PetroTal (PTAL LN)C; Target price £0.40: Important development in Peru – On August 28, 2020, the Government of Peru announced a Supreme Decree approving the financial Gap Closure Plan within a number of provinces in northeast Peru, including Loreto, the area where PetroTal operates the Bretana oil field. The decree provides for a six year financial commitment of approximately US$1.7 bn to the communities. This is important as the decree specifically addresses the local community participation criteria, that have been a recurrent key area of contention for years with some communities in Peru. US$46 mm will be designated for economic development of the localities over the next four months by the Peruvian government. Since the announcement of the Decree, government and municipality representatives have been consulting with the community representatives . After meeting with the Bretana community in the coming days, it is expected that PetroTal will restart oil production shortly thereafter.
IN OTHER NEWS
88 Energy (88E LN/AU): Update in Alaska – The final petrophysical interpretation from the recently drilled Charlie-1 well provides an increase in net pay from 280’ to 398’, with the largest contribution coming from the Lima discoveries in the Seabee Formation. These improvements are despite using higher cut-offs for both reservoir and net pay.
Alvopetro (ALV CN): Update in Brazil - In August, total sales were 1,867 boe/d. Total aggregate gross prospective resources identified at the B1 prospect (block 183) and the C1 prospect (block 182) are estimated at 59.4 bcf.
Echo Energy (ECHO LN): Operating update in Argentina - Net 2020 production at Santa Cruz Sur over the period 1 January to 7 September was 2,040 boe/d.
Exxon Mobil (XOM US): New discovery in Guyana - ExxonMobil has made its 18th discovery at the Redtail-1 well on the Stabroek Block with 70 meters of high-quality oil bearing sandstone.
Total (FP FP): Dropping operatorship of Brazilian exploration blocks – Total is resigning from its role of operator for five exploration blocks, located in the Foz do Amazonas Basin. These exploration blocks are referenced as FZA-M-57, FZA-M-86, FZA-M-88, FZA-M-125 and FZA-M-127.
Westmount Energy (WTE LN): Increasing stake in JHI Associates - Westmount has purchased 1.55 mm common shares in JHI by way of the issue of 18.3 mm new ordinary shares in Westmount, which will represent approximately 12.7% of Westmount's enlarged issued share capital. JHI holds a 17.5% carried interest in the Canje Block, offshore Guyana, where ExxonMobil is the operator. At the completion of the transaction, Westmount will hold 6.9% in JHI.
Hibiscus Petroleum: Raising ~ US$480 mm to acquire upstream assets – Hibiscus is raising up to US$480 mm from a private placement of convertible redeemable preference shares to acquire oil and gas assets.
Jadestone Energy: 1H20 results – 1H20 WI production in Australia was 12,116 bbl/d. Net cash at the end of June was US$78.3 mm. FY20 production guidance has been reduced to 11.0–12.5 mbbl/d from 12.0-14.0 mbbl/d previously, as a result of a slowdown in well interventions. Jadestone reiterated its FY20 capex guidance of US$30 35 mm. A maiden interim dividend of 0.54 US cents/share has been declared, representing a total distribution of US$2.5 mm, in line with the lower end of the FY guidance of US$7.5–12.5 mm, split approximately one-third/two-thirds between interim/final. The company anticipates to be debt free by the end of 1Q21. Most approvals are now in place with regards to the New Zealand acquisition and Jadestone expects final government approvals in 4Q20 post the upcoming general election. In Vietnam, discussions are continuing with the government on the FDP and a future gas sales agreement.
Hurricane Energy (HUR LN): Reserves downgrade in the UK – 2P reserves have been reduced from 30.7 mmbbl to 9.4 mmbbl (as of 01/09/2020) with 2C contingent resources cut from 486 mmbbl to 58 mmbbl at Lancaster and from 565 mmbbl to 45 mmbbl at Lincoln. Lancaster EPS production for September to December 2020 is expected to average 12,000-14,000 bbl/d. The company held net debt of US$123 mm at the end of June.
Reabold Resources (RBD LN) and ADX Energy (ADX AU): Partner not farming in Romania assets? – Tamaska Oil & Gas has decided not to proceed with the farmin transaction relating to the EX-10 Parta Exploration licence in Western Romania held by Danube Petroleum (49% ADX, 51% Reabold). Tamaska does not intend to proceed with the planned acquisition of 3D exploration seismic.
