Geo-Jade Petroleum has received Chinese State Administration of Foreign Exchange (SAFE) approval to complete the acquisition of Bankers Petroleum for C$2.20 per share. There are no additional regulatory hurdles for Geo-Jade to acquire Bankers. It is expected that completion of the agreement to acquire Bankers will take approximately two weeks, and will be finalized prior to September 30, 2016. Bankers stock will be delisted prior to the end of September 2016. With this positive update, and due to the stock being halted at $2.18 per share prior to the announcement, we have adjusted our ranking from Outperform to Tender. Our target price of $2.20 per share matches the acquisition price.
Companies: Bankers Petroleum
Geo-Jade Petroleum has received Chinese State Administration of Foreign Exchange (SAFE) approval, and as such, the acquisition of Bankers Petroleum for C$2.20 per share can now be completed.
Market Impact: Positive. Bankers has announced that the tax assessment dispute has been positively resolved. As expected, a third-party auditor determined that Bankers did report its expenses properly. The Company has paid a total of US$37 mm (equivalent to C$0.18 per share) that can now be recaptured. Recall, the original tax assessment was for US$57 mm (equivalent to C$0.28 per share). The acquisition of Bankers by Geo-Jade Petroleum is ongoing. Resolution of the tax dispute should be viewed positively in the context of the acquisition proceeding.
Market Impact: Neutral. The pending acquisition by Geo-Jade at a price of C$2.20 per share outweighs 2Q16 results. The acquisition is expected to close by September 30, 2016 and only remains subject to regulatory approval of the Chinese State Administration of Foreign Exchange (SAFE). If SAFE approval is not received by September 30, 2016, Bankers is entitled to the US$20 mm (equivalent to C$0.10 per share) reverse termination fee, should Bankers elect to terminate the agreement.
Market Impact: Neutral. The acquisition agreement between Bankers and Geo-Jade has not yet closed, due to delays in receiving regulatory approval from the Chinese Stare Administration of Foreign Exchange (SAFE). The delay is not unexpected, given the timing to date and the typical nature of government bureaucracies. Bankers stock is already trading at a discount of 9% to the acquisition price of $C2.20 per share.
Market Impact: Neutral. The acquisition of Bankers by Geo Jade is still expected to close in July 2016e, which outweighs a small production curtailment in 2Q16 due to an interruption at the port facility and the shut-in of production for some maintenance and optimization work.
Bankers reported 1Q16 production of 17,363 bbl/d and cash flow of US$1.5 mm. Cash flow was weaker than expected, due to sales volumes and lower realized pricing that was temporarily reduced in 1Q16 to compete with other heavy crude oil volumes in a very weak price environment. The 1Q16 results are overshadowed by the pending acquisition by Geo-Jade Petroleum. Geo-Jade Petroleum has offered a cash price of C$2.20 per share for Bankers Petroleum, which currently represents a 15% premium to the current stock
price. Our 2016e and 2017e outlook remains unchanged.
Market Impact: Neutral. Bankers reported 1Q16 production of 17,363 bbl/d and cash flow of US$1.5 mm. Cash flow was weaker than expected, due to lower than anticipated sales volumes and realized pricing. FirstEnergy was forecasting cash flow of approximately US$11 mm. The 1Q16 results are overshadowed by the pending acquisition by Geo-Jade Petroleum.
Bankers stock is currently offering a potential return of 22% to Geo-Jade Petroleum’s cash offer price of C$2.20 per share. We recommend that investors buy Bankers to take advantage of the 22% return to the offer price. We are of the opinion that deal risk is low. If the acquisition is not completed, Bankers benefits from a break-fee of US$20 mm (C$0.10 per share) and shareholders would continue to hold a company that is managed by a top-tier team in a potentially increasing crude oil price environment.
