$7 mm payables since YE20 and US$16 mm to Petroperu to settle the derivative liability, the company has ~US$76 mm in cash (in line with our expectations). Of this amount, US$23 mm have been set aside for acquisitions (US$20 mm) and for the hedges that have been put in place (US$3 mm), leaving US$53 mm of “unrestricted liquidity”. • Payables at the end of March are US$37 mm. • PetroTal expects to receive ~US$36 mm from Petroperu as true-up payments for 2019/2020 sales. Delivery on plan is not yet reflected in the share price The company is delivering on its plans and the spudding of the first well of the 2021 programme should send a strong message that production materially increasing again. The shares continue to trade at less than half our estimate of the value of the company based on its 2P reserves only (£0.41 per share @ Brent of US$60/bbl flat). Our Core NAV represents 3.5x the current share price. The shares now trade at EV/DACF multiples of 2.0x in 2021 and 0.8x in 2022.
Companies: PetroTal Corp.
• FY21 production guidance has been set at 9.2-10.6 mboe/d (below our initial forecast of 11.5 mboe/d) as Pharos’ guidance assumes minimum investment in Egypt with no rig (US$8 mm vs our forecast of US$23 mm with one rig for six month) pending conclusion of the farm out. Pharos’ production guidance for Egypt is therefore only 4.0-4.4 mbbl/d vs our expectations of 5 mbbl/d. • The new fiscal terms in Egypt are expected to be ratified in 3Q21 and a farm in partner is expected to be announced in 2Q21 (with completion of the transaction in 2H21). These are key milestones triggering the return to drilling in Egypt and allowing production in Egypt to triple to 12 mbbl/d. We are very confident Pharos will secure a partner given the renewed interest of the industry for Egypt (Cairn being the latest entrant with the acquisition of onshore assets from Shell). • Once ratified the new terms are expected to be back dated to Nov. 2020, resulting in a material positive impact on Pharos balance sheet on ratification. The company has put in place a working capital facility with the National Bank of Egypt the size of which would immediately increase on ratification. At current oil price, we believe that Pharos would likely have enough financial resources to start a two rig drilling programme until the farm out transaction completes. • As we roll forward our DCF to YE21 and incorporate lower G&A (following salary reduction and ongoing head office headcount reduction), we are increasing our target price from £0.50 to £0.60 per share. More details on the FY20 results • The FY20 financials were as expected as production, cash and net debt had already been reported. • YE20 2P reserves and 2C resources were broadly in line with expectations with a large reserves increase in Egypt more than offsetting a minor reserves reduction in Vietnam on a redetermination of the share of the reserves located on Pharos’ licences (from 30.1% down to 29.6%). • Hedges for 39% of the 2H21 production have been put in place at US$50.8/bbl. • Overall the negative impact of lower production in Egypt and 2H21 hedges are offset by the very low capex. Deep value. Upside. Newsflow. Our Core NAV of £0.36 per share (£0.28 per share) reflects our view of what the company could fund with its own balance sheet once the new terms in Egypt are ratified. Securing a farm in partner would unlock £0.18 per share of value in Egypt, increasing recovery factor a further £0.11 per share. Including the contingent resources in Vietnam, our unrisked NAV for the company’s reserves plus contingent resources is >£0.80 per share. Any exploration success would be additive. Our ReNAV is £0.56 per share.
Companies: Pharos Energy PLC
Diversified Gas & Oil (DGO) has announced that the Company's bank lending group has completed the semi-annual redetermination of the Company's senior secured credit facility and reaffirmed the existing US$425m borrowing base with no changes to pricing, covenants or other material terms. Despite a challenging market and a backdrop of many borrowing base reductions, DGO has once again proved the strength of its production-led long-life, low-decline business model. Elsewhere, the US Energy Information Administration (EIA), in its Short-Term Energy Outlook has forecast Henry Hub natural gas prices to average US$3.04/MMBtu for full-year 2021, a 50% increase on 2020, with gas prices forecast to further increase to US$3.11/MMBtu in 2022. We update our price target to 129p and reiterate our BUY recommendation.
Companies: Diversified Gas & Oil PLC
The Budget offered a clear picture of the state of the economy. Put simply, the economy will be 3% smaller in three years’ time than it would have been without the impact of the pandemic. However, it is forecast to return to pre-pandemic levels by mid-2022, six months earlier than previously thought. The OBR forecasts that the UK economy will grow by 4.1% in 2021, (lower than the 5.5% outlined in November 2020). It has set its GDP forecasts in 2022, 2023 and 2024 at 7.3%, 1.7% and 1.6%. Positively, we have a continuation of substantial support for various parts of the economy – totalling £350bn. The market may focus on two elements. Under the so-called “super-deduction scheme, businesses which invest in the next two years will be able to claim 130% of the cost against their tax bill. This is significant but also significant is the proposed increase in corporation tax on profits from 19% to 25% in 2023. This has material consequences. Looking that far ahead is not straightforward. The increased tax charge will inevitably impact ratings. This may not be a consideration currently but may become one as more FY2023 estimates are introduced. Closer to home, we have continued to see most results/updates in line with expectations. An increasing number of companies have restored dividends. M&A across a broad range of sectors also looks set to continue.
Companies: AMYT ARBB BPC BVC BEG BRSD BWNG CBOX CTG CLG CML CWK EYE ECHO EML ESC FBD FA/ GSF HTWS INSE JDG MACF MTW NESF NAVF NSF NBI OTMP PCF PPC QFI SAVE SEN SNX TGL UTL VLS WYN
West Texas Intermediate (WTI) and Brent crude oil futures posted solid increases Thursday. WTI for May delivery gained $2.29 to settle at $61.45 per barrel. The benchmark traded within a range from $58.86 to $61.75. The June Brent futures price closed at $64.86 per barrel, reflecting a gain of $2.12. Oil futures received a boost from the OPEC+ group of major producers' decision to ease output from May to July. The May reformulated gasoline (RBOB) contract price added less than a penny to end the day at $2.02 per gallon. Henry Hub natural gas futures also rose Thursday, with the May contract settling at $2.64 – a three-cent increase from the previous day. Rigzone.
Companies: FO 88E DGOC EME GTC TRIN UOG