Serica Energy (SQZ LN): 1H20 results – 1H20 production in the UK North Sea was 21,600 boe/d. First gas at Columbus continues to be expected by the end of 2021. Serica held £101 mm in cash at the end of June.
The Parkmead Group (PMG LN): Licence awards in the UK – Parkmead has been offered 50% WI in Blocks 14/20g & 15/16g situated in the Central North Sea, adjacent to Parkmead's extensive Greater Perth Area. Two further licences have been offered to Parkmead as part of the 32nd Round. Block 14/20c (Parkmead 100%) is located in the Central North Sea and contains extensions to the Lowlander oil field and the Fynn Beauly oil discovery. Block 42/28g (Parkmead 100%) is situated in the Southern North Sea near the Tolmount gas discovery.
FORMER SOVIET UNION
Cadogan Petroleum (CAD LN): 1H20 results – 1H20 production in Ukraine was 230 bbl/d. The company held US$11.6 mm in cash at the end of June.
MIDDLE EAST AND NORTH AFRICA
Chariot Oil & Gas (CHAR LN): Resources update in Morocco – Anchois is now expected to hold 361 bcf of contingent resources (2C) and 690 bcf of prospective resources (P50).
Energean (ENOG LN): 1H20 results – 1H20 pro forma production (including Edison E&P) was 52.1 mboe/d, with FY20 production guidance unchanged at 44.5 - 51.5 mboe/d. The acquisition of Edison E&P is expected to be completed during 4Q20. The FY20 pro forma capex guidance has been reduced by US$75-125 mm to US$635 - 705 mm, primarily due to (i) the rescheduling of expected milestone payments under the Karish EPCIC contract; and (ii) expected timing of capital expenditure on Edison E&P in Egypt. Net debt at the end of June was US$597 mm.
ShaMaran Petroleum (SNM CN): Receives payment from Kurdistan – ShaMaran has received a net payment of US$6.5 mm from the Kurdistan Regional Government for Atrush oil sales invoice entitlements for the month of July 2020.
Tethys Oil (TETY SS): Production update in Oman – WI production in August was 10.8 mbbl/d.
Zenith Energy (ZEN LN): Acquisition in Tunisia – Zenith is acquiring a 26% interest in the North Kairouan permit and the Sidi El Kilani Concession, which contains the Sidi El Kilani oilfield for US$0.3 mm.
Africa Oil (AOI/SS CN): Extension of Kenya licences – The partners on the 10BB and 13T licences have been given the right to extend the second exploration period until 31 December 2020, with a further extension until 31 Dec 2021.
Kosmos Energy (KOS US/ LN): Selling frontier exploration assets for US$100-200 mm – Kosmos is selling interests in blocks offshore São Tomé & Príncipe, Suriname, Namibia, and South Africa to Shell. The consideration consists of an upfront cash payment of ~US$100 mm, plus contingent payments of US$50 mm payable upon each commercial discovery from the first four exploration wells drilled across the assets, capped at US$100 mm in aggregate. Three of the four wells are currently planned for 2021.
Tullow Oil (TLW LN): 1H20 results – 1H20 production was 77 mboe/d. Net debt at the end of June was US$3.0 bn. FY20 production guidance has been narrowed from 71-78 mbbl/d to 73-77 mbbl/d following good well performance in Ghana. During 1H20, Jubilee and TEN produced 84,700 bbl/d and 50,900 bbl/d gross respectively. This strong performance is a result of (1) increased gas offtake nominations, (2) permission to temporarily increase flaring, (3) higher than forecast facility uptime of over 95% at both FPSOs and (3) greater reliability and redundancy in the water injection facilities on the Jubilee FPSO. The Ntomme-09 production well came on stream in August and is adding c.5,000 bbl/d gross to TEN oil production. FY20 free cash flow is forecast to break even at the current Brent forward curve. The semi-annual RBL debt capacity redetermination is expected to complete in early October 2020. The next redetermination will be in January 2021. Drilling of the Goliathberg-Voltzberg North well in Block 47, Suriname, is planned for 1Q21.
