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
Research Tree provides access to ongoing research coverage, media content and regulatory news on CHINOOK ENERGY. We currently have 42 research reports from 2 professional analysts.
Robust, cash-generative production from mining waste Jubilee operates several chrome-Platinum Group Metal (PGM) operations in South Africa and is constructing a zinc-lead (vanadium) plant at Kabwe in Zambia after already commissioning the copper and cobalt circuits (the ‘Sable' refinery). The company has a growth pipeline identified and significant opportunities to find new projects in Africa (or globally); more specifically, Jubilee announced that it is looking to increase its copper (cobalt) production in Zambia aggressively to make full use of the Sable Refinery. Jubilee also owns the Tjate PGM project in South Africa, which is currently on hold. The company model is to treat its own waste materials and to supplement these with third party ores and wastes where possible. This year has been nothing if not eventful for Jubilee, but further progress and material catalysts are expected over the course of 2020. Jubilee has a high-margin business with cash on hand, and we see plenty of opportunities for Jubilee to capitalise on its robust business model through the global Covid-19 crisis and beyond. We initiate with a fair value of 11.2p/sh
Companies: Jubilee Platinum
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
Operational update
Companies: Hurricane Energy
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
Caledonia's Q2 2020 production from its 64% owned Blanket mine in Zimbabwe was 13.5koz gold. This was an increase over the same period last year of 6.2%, leaving Caledonia with a first half production of 27.7koz – well ahead of this time last year (24.7koz) and on track to meet its 2020 full year guidance of 53-56koz (WHI etc. 55.5koz). Spectra Systems Corporation is a provider of machine-readable high-speed banknote authentication, brand protection technologies and gaming security software. The company has announced that it has executed a new contract with a major world central bank to ‘enhance existing authentication sensors to detect a unique type of counterfeit notes'.
Companies: Spectra Systems Caledonia Mining Corporation Plc Com Shs Npv
Stable platform agreement approved by creditors
Companies: Premier Oil
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
InfraStrata has raised £9m in gross proceeds via a share placing (subject to the approval of shareholders), which will be used to provide growth capital to execute on the company's pipeline. The proceeds will also be used to repay high-cost short-term debt (leaving the group with a c£4.5m net cash position). Given the significant earnings potential of H&W, along with that of the group's other infrastructure assets as they mature, we consider the company to be significantly undervalued and reaffirm our Buy recommendation.
Companies: Infrastrata
The market should be in no doubt that Pure Gold will deliver first gold before the end of the year before ramping up to 66koz in 2021 through to 125koz in 2025 (the company is already looking at ways it can accelerate the ramp up). All critical path items are on track with long lead equipment on order, all license applications expected to be approved by Q2, and mine sequencing being planned. Management are already planning on how they might ramp up quicker, improving flexibility in the system with a new decline and tweaking metallurgical recoveries. Perhaps most importantly they are growing their knowledge of the geology with the team putting together a drill programme to start next year once in production. This will target extensions to the 1Moz, 9g/t reserve (will be the 17th highest grade mine in the world when in production) down dip, at satellite deposits and, most excitingly, at Zone 8 where there is already a 0.5Mt resource grading 21g/t.
Companies: Pure Gold Mining
Pure Gold (LSE/TSX: PUR/PGM) have announced a project update for its Red Lake Mine and also its financial results for YE December 2019 today. Importantly the Ontario Government has deemed exploration and mineral extraction an essential business with respect to the COVID-19 pandemic and Red Lake has no known infections at the moment. As such the Project is proceeding as planned with first production due before the end of the year.
AFC Energy is a global leader in the fuel cell sector. It has a proven fuel cell technology which it is commercialising through its H-Power™ product, an off-grid electric vehicle charging system which is run on hydrogen and produces no emissions. The company's core fuel cell technology is a liquid alkaline fuel cell called HydroX-Cell(L)™. The company is also developing a solid alkaline fuel cell called HydroX-Cell(S)™ , the critical component of which is a is a solid electrolyte which upon validation will be marketed under the AlkaMem™ trademark. We expect the AlkaMem™ product to have multiple electro-chemical applications outside of fuel cells. The purpose of this note is to compare AFC Energy's products, markets and business strategy against its listed peers Ceres Power and ITM Power. The note also assesses the state and outlook of the hydrogen market in addition to the proton exchange membrane market, which is relevant for AFC Energy's AlkaMem™ product. As a reminder, we believe AFC Energy has a fair value of 27p/sh.
Companies: AFC AFC AFC
In this note, we analyze the indebtedness of 35 international E&Ps publicly listed in the UK, Canada, Norway, Sweden and the USA. For each company, we look at (1) cash position, (2) level and nature of debt (including covenants), (3) debt service and principal repayment framework and (4) Brent price required from April to YE20 to meet all the obligations and keep cash positions intact. We also estimate YE20 cash if Brent were to average US$20/bbl from April to YE20. While the oil demand and oil price collapse are of unprecedented historical proportions and the opportunities to cut costs much more limited than in 2014, most companies (with a few exceptions) entered the crisis in much better position than six years ago, with stronger balance sheets and often already extended debt maturities. In addition, this time around, many E&Ps have already been deleveraging for 1-2 years and are not caught in the middle of large developments that cannot be halted. The previous crisis also showed that debt providers could relax debt covenants for a certain period as long as interest and principal repayment obligations were met. This implies that as long as operations are not interrupted and counterparties keep paying their bills (Kurdistan), the storm can be weathered by most for a few quarters. With (1) Brent price of about US$50/bbl in 1Q20, (2) reduced capex programmes, (3) material hedging programmes covering a large proportion of FY20 production at higher prices and (4) limited principal repayments in 2020, we find that most companies can meet all their costs and obligations in 2020 at Brent prices below US$40/bbl and often below US$35/bbl) from April until YE20 and keep their cash intact, allowing them to remain solvent at much lower prices for some time. In particular, Maha Energy and SDX Energy are cash neutral at about US$20/bbl. When factoring the divestment of Uganda, Tullow needs only US$9/bbl to maintain its YE20 cash equal to YE19. Canacol Energy, Diversified Gas and Oil, Independent Oil & Gas, Orca Exploration, Serica Energy and Wentworth Resources are gas stories not really exposed to oil prices and Africa Oil has hedged 95% of its FY20 production at over US$65/bbl.
Companies: AKERBP AOI CNE CNE DGOC EGY ENOG ENQ GENL GKP GPRK GTE HUR IOG JSE KOS LUPE MAHAA OKEA ORC.B PEN PHAR PMO PTAL PXT RRE SDX SEPL TETY TGL TLW TXP WRL
Jubilee Metals (JLP) – Corporate – Large copper tailings project in Zambia – staged expansion for Sable Market Cap £82m Share Price 3.8p Jubilee announced yesterday that it had secured a JV with a private company - Star Tanganika – for the rights over a copper project at Ndola in Zambia. The purchase price was $5m ($0.6m in cash the rest in shares in Jubilee) which will be used to advance a further potential copper tailings project held by the owners of Tanganika. Jubilee will provide all of the operating and capital funding for the first phase project and will receive 75% of the project earnings until all capital is recovered dropping to 60% after that – Jubilee will also have first right of refusal over the copper-bearing concentrates produced on 3rd party offtake terms.
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
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
