Penn West reported second quarter results that came in slightly ahead of our thinking, although in isolation we view the results as somewhat of a non-event in light of material disposition activity to date. More importantly we believe focus will be placed on the uplift to corporate guidance and operating cost reductions, which have resulted in positive moves to our forecast. As part of its “Phase II” asset sale initiatives, Management has shed a further 6,000 boe/d of production for proceeds of
Companies: Penn West Petroleum
Impact: Slightly positive. We view second quarter results in isolation as somewhat of a non-event in light of material disposition activity to date, and believe more focus will be placed on the uplift to corporate guidance and operating cost reductions, which should help to buoy our estimates going forward.
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
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It comes as no surprise that the sale of Penn West’s Saskatchewan assets was viewed positively by the market, with the stock surging ~40% on the day, as the transaction materially reduces the Company’s outstanding debt position while ensuring it stays onside with its debt covenants for the foreseeable future. That said, it comes at the expense of parting with one of its prized assets, while further non-core dispositions will be required in order to improve the long-term outlook for the Company
Impact - positive as the transaction materially reduces the Company's outstanding debt position while ensuring it stays onside with its debt covenants that were set to be breached by the end of 2Q16, although comes at the expense of parting with its best asset with further non-core dispositions required in order improve the long-term outlook for the Company and allow it to be competitive within its peer group.
Our forecast for this week’s report is for an injection of 77 bcf. Last week was probably one of the most weather neutral weeks so far this year, as demand slipped modestly in all the major categories, while supplies held firm for the most part. With such slack conditions, we think the market can hold more in the 70s bcf range for injections, but still well below year ago injection rates, and below 5-year average injection rates for this time of year. This will prove critical in keeping storage
while quarterly results were ahead of expectations and annual operating expense guidance has been reduced, we expect the market to continue to focus on the Company's ability to continue as a going concern given the Company's need for a second round of covenant relief by the end of the second quarter to avoid default on its outstanding debt.
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.
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Penn West has announced the sale of its Slave Point assets for $148 mm along with additional non-core asset sales to the tune of $80 mm, bringing in combined proceeds of ~$230 mm that will go towards paying down outstanding debt. While the Slave Point asset was deemed as a core asset, given the current state of commodity prices Management had no plans to allocate any capital to the property over the near term. With net debt of ~$2,100 mm exiting 2015, these asset sales, while helpful, are relati
Impact - neutral with the sales proceeds going towards paying down debt, although relatively immaterial in the context of the Company's outstanding debt position, with the Slave Point assets defined as core assets up until this point
Penn West’s year-end results continue to paint a challenging picture for the Company with fourth quarter cash flow well below our thinking and the consensus estimate, coupled with a significant haircut to year-end reserves. Year-end reserves were down close to 50% in the 1P and 2P categories as were NPVs, as a result of ongoing disposition activity, economic factors, and negative technical revisions (largely stemming from an “FDC alignment”). Further uncertainty exists surrounding the Company’s
Impact - negative with fourth quarter cash flow well below our thinking and the consensus estimate coupled with a significant haircut to year-end reserves. In addition, further uncertainty exists surrounding the Company's outstanding debt as under current pricing Management is forecasting a breach of its covenants in 2Q16, and thus has entered into discussions with its lenders to explore available options, including potential for a second round of covenant relief
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
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Fourth quarter production came in ahead of our estimate on slightly lower spending, with 21 net wells brought on stream during the fourth quarter. The 2016e capital budget will see $50 mm of E&D spending, a 90% decrease from 2015e levels as Management works towards living within cash flow at current commodity prices. Production is anticipated to drop to a range of 60,000-64,000 boe/d in 2016e, down
considerably from the 2015e average of 86,250 boe/d, a portion of which is related to ongoing dis
Impact: Negative. While 2015e production was modestly ahead of our estimates, the large downdraft to 2016e capital spending will see downward revisions to our estimates. Penn West announced that its Board of Directors has approved a minimalist 2016e capital budget of $50 mm (FCC was $175 mm; consensus $278 mm), which is anticipated to generate average volumes of 62,000 boe/d (67% liquids), at midpoint. The Company provided a range of cash flow sensitivities calling for $0-$40 mm of cash flow at
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Given the stellar performance of PGM prices, it is no surprise that Sylvania have achieved another record quarter with EBITDA of $58.7m and cash balance increasing 52% to $102.1m. Annualising this past quarter, the stock trades on a ridiculously cheap EV/EBITDA of 1.5x. Production of 17.4koz was inline with expectations and guidance of 70koz for the year remains in place. We remain very comfortable on rhodium on a five-year view (see here) and expect the abnormal cashflows to continue (30% FY22
Companies: Sylvania Platinum Ltd.