Companies: 88E AOI ALV ENOG 0R1M HUR JSE KOS PMG PTAL RBD SQZ 0VH4 TPL TTA TLW
Panoro Energy (PEN NO)C; Target price NOK23.00: Showcasing Gabon – The important news is the very large resources estimate increase at Greater Hibiscus. The Hibiscus South and Mupale prospects are now mapped by the operator as part of the Hibiscus structure with overall recoverable volume of 155 mmbbl. This compares with current gross 2P reserves at Hibiscus of only 45 mmbbl. Net to Panoro’s 7.5% WI, this could add ~8 mmbbl, representing about 100% of the company YE19 WI 2P reserves in Gabon. One or two appraisal wells are expected to be required to confirm the new mapping of Greater Hibiscus with the wells likely to be drilled early next year. BW Energy indicated that the production capacity of the Ruche phase-1 development could be increased by ~50% to 60 mbbl/d at a nominal cost with simple debottlenecking work, should the increased resources be confirmed. We are increasing our target price from NOK20 to NOK23 per share in line with our new ReNAV that captures the risked value of the resources addition. Our new target price represents ~100% upside. Panoro was already one of the few names that offers material near term exploration upside. The likely addition of appraisal drilling on the Greater Hibiscus area enhances this profile with a total unrisked value for near term drilling of NOK29 per share.
IN OTHER NEWS
Arrow Exploration (AXL CN): Divesting assets in Colombia - Arrow is selling LLA-23 to COG Energy for a gross cash consideration of US$11.75 mm plus a contingent consideration of US$0.25 mm. Arrow will also transfer to COG its work obligations under various letters of credit in place to guarantee work commitments on LLA-23 for a total of ~US$7.3 mm.
Maha Energy (MAHA-A SS): 2Q20 results – 2Q20 production in Brazil was 3,602 boe/d. Maha held US$15.7 mm in cash at the end of June.
Getech (GTC LN): 1H20 update
Independent Oil & Gas (IOG LN): 1H20 results and project update in the UK – First gas at the core project in the Southern North Sea continues to be expected in 3Q21. The company had £104.1 mm in cash at the end of June including restricted cash of £72.6 mm. A further £36.7 mm of uncalled development carry was available at the end of June from CalEnergy Resources. £60 mm funds from the senior bond remain in escrow.
Ithaca Energy: 1H20 results – 1H20 production in the UK was 73 mboe/d. Forecast FY20 production is anticipated to be at the top end of the 63-68 mboe/d guidance range. Net debt at the end of June was US$1.3 bn.
Large gas discovery in Turkey – The Tuna-1 well encountered 11.3 tcf in the Turkish Black Sea.
Neptune Energy: 1H20 results – 2Q20 production was 149.6 mboe/d. FY production guidance is unchanged at 145-160 mboe/d. Net debt at the end of June was US$1.6 bn. The company also reiterates most of its financial guidance. FY20 expected exploration spend increased marginally to US$135 mm, reflecting positive drilling results and a further appraisal study at Isabella.
FORMER SOVIET UNION
Petroneft (PTR LN): Operational update in Russia – Licence 61 production in July was 1,589 bbl/d.
MIDDLE EAST AND NORTH AFRICA
Pharos Energy (PHAR LN): 1H20 results – 1H20 WI production of 12,093 boe/d had already been reported. FY20 cash capex is expected to stand at ~US$37 mm of which US$31.9 mm was spent in 1H20. Net debt at the end of June was US$36.1 mm. FY20 production guidance of 5.5 mboe/d for Vietnam and 5.0-6.0 mboe/d for Egypt is reiterated.
Tethys Oil (TETY SS): Production update in Oman – WI production from Blocks 3&4 onshore Oman amounted to 10,260 bbl/d. Oil production in Oman continues to be subject to production limitations under the OPEC+ agreement.
Africa Energy (AEC SS/AEF CN): Consolidation of Block 11B/12B interest and Impact Oil & Gas to become major shareholder in Africa Energy – Africa Energy is consolidating the interests of Impact Africa and Arostyle in Block 11B/12B offshore South Africa. Impact will subscribe for 509 mm shares in Africa Energy, resulting in Impact holding over 39% of Africa Energy’s enlarged share capital. Africa Energy will have also an option to acquire Arostyle’s indirect interests in the block which would result Arostyle being issued 64.5 mm shares in Africa Energy. The Luiperd-1X well is expected to be drilled this quarter.