Impact: Neutral. In light of the looming acquisition by Geo-Jade, Bankers has announced 1Q16 production of 17,363 bbl/d which tracked our forecast and was 4% lower q/q as the Company deferred all drilling activity at the start of the year to preserve balance sheet strength. The Company continues to monitor its EOR flood patterns which are continuing to perform as expected and to date is currently producing 4,952 bbl/d (29% of production) from its EOR program alone. During the quarter, Bankers converted one producing well to injector well and has 49 polymer and five water flood patterns implemented at the quarter's end.
We had the pleasure of hosting David French, President and CEO, at the FirstEnergy Calgary office. Mr. French provided insight on the transaction and the process to closing. Post the update, we are of the view that there is less deal risk than what is implied in the current stock price, which is still offering a potential return of 20% to the offer price of C$2.20 per share.
Bankers has agreed to a cash offer price of $2.20 per share. We recommend that shareholders tender their shares. The cash offer price represents a 98% premium to Friday’s closing price and is 10% greater than our prior target price of C$2.00 per share. The attractive offer provides liquidity to existing shareholders, a compelling premium and valua on metrics, and eliminates any risk associated with the pending audit results of the US$57 mm tax assessment.
Bankers previously reported 4Q15 production of 18,139 bbl/d, while cash flow of US$31 mm was less than our estimate of US$36 mm, due to differences in a realized hedging gain and a realized foreign exchange loss. Our forward looking production and financial estimates for 2016e and 2017e remain relatively unchanged. The Company previously reported 1P reserves of 125 mmbbl and 2P reserves of 202 mmbbl. Please refer to Bankers Reports Reserves that Remain Flat Y/Y. The audit of the US$57 mm tax assessment is expected to conclude in 2Q16e.
Market Impact: Neutral. Bankers previously reported 4Q15 production of 18,000 bbl/d, while cash flow of US$31 mm was less than our estimate of US$36 mm. Our 2016e and 2017e production and financial estimates remain relatively unchanged.
Bankers maintained its 1P reserves at 125 mmbbl and 2P reserves at 202 mmbbl at year-end 2015, which we view positively.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Bankers Petroleum.
We currently have 41 research reports from 3
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Caledonia, which operates the Blanket gold mine in Zimbabwe, announces today a second dividend increase for 2020 with an increase of their dividend from 7.5c a quarter to 8.5c a quarter – an annualised 34c/yr which currently yields 2.3%. This comes on the back of a first increase in January of this year when Caledonia raised its dividend from 6.9c/quarter.
Avation is a lessor of 48 commercial aircraft to a diversified airline client base. This morning, the group has released results for the nine months to 31 March 2020, which illustrate that the business remained profitable in Q3 FY 2020.
Phoenix copper today provides the results from the initial metallurgical test work to recover precious metals from the Empire deposit. Results from leaching with non-toxic ammonium thiosulfate (ATS) resulted in high gold recoveries of nearly 98% gold, and silver recoveries of between 70% and 80%. A full metallurgical report on this new work is available on Phoenix Copper's website.
Companies: CMCL AVAP PXC
Considering the environment, this sale is positive and marks the completion of the $15bn divestment programme started after the acquisition of the shale assets from BHP in 2018. Overall, BP’s strategy in downstream is to bring stable earnings, to offset volatility in upstream. In this regard, expanding renewables activities would seem appropriate to BP. While, BP has no competitive advantage in this field, exposure to renewables will allow the oil majors to keep their oil & gas activities.
Companies: BP Plc
U.S. futures and European stocks dropped on Friday as investors mulled a reported conflict among policy makers over a stimulus package for the single-currency region, as well as political upheaval in France.
The Stoxx 600 Index fell after Bloomberg News reported the European Central Bank is facing a potential rift over how much their emergency bond-purchase program should stay weighted toward weaker countries such as Italy. The euro fluctuated following French President Emmanuel Macron's decision to name a new prime minister after asking his government to resign. Rolls-Royce Holdings Plc slumped after the British jet-engine maker said its exploring options to raise funds to strengthen its balance sheet.
The dollar was slightly down, posting its first weekly drop in a month, while American cash equity and bond markets were shut for Independence Day. President Donald Trump will attend an early July 4 celebration at Mount Rushmore with thousands of guests who won't be required to wear masks, while his U.K. counterpart Boris Johnson urged Britons to act responsibly as pubs prepare to re-open and the government lifts quarantine rules on travel for 60 countries.
