Discontinuing Coverage

We are discontinuing coverage on Raging River Exploration Inc. due to its acquisition by Baytex Energy Corp.1 (BUY, $8.00/sh target price). Accordingly, all prior research ratings, price targets, and earnings estimates must no longer be relied upon.

Quality available at deep discounts amidst overt sector pessimism

The stocks on the GMP FirstEnergy Best Ideas List represent our highest conviction BUY recommendations with an expected return of 20% or more over the next 12 months. The investment thesis for each name on the list is laid out in this report.

Reports Solid Second Quarter Results

Raging River reported second quarter financial and operating results that were in line with our estimates, highlighted by positive earnings generation in the period, illustrative of a highly economic top line revenue and enviable cost structure, coupled with affirmation of a disciplined acquisition strategy since inception. There are essentially zero changes to our forward outlook. We reiterate a $13.50/sh 12-month target price and Outperform ranking.

2Q16e Quarterly Preview

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 rev

Announces Operations Update, Forgan Land Consolidation and Increased 2016 Guidance, Approval for Rock Energy Acquisition

An increased 2016 budget prompts slight boost to production estimates, despite a modestly trailing 2Q16 production figure. Consolidation of land at Forgan is positive and consistent with Corporate aggregation strategy, further expanding the Viking footprint.

ANNOUNCES OPERATIONS UPDATE, FORGAN LAND CONSOLIDATION AND INCREASED 2016 GUIDANCE, APPROVAL FOR ROCK ENERGY (RE) ACQUISITION

Impact: Neutral. 2Q16 production slightly trailed both FirstEnergy and consensus estimates, however, a modestly increased 2016 budget should bring annual production volumes above our prior expectations.

Raging River Announces Corporate Acquisition of Rock Energy

Raging River has entered into an agreement to acquire Rock Energy in an all share deal valued at $109 mm (inclusive of $67 mm in debt). Through this transaction, the Company adds 2,550 boe/d (95% oil), of which 1,950 bbl/d is outside Raging River’s core Viking asset base and producing from Rock’s heavy oil assets primarily at Mantario. Our proforma forecast portrays the transaction as 8% accretive to 2017e CFPS all while maintaining the Company’s balance sheet flexibility and strong productio

ANNOUNCES CORPORATE ACQUISITION OF ROCK ENERGY INC. (RE)

Impact: Positive. The corporate acquisition of Rock Energy adds another layer of high quality, light oil Viking inventory at Kerrobert complementary to Raging River's existing position. While the market may be initially uncertain of the heavy oil barrels acquired from the Mantario pool, we view this as an opportunistic transaction at a low in the commodity cycle that may ultimately reside only temporary at Raging River. Further, tax pools of $208 mm will aid in reducing the Company's payable cas

Raging River Reports First Quarter Results, Lifts 2016e Capital Budget with Crude Oil Price Recovery Up from the Lows

Raging River reported first quarter financial and operating results that were in line to slightly below forecast, principally a function of its election to delay completion activity until 2Q16e on confirmation of crude oil price recovery.

Intermediates, Mid Caps & Small Caps

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

Domestic E&P Statistical Package and FD&A Review

With this publication we highlight various metrics and statistics forthcoming from yearend reserve books for our Domestic E&P coverage universe (Integrateds, Large Cap, Oilsands, Intermediate, Mid Cap, and Small Cap). Similar charts for YE2014 reserves can be found in our Statistical Package dated April 7, 2015.

Reports As expected 4Q15 Financial and operating Results

Following our participatoon in Raging River’s $108.1 mm equity financing, issuing 12.5 mm share at $8.65 per share, we summarize the Company’s 4Q15 financial and operating results, which we view as in line with our prior estimates. Overall, incorporating 4Q15 results into our estimates along with the recently closed financing, we see our general outlook unchanged, absent some minor changes to pricing, costs and the signi cant reduction to net debt which has improved Raging River’s 2016e debt to

Intermediate/Mid/Small Cap Commodity Price Update Impact

With this publication we highlight forecast revisions associated with our crude oil commodity price update. Concurrent within a dynamic time for E&Ps, some of which have already begun the process of 2016 capital budget downdrafts, revised estimates attempt to directionally capture a shift towards capital conservation, though severely weakened futures curves have influenced our thinking for the better part of 6 months anyway. We expect further capital investment reductions forthcoming from E&Ps i

Raging River Reports Strong 2015 Year-End Reserve Book, Reduces 2016e Capital Spending Targets to Preserve the Best Balance Sheet in its Peer Group

Raging River’s reserve book coming out of 2015 is reflective of another year of predictable, efficient capital allocation. With capital outlays entirely discretionary, the Company is moving to a lower capex program for 2016e to $150-$160 mm, though a growth target of 16,500 boe/d is not materially different from its prior assertion (-3%). The Company continues to have the best balance sheet in its peer group far and away. An updated NAV continues to support a valuation level offering decent posi

RAGING RIVER EXPLORATION INC. (RRX) ANNOUNCES 2015 YEAR END RESERVES AND UPDATED 2016 GUIDANCE

Impact: Positive. While a reduced capital investment outlook will likely induce downward revisions to our production and cash flow estimates, the decreased spending will also offer an improved financial position, which when coupled with stronger implied capital reinvestment efficiencies, should prove to be net positive for the stock on a risk adjusted basis, given the current environment.

i3 Energy (I3E LN) - Canada site visit review

Last week we attended a site visit to i3’s assets in central Alberta in Canada – the company’s largest producing area. We were left with a favourable impression of the magnitude of the company’s operations in the region, of the professional operational running of these, and of the overall level of opportunity in this well-established oil and gas province.