BW Energy (BWE NO): 1H results and operational update in Gabon - Recent results of reprocessed seismic suggest an increase in the Greater Hibiscus (Gabon) oil-in-place volumes by potentially ~3.0x. Hibiscus South and Mupale are now mapped as part of the Hibiscus structure with overall recoverable volume of 155 mmbbl. This compares with current 2P reserves at Hibiscus of 45 mmbbl. Gross production from Dussafu averaged 15,991 bbl/d during 2Q20 with current production of 18 mbbl/d on four wells and FY20 production guidance of 15-16 mbbl/d. The connection and completion of the last two Tortue wells have been deferred to early 2021 with first oil expected in 2Q21.
FAR Limited (FAR AU): Update in Senegal – Cash calls for the SNE development for June, July and August are currently unpaid and total US$28.2 mm. As at 31 July 2020 FAR has cash of US$63.4 mm.
Lekoil (LEK LN): FY20 results – FY2o gross production at Otakikpo in Nigeria was 5,035 bbl/d. At the end of July, Lekoil held US$0.6 mm in cash.
EVENTS TO WATCH NEXT WEEK
03/09/2020: EnQuest (ENQ LN) – 2Q20 results
03/09/2020: Gulf Keystone Petroleum (GKP LN) – 2Q20 results
Companies: PHAR FAR GTC 0GEA PENUSD PTR TPL
PetroTal (PTAL LN/TAL CN)C; Target price £0.45: 1Q20 results/Bretaña expected to restart in July – 1Q20 financials are in line with expectations and 1Q20 production had been reported previously. At the end of 1Q20, current trade and other payables had been reduced to ~US$45 mm compared to ~US$55 mm at YE19. Most importantly. PetroTal continues to expect the Bretaña field to be re-opened this month. The contingent liability with Petroperu is estimated at US$25 mm at the current oil price and the company has entered into a financial swap for 0.46 mmbbl of oil with an ICE Brent reference price of US $40.58/bbl to cover the upcoming sale by Petroperu at the Bayovar port. This is a recovery story that we continue to like. It offers a combination of value, production and cash flow growth and reserves upside. We anticipate that the imminent reopening of the field with be an important catalyst to the share price.
i3 Energy (I3E LN): Reveals takeover target in Canada | Maha Energy (MAHA-A SS): Production update | Aker BB (AKERBP NO): 2Q20 update in Norway | Energy (RRE LN): Recommended offer by Viaro Energy | Spirit Energy: Dry hole in Norway | Enwell Energy (ENW LN): Ukraine update | JKX Oil & Gas (JKX LN): 2Q20 update in Ukraine and Russia | Pharos Energy (PHAR LN): Operating update in Egypt and Vietnam | Sound Energy (SOU LN)C: Terms of Moroccan licence renegotiated | Tethys Oil (TETY SS): June production in Oman | Victoria Oil & Gas (VOG LN): Gas sales contract with ENEO in Cameroon terminated
EVENTS TO WATCH NEXT WEEK
14/07/2020: Aker BP (AKERBP NO) – 2Q20 results
15/07/2020: Premier Oil (PMO LN) – 1H20 update
13-17/07/2020: GeoPark (GPRK US) – 2Q20 update
Companies: I3E 0GEA JKX PHAR DNQ ARC ENI HUR PTAL REP RRE SOU TPL VOG OMV
PetroTal (PTAL LN/TAL CN)C: FY19 results | Wentworth Resources (WRL LN)C: Trading update in Tanzania | Touchstone Exploration (TXP LN/CN): Very good well results in Trinidad | Trinity Exploration and Production (TRIN LN): Trading update in Trinidad | Genel Energy (GENL LN): Payment from KRG | Gulf Keystone Petroleum (GKP LN): Operating update in Kurdistan | Tethys Oil (TETY SS): Production update in Oman | Tlou Energy (TLOU LN): Raising A$3 mm of new equity
Companies: TPL GENL SLG TLOU TXP
Oil clinched the best weekly gain for the year on signs the worst economic impacts of the lethal viral outbreak have been accounted for, easing concern about free-falling demand for crude.
Futures advanced 1.2% in New York on Friday, settling above $52 for the first time this month. Investor confidence was lifted after China reassured the international community that a huge spike in new coronavirus cases was a one-off event. The optimism outweighed Goldman Sachs Group Inc. slashing its 2020 crude-demand growth forecast almost in half and lowering its first-quarter oil-price estimate by 16%.
The Organization of Petroleum Exporting Countries and its allies have signalled a desire to stabilize the oil market that has tumbled almost 15% this year as the coronavirus wreaked havoc on the world's second-largest economy and beyond.