Thor Mining (Thor) provides investors with exposure to a wide range of commodities in two safe jurisdictions (the USA and Australia). We see Thor's priority projects as its In-situ Recovery (ISR) projects in South Australia and its shovel-ready Molyhil tungsten project in Northern Territory. Short term, we expect news from exploration and drilling at its Ragged Range gold project in Western Australia and drilling in its uranium projects in Colorado – either of which could be transformational f
Companies: Thor Mining PLC
Semper Fortis Esports* recently announced its intention to IPO onto the Access Segment of the Aquis Stock Exchange Growth Market. Semper is a multi-operational Esports organisation focusing on gaming technology solutions, brand enhancement and high growth team infrastructures. The company plans to raise £2.5m to develop their three core areas of establishing an esports team, forming partnerships with brands for sponsorship and B2B consultancy services. The Board are highly experienced in spor
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Following on from our previous report we wanted to explore the potential value of the Jade, Topaz and Pearl prospects in the event of success. We explore a potential three stage approach to the drilling of the three identified prospects within Block 29/11. Phase 1 involves success at Jade, which in the event of a commercial discovery would see our risked valuation of Jade increase from 9.7p to 41.2p. Phase 2 involves success at Topaz, which in the event of a commercial discovery would see our ri
Companies: Empyrean Energy PLC
Not much of note in Touchstone’s Q1 results, although the oil price recovery has spurred increased workover activity on its mature base oil business, stabilising production. Cash resources remain strong and Touchstone has significant remaining headroom on its credit facility, which alongside existing cash flows should cover this year’s work programme. Our risked-NAV and price target fall slightly, by 4% to 157p/sh, due primarily to lower net cash balances, but the impending Royston exploration w
Companies: Touchstone Exploration Inc
AUCTUS ON FRIDAY: EGY US/LN, PEN NO, PTAL LN/TAL CN, TETY SS, VLU LN/VLE CN, ALV CN, AOI CN/SS, CNE CN, CNE LN, CPI CN, ENQ LN, GKP LN, HRB LN, HUR LN, IGAS LN, KOS US/LN, NOR NO, OKE NO, SENX LN, TXP LN/CN
Vaalco Energy (EGY US/LN)C; Target price of £3.80 per share: Removing oil price risk in 2021 - 1Q21 cashflow was negatively impact by a ~US$12 working capital movement that should be reversed on the upcoming period given that the c
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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 fa
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Bacanora Lithium (BCN LN) – Potential offer from Ganfeng
Lucara Diamonds (LUC CN) – Reports healthiest diamond market for 5 years
Pasofino Gold (VEIN CN) – C$9m equity raise
Power Metal Resources* (POW LN) – New corporate presentation
Rambler Metals and Mining* (RMM LN) – 2021 Q1 results and progress of recovery plan
Rio Tinto (RIO LN) – Battery-grade lithium produced at California plant
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• The 7D well has been put on production at 3,700 bbl/d during the first 10 days of production and has averaged 4,550 bbl/d during the past three days. The well took only 33 days to drill at a cost of US$8.6 mm (7% below the US$9.2 mm estimate).
• During the last three days, Bretana oil field production has averaged approximately 11,100 bbl/d. Two wells, representing 1,200 bbl/d, are currently shut in awaiting increased water injection pump enhancements, suggesting an overall well production ca
Companies: PetroTal Corp.
InfraStrata has conditionally raised £10.3m in a placing (with potential for up to a further £4.1m through an open offer) to support delivery of a transformational £26.5m fabrication contract with Saipem. This project validates management's vision for the company, and paves the way for future fabrication contracts. With the substantial pipeline of opportunities being targeted (c£1.7bn), alignment to structural growth drivers that are underpinned by government policy, and the credibility provided
Companies: InfraStrata plc
European Metals Holdings (EMH) yesterday provided a further update on its resource drilling programme at Cinovec; the nineteen hole drill program is to define blocks of resource for the first 5 years of mining within the Cinovec-South area and to convert the resource from Indicated to the Measured category. Seventeen holes have been completed with results reported by EMH to be in line, or better, than modelled. Of the six holes reported today, there were some intercepting significant tin miner
Companies: European Metals Holdings Limited
Oil posted a gain this week as expectations for growing economic activity in nations from the US to Europe fuelled optimism around stronger summer demand. Futures in New York advanced 2.1% this week in the first back-to-back weekly increase since early March. Fuel sales in the UK rose to the highest since the pandemic again, and in the US, refineries are running at their highest rate since the pandemic began as they gear up for the summer driving season.
Crude's advance this week comes amid s
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Canyon Resources (CAY AU) – Minim Martap bauxite project mineral resource upgrade (Altus Strategies is invested in Canyon Resources)
Marvel Gold (MVL AU) A$0.05, Mkt Cap A$27m – Chilalo Graphite Project spin out (Altus Strategies holds a JV agreement with Marvel Gold)
Metal Tiger (MTR LN) – Drilling Commenced at KML copper project
Serabi Gold* (SRB LN) – Drilling confirms lateral and depth extensions to mineralisation at Palito
Companies: ALS SRB MTR CAY MVL
Q1 2021 results
Companies: Serinus Energy plc
Atalaya Mining (ATYM LN) –Q1 reaps benefit of a strong operating performance and higher copper prices
Caledonia Mining* (CMCL LN) – Blanket mine comes through weather affected Q1 to deliver above planned gold production in April
Eurasia Mining* (EUA LN) – Eurasia asset sale process. West Kytlim operations expand capacity
GoldStone Resources* (GRL LN) – Significant production guidance upgrade at Homase
Shanta Gold (SHG LN) – NED appointment
Walkabout Resources (WKT AU) – A$6.4m equity raise
Companies: CMCL EUA GRL SHG ATYM WKT