The friction at the ECB highlights the risk to markets should promised stimulus measures fall short. Investors continue to weigh policy support and upbeat economic data against relentless new outbreaks of the virus. U.S payrolls figures Thursday fuelled optimism of a V-shaped recovery in the world's biggest economy, even as Florida reported that infections and hospitalizations jumped the most yet, and Houston had a surge in intensive-care patients. Emerging-market stocks posted the biggest weekly gain in a month.
Elsewhere, crude oil dipped but remained on track for a weekly gain.
Companies: TGL JSE IAE ADME BP/ DGOC ENOG NTQ NTOG PMO RBD ROSE RDSA UKOG TRIN
Over the last 18 months, Powerhouse has cemented its relationship with Peel Environmental, which is targeting the development of at least 30 distributed modular generation (DMG) plants across the UK. Each of these will potentially generate £0.5m in annual licence fees for Powerhouse. This roll-out is conditional on shareholders approving the proposed acquisition of former development partner Waste2Tricity (W2T) at the general meeting on 14 July
Companies: Powerhouse Energy Group
Acquisitions and creditors update
Companies: Premier Oil
Despite the ongoing economic headwinds, 2020 has already been a significant year for United, with the 2019-20 infill-drilling campaign at Abu Sennan exceeding expectations and delivering significant reserve and production additions. Since the Abu Sennan acquisition was announced in July 2019, net production has nearly tripled from 1,100boepd to 3,100boepd, following successful wells at ASH-2 and El Salmiya-5 and the onset of gas production from the Al Jahraa field. We value United's portfolio (minus Jamaica) at US$91.3m, c4.5x its current market cap. Unrisked, we value United's entire portfolio at US$321.7m (including Jamaica) or 34.9p per share, >16x United's current market cap. We set our target price in line with our risked valuation (minus Jamaica) at 9.5p, a 280% premium to the current share price and reiterate our BUY recommendation.
Companies: United Oil & Gas
Updated commissioning plans for the Uis tin mine in Namibia
AfriTin is developing the Uis tin mine in Namibia. Despite some minor delays in commissioning, not helped by Covid restrictions, the team are making good progress to bring the plant, as initially envisaged, into full production (0.8kt/a tin concentrate). Several enhancements can be implemented that will add further value to the Phase 1 plant making it a standalone profit centre: plant expansion, by-product lithium concentrate production and measures to improve head grade. The plant also acts as an excellent pilot and testbed for the larger, full-scale plant planned by AfriTin. The large resource base in and around Uis will support a considerably larger operation as shown by the September 2019 JORC resource estimate. We see fair value in AfriTin at 11.1p/sh.
Companies: Afritin Mining
Shearwater sells resilience and today's trading update shows us how resilient demand has been for its products and services. The Group has swung to EBITDA profitability and cash flow is well ahead of expectations. The macro themes of cyber security and remote working are supportive of robust demand levels going forward. We are maintaining our forecasts. Buy.
Companies: Shearwater Group
Petropavlovsk PLC (LSE: POG) have released their FY2019 results and Q1 trading update this morning. The company had already released production numbers for last year. Overall the numbers reflected a strong operational performance although various financial/other parameters thwarted positive changes below the EBITDA line. Conversely net cash from operations reduced by 43% due to lower cash from prepayment as part of the group’s forward sale facility with the banks, yet net debt came down to $561m. . We show the key figures in Table 1.
InfraStrata's acquisition of the iconic Harland & Wolff (H&W) shipyards in Northern Ireland has been transformational for the group, and with a carefully planned growth strategy, there is a clear route to cash breakeven in the short term. Over the medium to long term, these facilities could support a c£400m revenue business. With the company trading at a c30% discount to its H1/20A book value and c65% to its Adj NAV, we initiate with a Buy recommendation.
Oil posted its second weekly loss for the month, as a surge in US coronavirus cases clouds the demand outlook and casts doubts on the market's recovery.