The past two weeks have been rife with uncertainty for oil markets as Riyadh's push for an early meeting in February and fresh production cuts face an impasse with Russia.
OPEC and its allies were close to abandoning any plans for an emergency meeting though Saudi Arabia had not given up on the proposal outright, several delegates from the group said on Friday. The outbreak has intensified concerns about crude demand, prompting technical experts from the coalition to propose deepening the current supply cuts by 600,000 barrels a day to relieve excess inventories.
Chinese independent refiners have seized on the recent slump in oil prices to bulk up on cheap cargoes in a sign that they may be positioning for an eventual rebound in demand.
West Texas Intermediate crude for March delivery gained 63 cents to settle at $52.05 a barrel on the New York Mercantile Exchange. Brent for April settlement rose 1.7% to settle at $57.32 on the ICE Futures Europe exchange.
The structure of the Brent futures market also flipped into a backwardation, signalling that some of the oversupply may have eased.
Meanwhile, Kuwait and Saudi Arabia will resume oil production from their shared fields this month, more than five years after a dispute halted supply. The projects will bring additional production capacity to an oil market that's already dealing with excess supply.
Companies: TPL SENUSD PVR BP/ CORO EME PMO SDX TLW 88E
Tethys Petroleum (TPL LN) (not covered): Negative result of Tajikistan arbitration | Volga Gas (VGAS LN) (not covered): December production in Russia | Genel Energy (GENL LN); HOLD, £1.60: December production at Taq Taq | Orca Exploration (ORC.A/B CN) (not covered): US$130 mm investment by Swala Oil & Gas
Companies: TPL VGAS GENL ORC/B
Frontera Energy (FEC CN)6 ; BUY, CN$53.00: Frontera’s 3Q17 cash flow impacted by a build in inventory and pipeline downtime | Madalena Energy (MVN CN) (not covered): 3Q17 update in Argentina | Touchstone Exploration (TXP CN)1,6; BUY, C$0.50: Better than expected cash flow in 3Q17 and expanded development drilling program | Niko Resources (NKO CN) (not covered): 3Q17 results | TAG Oil (TAO CN)1; BUY, C$0.75: Fiscal 2Q18 results that benefitted from strong realized pricing | Exillon Energy (EXI LN) (not covered): October production in Russia | Tethys Petroleum (TPL LN/CN) (not covered): 3Q17 update in Kazakhstan | Africa Oil (AOI CN/SS); BUY, C$3.00: 3Q17 results | Eland Oil & Gas (ELA LN) (not covered); Operations update in Nigeria | Savannah Petroleum (SAVP LN) (not covered): Transaction update with Seven Energy in Nigeria | Orca Exploration (ORC A/B CN) (not covered): 3Q17 results
Companies: MVN TXP NKRSF TAO EXI TPL AOI ELA SAVE ORC/B
GeoPark (GPRK US)1,6; BUY, US$6.50: Announces new exploration discovery and development drilling successes in Colombia | Eco Atlantic Oil and Gas (EOG CN) (not covered): Raising Equity and Listing on AIM | Ithaca Energy (IAE LN/CN): Recommended takeover offer by Delek | Aker BP (AKERBP NO) (not covered): 4Q16 results | Europa Oil & Gas (EOG LN) (not covered) & Angus Energy (ANGS LN) (not covered): £2 mm fundraising and Acquisition of Interest in PEDL143 in the UK | Tethys petroleum (TPL LN/CN) (not covered): Corporate update | Transglobe Energy (TGL CN); BUY, C$6.00: 2017: capital budget | Aminex (AEX LN) (not covered) & Solo Oil (SOLO LN) (not covered): Ntorya-2 Initial Well Results in Tanazania
Companies: 0MDP IAE TPL TGL
Green Dragon Gas (GDG LN) (not covered): Operations update in China | Private Equity commits further capital to Norway | Royal Dutch Shell (RDSA/B LN) (not covered): 4Q16 results | Tethys Petroleum (TPL LN/CN) (not covered): Court ruling in favour of Tethys | SDX Energy (SDX LN/CN)1; BUY, £0.65: Egypt & Morocco Operations Update | Sound Energy (SOU LN) (not covered): Preliminary volume estimates in Morocco
Companies: G3E RDSA TPL SOU SDX
Tethys Petroleum (TPL LN/CN) (not covered): Gas sales contract in Kazakhstan | ENI (ENI IM) (not covered): No Divestment of stake in Zhor in Egypt to Rosneft
Companies: Tethys Petroleum (TPL:TSE)Eni S.p.A. (ENI:WBO)