Reabold Resources - Payment received from Shell

Good news for Reabold, which is set to receive £5.2m of the second tranche payment from Shell imminently for the Victory gas field it acquired last year. The final £4.4m payment is due once the development approval for the field is received from the NSTA in the coming months. These funds will allow RBD to progress its two onshore gas developments in the UK and Italy and consider further distributions to shareholders. Partner funding of these projects remains an issue, but RBD’s risk/reward profi

Oil & Gas - Cavendish sector note

88 Energy, Falcon Oil & Gas, Trinity Exploration & Production, Plexus Holdings, Baron Oil, Harbour Energy, EnQuest, Capricorn Energy, Arrow Exploration, Southern Energy, Serinus Energy, SDX Energy, Panoro Energy, Eco (Atlantic) Oil & Gas, OKEA ASA, Equinor Source: FactSet, weekly change 27/11/23-1/12/23 Oil extended declines, closing out a sixth straight weekly drop, as the OPEC+ output cuts announced Thursday failed to dispel the market’s gloom over swelling global supplies. West Texas Intermed

Tower Resources (TRP LN) - Initiation Report (SPECULATIVE BUY, 0.12p/sh TP)

Cameroon: Ready for the Rig

Pan African Resources - Valuation up 22.2% with new gold price forecasts

On 22 November, Pan African Resources (PAF) announced that operations to date in FY24 had performed in line with, or better than, expected, with gold production for H124 anticipated to be in the range 94,000–98,000oz (cf 92,307oz in H123). As a result, it increased its production guidance for FY24 to 180,000–190,000oz, which caused us to increase our production estimate in turn by 1.9% (or 3,575oz) to 189,725oz. The change made only a modest difference to our EPS forecasts for FY24 (see Exhibit

Morning Note – 4 December 2023

New Debt Facility – Lowering TRR Cost of Capital

We have been roadshowing Trident Royalties all week during which time the company released an announcement that they have entered into a commitment letter with BMO and CIBC for a new $40m revolving credit facility (RCF), with the potential to increase the facility to $60m via an accordion feature. The proceeds from the $40m are going to be used to repay the existing secured debt facility of $40m with Macquire in Q1 next year.

Baron Oil - Chuditch PSC – Six-Month Extension

Baron has been granted a further six-month extension to the Chuditch PSC. The end of Contract Year Two will now be 18 June 2024, at which time Baron will need to make a decision on entering Year Three. In the Third and final phase of the PSC, a final investment decision (FID) will be required on an appraisal well targeting the Chuditch discovery (Chuditch-2). Baron continues to make good progress in its discussions with potential funding partners, having previously announced that it is in “advan

Hartshead Resources - Fully Funded Solution

Hartshead has secured a funding solution with partner Rockrose Energy to fund 100% of the Phase I development costs. Under the agreement, Hartshead has the option to exchange an additional 20% licence interest for an uncapped free carry, thereby covering the total cost of the Phase I development project (financing backstop). Importantly, Hartshead maintains at its election the option not to proceed with the RockRose financing solution, and introduce other financing solutions (eg project debt, pr

SP Angel Morning View: Ford takes 8.5% stake in Indonesian nickel project as Automakers swim upstream

Southern Energy - 3Q Results and Comprehensive Update Note

Southern Energy delivered solid 3Q results with the focus of attention now turned towards the completion of 4 drilled uncompleted wells (“DUCs”). We see our investment thesis for Southern Energy – premised on the scale, location, quality, deliverability, low-cost nature of the company's Gwinville gas field in Mississippi, USA – very much strengthening based on our structural commodity price outlook and our growing confidence in the highly prolific Gwinville gas field, sharpening our interest in

SP Angel Morning View: Gold powers through $2,100/oz on outlook for Fed rate cuts

SP Angel Morning View: China lithium stocks rally on prospects for market rebound

UK-Listed Energy Sector: Review of the UK oil and gas landscape – why the country needs it, current policy and tax

The front of this note takes a look at the UK oil and gas sector, why domestic production is advantageous, what the main political parties think, and what could happen going forward. The latter part contains a review of the companies in our coverage – some that are UK centric, which give exposure to the note’s wider theme, and others that are focused elsewhere.

Andrada Mining: Lab-scale Spodumene concentrate results further advance Andrada’s lithium strategy

Andrada Mining (“Andrada”; “ATM”) has produced its first laboratory scale high-grade spodumene concentrate from mineralised pegmatite at Lithium Ridge (ML133). The material was sourced from the drill core of three holes through two separate pegmatite ore bodies drilled earlier this year. The weighted average feed grade was 1.69% Li2O (15.2% Spodumene), with a 76% Li2O recovery, producing a 6.8% Li2O high-grade spodumene concentrate suitable for lithium carbonate production. A second drill progra