Futures in New York slipped 3.2% this week. The price slump comes just days after oil closed above $40 for the first time since early March, and following a run of weekly gains that lifted oil from its historic plunge below zero in April. Texas -- the centre of the American oil industry -- halted its reopening as virus infections jumped, and Houston's intensive-care wards reached capacity. Bars in Texas and Florida were ordered to shut, and Arizona reported a surge in infections.
While massive OPEC+ output cuts and a pickup in demand have helped crude climb from its April low, price gains have slowed this month. Infections continue to soar in many parts of the world, consumption is still a long way off pre-virus levels and many refiners are struggling with low margins.
Crude stockpiles in the US are at record highs, and there's a risk that US shale producers could start bringing back output. The number of rigs drilling for oil fell by 1 to 188, the lowest since June of 2009.
West Texas Intermediate for August slid 23 cents to settle at $38.49 a barrel in New York.
Brent for August fell 3 cents to close at $41.02 a barrel.
Still, the pessimism's being tempered by huge cuts to Russia's seaborne crude exports, a development that lifted oil earlier in the session. Shipments of the flagship Urals grade from its three main western ports are set to plunge by 40% next month, according to loading programmes seen by Bloomberg. The steep reductions underscore the OPEC+ alliance's commitment to eliminate the oil glut that built up earlier this year.
Other oil news:
Exxon Mobil Corp is preparing to cut jobs in the US as the oil giant focuses on a slimmed-down and more efficient organisational structure, according to people familiar with the matter.
Four automakers backing a California effort to curb tailpipe emissions will break with some big rivals in the legal battle over the Trump administration's relaxation of fuel efficiency standards.
Companies: FOG PVR 88E DGOC EME TRIN UOG
Implications of the gold-silver metallurgy at Empire, Idaho
Yesterday, Phoenix Copper published a metallurgical report on the leaching of its gold-bearing mineralisation from the Empire resource area in Idaho. This showed high recoveries for gold and silver using standard cyanide and non-standard Ammonium Thiosulphate leaching (comparable leach times, reagent consumption and recovery). The implications of these tests may be far ranging for Phoenix as it enables it to consider bringing forward precious metals production from the area, with the following benefits: 1) quicker permitting for a non-cyanide process; 2) cheaper reagents; 3) earlier establishment of mine site infrastructure to assist ongoing economic studies and; 4) cash flow in a robust gold price environment. More test work on the gold recovery process remains to be completed to establish the optimum leaching and recovery parameters. We still see fair value at 34p/sh (see research from 12/05/2020 for full details) but note that Phoenix management is actively seeking to bring forward value in its projects. In the meantime, we have drilling results and a (potential) resource upgrade to look forward to shortly from the Red Star lead-silver project as well as a funded resource drilling program to establish a whole resource for Empire – and not just the base metal-rich zones.
Companies: Sirius Real Estate
Enteq Upstream PLC (LON:NTQ) has released full-year (FY) results for the year-end March 2020 with commentary on the ongoing trading environment. The company reported revenues of around US$10.9mln, underlying adjusted EBITDA (earnings before tax interest depreciation and amortisation) of US$3.1mln,
Companies: Enteq Upstream
Rockfire Resources, the gold and copper exploration junior with projects in northern Queensland has recently commenced a major £0.8m drilling programme on Plateau, its most advanced project. Drilling is likely to be followed by a resource update in late 2020 and a scoping study in Q1 2021. We believe that the updated resource estimate could be commercially significant. This reflects the promising drilling results post July 2019’s resource assessment and the potential for the drilling programme to expand the resource base given the analogous Mt Wright mine geology 47 km to the NE. The new drilling programme will include diamond drilling for the first time which will enable deeper higher-grade targets to be targeted. The drilling programme has been underpinned by the recently announced £1m raise. We believe the scope for positive news flow in the coming months is excellent while the gold market backdrop should be supportive for gold exploration as well as production plays over the balance of 2020.
Companies: Rockfire Resources