Gran Tierra (GTE CN)1, 6; BUY, C$6.50: FLASH: operational update | SOCO International (SOCO LN) (not covered): Trading & operations update | New Zealand Oil & Gas (NZOG AU) (not covered): selling New Zealand’s properties to Genesis Energy | IGas Energy (IGAS LN) (not covered): Springs road planning application approved onshore UK| Tethys Petroleum (TPL LN/CN) (not covered): 3Q16 Results | ShaMaran Petroleum (SNM CN) (not covered): 3Q16 Results | Wentworth Resources (WRL LN/NO) 1, 6; BUY, £0.45: 3Q16 low production leads company to seek other potential sources of gas demand
Companies: GTE PHAR TPL 0VH4 WRL IGAS
Soco International (SIA LN) | Reliance Industries, BP | La Francaise de l’Energie | Valeura Energy | Tethys Petroleum
Companies: PHAR VLU TPL
Lundin Petroleum (LUPE SS) | Tethys Petroleum (TPL CN/LN) | Volga Gas (VGAS LN) | Genel Energy (GENL LN) | Sound Energy (SOU LN) | Africa Energy (AFE CN)
Companies: LYV TPL VGAS GENL SOU AFE
Amerisur Resources (AMER LN) | Tethys Petroleum (TPL CN/LN) | Roxi Petroleum (ROXI LN) | Tullow Oil (TLW LN) | Total (FP FP)
Companies: AMER TPL CASP TLW TTA
Research Tree provides access to ongoing research coverage, media content and regulatory news on Tethys Petroleum.
We currently have 31 research reports from 4
Central Asia Metals (CAML LN) following a successful ramp up at Sasa, progress in the environmental clean up and confirmation of the remedial costs in line with the previously guided US$1.5m the company has declared an interim dividend of 6p/sh. This will be paid on 11 December 2020 with a record date of 20 November 2020.
Companies: Central Asia Metals Plc
Parkmead’s portfolio has evolved to the point where it is now a full-cycle E&P company with a low-cost Dutch production base and a broad spectrum of high-quality UK growth opportunities, encompassing material development projects and an attractive range of risk/reward exploration. Recently, it has diversified into renewables, future proofing its equity story and opening up a new ‘investor-friendly’ avenue of growth. A core strength of this management team is its commercial acumen and portfolio-driven approach to optimising value. Parkmead has been in portfolio construction mode to date but is now well positioned to start crystallising its intrinsic value. We initiate with a risked-NAV based price target of 155p/sh. Investors would do well to get on-board with a management team that has a strong track record of delivering shareholder value.
Companies: Parkmead Group PLC
• In an Important development, PetroTal has signed a contract with an international oil trader for a pilot shipment to export 0.12 mmbbl into the Atlantic region using the Amazon river through Brazil. The shipment will be sold FOB Bretana, priced at the forward month Brent ICE price, and paid within two weeks of loading at Bretana. There are no subsequent oil price adjustments.
• At November 19, 2020, PetroTal had cash resources of US$9.8 mm, with accounts payable and accrued liabilities of ~US$39 mm, a reduction of ~US$11 mm from the end of 2Q20. The company has been paid US$5.5 mm for delivery of 0.192 mm bbl of oil to Petroperu in October. Production is constrained to ~5,000 bbl/d pending the reopening of the export pipeline.
• We understand that the pilot should start in December. This would not only provide ~US$5 mm in cash to PetroTal but also allow production to return to recent levels (11.5 mbbl/d), effectively unlocking the fundamental value of the asset.
Balance sheet considerations
The potential financial derivative liability has been reduced from US$22.5 mm at the end of June to US$17 mm at the end of September. Of the US$39 mm current payables 46% are not due before 2021 and we note that the company still holds US$13 mm in account receivables and US$4.7 mm in inventory.
Financials on “a back to normal” scenario with flat production
We are now assuming production remains constrained at 5 mbbl/d over 4Q20 with minimum capex with cashflow and receivables being used to repay the due payables over the period.
On production of just ~11.5 mbbl/d during 2021, we estimate operating cashflow of US$85 mm at US$48/bbl Brent. This would result in free cashflow of >US$40 mm assuming capex of US$20 mm to maintain production and US$20 mm to repay the remaining payables. This compares with a current market cap of just US$75 mm, suggesting FY21 free cashflow would represent over 50% of the current market cap in a no growth scenario assuming production can be exported.
Our target price of £0.45 per share represents 6x the current share price.
Companies: PetroTal Corp.
Edison Investment Research is terminating coverage on Diversified Gas & Oil (DGOC), Vermilion Energy (VET) and Circle Property (CRC). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant.
Companies: Diversified Gas & Oil PLC
EQTEC has announced today that the Company and Scott Bros. Enterprises Limited have agreed to extend the exclusivity period of the Billingham MOU until 18 December 2020. The Billingham MOU has been subject to previous extensions, as announced on 23 October 2019, 23 June 2020 and 18 September 2020.
Companies: EQTEC PLC (KEU1:FRA)EQTEC PLC (EQT:LON)
Pan African Resources (PAF) has announced that it is to acquire 100% of Mogale Gold and Mintails SA Soweto Cluster from Mintails’ liquidator for ZAR50.0m (US$3.2m). Combined, the two assets host a mineral resource of 243Mt (in tailings), containing 2.36Moz gold. As such, consideration equates to US$1.31 per oz of contained gold cf an average valuation of US$9.88/oz for London-listed pre-production gold assets (see Gold stars and black holes, published in January 2019). Closure of the deal is subject to the usual due diligence, including the evaluation the assets’ amenability to retreatment.
Companies: Pan African Resources PLC
Savannah’s acquisition of a key strategic Nigerian gas asset with strong growth potential has been ignored by the market. Its significant exploration success in Niger has also gone unrewarded. Delivery of the strong free cash flow potential these assets offer will re-rate the shares, which are materially undervalued. Management’s tenacity in getting the Seven Energy acquisition across the line alongside the impressive early progress with the acquired assets should give investors confidence. We initiate with a Buy rating and risked-NAV based price target of 49p/sh.
Companies: Savannah Energy Plc
Oil declined for a second session as rising Covid-19 cases threatened to derail demand with tougher restrictions in major US cities on the horizon.
Futures fell 2.4% in New York on Friday, but still posted the largest weekly gain in a month as optimism from news of a potential Covid-19 vaccine breakthrough jolted markets earlier in the week. Despite the measure of hope for the long-term, US cities from the West to East coasts have imposed stricter measures to slow surging case counts, raising concerns that the virus will further crimp demand for fuel. Gasoline futures also slumped.
Before concerns over lockdowns set in, futures also got support from signs the OPEC+ alliance is inching closer to delaying a planned output increase in January. But downbeat demand forecasts from the International Energy Agency and OPEC have clouded hopes of a recovery. At the same time, governors of states along the US West Coast issued travel advisories, following measures recently imposed in New York and Chicago.
Meanwhile, crude supply in Libya is rising. The country's production rose to 1.145 million barrels a day on Friday, according to a spokesman for its state-run National Oil Corp.
West Texas Intermediate for December delivery lost 99 cents to settle at $40.13 a barrel. The contract rose 8.1% this week.
Brent for January settlement slid 75 cents to $42.78 a barrel.
Gasoline for December delivery declined 2.7% to $1.1254 a gallon.
In Europe, where motorway traffic is down by almost 50% in some countries, demand is stuttering anew. That is impacting crude, with six supertankers of unwanted North Sea oil continuing to float in the region. Meanwhile, vehicle miles travelled on US highways fell last week in another sign Americans are keeping off the roads amid the pandemic.
Companies: FOG PVR 88E DGOC EME TRIN UOG
Panoro Energy (PEN NO)c; Target price of NOK23.00: Revisiting Gabon - BW Energy provided an update on Dussafu with FY20 production guidance expectation marginally below previous guidance (14.25 mbbl/d versus 15 16 mbbl/d) due to COVID-19 restrictions and OPEC+ quotas. This results in FY20 opex expected to be US$19/bbl which is slightly above the previous guidance of US$17-18/bbl. The drilling of DTM-7H, and the tie-in of DTM-6H and -7H, has been deferred to mid-2021 with first oil expected in 3Q21 and our estimate of the timing of the field production ramp-up has been delayed by one quarter. BWE continues to expect production from the Dussafu area to reach >30 mbbl/d in 2023 and ~40 mbbl/d in 2024. The Hibiscus development is expected to offer 15% IRR at
Companies: TGL TGA 88E FEC JSE LUPE LUNE LNDNF LYV NOG GB_NTRM NSTRY 3NO PANR P3K PTHRF PTAL TETY TETY AOI ENOG PEN SDX EGY
Salt Lake Potash's AGM update reported that the Lake Way project is now 74% complete. Construction of the process plant is on-schedule with practical completion and first SOP production planned for Q1/21. Drawdown of the Senior Facility Agreement funds and repayment of the Taurus bridge loan is expected soon.
Companies: Salt Lake Potash Limited
88 Energy has raised A$10m (before expenses) at a price of A$0.006 (0.33p) to fund the ongoing evaluation of the Company's portfolio and to enable it to identify and exploit new opportunities on the Alaskan North Slope. The net proceeds will fund 88E's share of any potential costs associated with the drilling of the Harrier and Merlin prospects at Project Peregrine, scheduled to commence in Q1/21. Harrier and Merlin are on trend and south of the ConocoPhillips Harpoon and Willow discoveries, and are estimated to contain >1bn boe of gross unrisked net prospective resources. Lying at a depth of 5,000ft, both prospects can be drilled at a gross cost of cUS$15m, providing shareholders with access to a huge potential resource at a relatively low cost. Following strong industry interest, a preferred bidder has been selected, with 88 Energy looking to conclude the farm-out of Project Peregrine in the next few weeks. Following yesterday's placing, we value the Merlin and Harrier prospects at 0.5p/share (risked) in aggregate, increasing to 8.0p/share unrisked. We update our target price to 2.3p (a 597% premium to the placing price and reiterate our BUY recommendation).
Companies: 88 Energy Limited
Hargreaves’ AGM statement confirms a positive start to FY21, building on the resilient FY20 performance. Trading is in line with expectations, the Industrial Services business has won a number of new contracts, and Hargreaves Land is said to be close to announcing the completion of its first plot sale at Blindwells. In our view, the shares are yet to reflect the earnings growth forecast for the next three years or the prospect of a 20p total dividend, which is expected to be paid first in FY22 as previously restricted HRMS profits are distributed. A further update on trading will be provided in early December, ahead of interims at the end of January.
Companies: Hargreaves Services plc
As expected, Castings' interim results highlighted a tough period with customer shutdowns and lockdown measures causing a 43% decline in revenue. Pent-up demand, a recovering trucking industry and strong new truck orders supports activity levels that have now reached 100% of pre-COVID levels and likely to exceed this in short order. Reinstate buy rating.
Companies: Castings PLC (CGS:LON)Castings PLC (9Z9:STU)
Jubilee today releases its audited annual accounts for the year ending June 30 2020. As expected, the results show the real progress made through the year. Production up, revenues up (132% to £54.8), Operating profit up (226% to £15.9m and EPS up (96% to 0.94/sh). We have seen solid progress on the expansion in the chrome and PGM projects in South Africa and consolidation of ownership of the projects against a background of Covid – which Jubilee successfully navigated. The year also saw robust plans for expansion in Zambia at the Sable Refinery in Kabwe. Security of supply has been achieved by three transactions which tie up dump resources all set to feed into the (to be) expanded Sable Refinery and making Jubilee a producer of scale in Zambia. We see fair value in Jubilee at 12p and present our first forecasts for the company (FY2021E).
Companies: Jubilee Metals Group PLC
We believe that Pantheon Resources is on the cusp of generating substantial shareholder value by progressing the appraisal and commercialisation of its world-class Alaskan oil & gas discoveries, all of which benefit from 3D seismic and well penetrations. Of its six identified targets in Alaska, Pantheon Resources has established resource estimates for three, which have a combined success-case recoverable resource potential of 720 million barrels of oil. Our current fair value estimate includes the equivalent of 147 million barrels of oil or 20.5% of the defined success-case potential resources. We see scope for future value creation from commercial and geological derisking. The board of Pantheon Resources has high-profile Alaskan pedigree, commercial acumen, substantive technical backgrounds and deep oil & gas experience, which we believe will favour successful value creation for shareholders. All-in, we see a positive multi-year trajectory of value creation for the company. We are initiating on Pantheon Resources and see fair value at 75p/sh.
Companies: Pantheon Resources plc