While the quarter modestly trailed our expectations, Trilogy’s spending represented only 11% of cash flow while reining in operating costs, and observing only modest production declines which should situate the Company well for 2H16e where more drilling activity is planned. With this release, we have made no material changes to our estimates, though note that operational catalysts will be ramping up in 2H16e. Sustained improvements to drilling costs may lead to a bump to our reinvestment efficiencies as more capital is deployed throughout the year. We are increasing our 12 month target price to $6.00 per share while electing to maintain our Market Perform ranking on the stock.
Companies: Trilogy Energy
Impact: Neutral. While the quarter trailed our expectations, Trilogy has managed to hold spending under cash flow while reining in operating costs, which should situate the Company well for 2H16e where more drilling activity is planned.
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: 0UG9 ARX BTE BNP 0UR7 ERF POU 0VCO PGF PWT PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS NVA PPY PNE RRX RMP SRX SGY TOG TET ATU CKE GXE IKM LXE MQL PRQ SPE SKX TVE TVETF YO
Impact: Neutral to slightly negative. The re-determination to $300 mm removes some margin of error for Trilogy and brings total borrowing capacity closer to our net debt estimate exiting 2Q16e, which is not ideal. That being said, our current estimates have Trilogy spending at or below cash flow for the remainder of the year on both FirstEnergy and current forward strip pricing, which should assist with deleveraging efforts moving into 2017e.
Given natural declines and voluntary shut-in of uneconomic production, Trilogy’s production was 2% shy of our expectations, alongside a slightly higher natural gas bias. Cash flow of $9.1 mm or $0.07 per share was behind FirstEnergy and consensus estimates of $0.10 per share. Capital spending of $22.3 mm outpaced cash flow as the Company addressed expiry issues in the Duvernay while taking advantage of notably improving well costs in its Montney oil and gas plays.
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: 0UG9 ARX BTE BNP 0UR7 ERF POU 0VCO PGF PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PNE RRX RMP SRX SGY TOG TET ATU CKE GXE IKM LXE ROAOF MQL RE SPE SKX TVE TVETF YGR YO
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.
Companies: 0UG9 ARX BTE BNP 0UR7 ERF POU 0VCO PGF PWT VII TXP VET WCP BNE CJ KEL LTS LRE NVA PPY PNE RRX RMP SRX SGY TOG TET ATU BXO CKE GXE IKM LXE MQL SKX TVE TVETF YGR YO
Trilogy’s 4Q15 production was 4% lower than an cipated at 24,172 boe/d, however cashflow (net of one-time items) was in line with our expectations. Reserve growth per share was 13% and F&D was $14.09/boe on a 2P basis with Management elec ng to book an expanded 5-year development program, largely due to improved production history and further well control in key plays. PDP reserves decreased 20% per share y/y. With only minor changes to our proforma outlook and thesis on the evolution of its core assets, we are maintaining our Market Perform ranking and target price of $3.75.
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 in the coming weeks.
Companies: 0UG9 ARX BNP 0UR7 ERF POU 0VCO SPE SGY TVE TOG TOU VET GXE KEL NVA PPY BTE PGF PSK PWT VII WCP BNE CJ CR DEE JOY LTS LRE PNE RRX RMP SRX TET ATU BXO CKE IKM LXE ROAOF MQL RE SKX TVETF YGR YO
“Worse? How could they get any worse? Take a look around you, Ellen. We’re at the threshold of hell”. These are the words spoken by Clark Gris-wold in the holiday classic “Christmas Vacation”, and seem aptly suited for the general sentiment in the Canadian energy space at the moment as we roll out a summary of our regular forecast revisions extending from our most recent crude oil and natural gas price forecast update.
Companies: 0UG9 ARX BTE BNP ERF POU 0VCO PGF PSK PWT VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PNE RRX RMP SRX SGY TOG TET ATU BXO CKE GXE IKM LXE ROAOF MQL RE SPE SKX TVE TVETF YGR YO CPG
Trilogy Energy Corp. (TET) | Greenfields Petroleum Corporation (GNF) | Pembina Pipeline Corporation (PPL) | Tidewater Midstream and Infrastructure Ltd. (TWM)
Companies: TET GNF PPL TWM
Impact: Positive as this sale came in at compelling metrics and will allow Trilogy to pay down debt in the near term without adversely affecting the longer term growth prospects of the Company while also reducing its capital commitments over the remainder of 2015e and 2016e. Additionally the Company will be able to focus on 100% working interest projects in the Duvernay and Montney (Kaybob oil and Presley gas) projects in 2016e where the pace of development will be at the sole discretion of the Company.
Advantage Oil & Gas Ltd. (AAV) Reports Third Quarter Results Slightly Behind Expectations Due to TCPL Restrictions, Beats Cost Bogeys by 9%, Offers Strong Middle Montney IPs | Bonavista Energy Corporation (BNP) Reports Third Quarter Results, Reduces Dividend, Unveils Conservative 2016e Guidance Aimed at Balance Sheet Preservation | Crescent Point Energy Corp. (CPG) 3Q15 Results In Line, Waterflood and Service Cost Deflation Recognition Highlight Operational Update | Crew Energy Inc. (CR) Reports Third Quarter Results In Line, Announces Septimus Lower Montney Test | Penn West Petroleum Ltd. (PWT) Third Quarter Results Fall Short of Expectations, Ramping Down Activity | Raging River Exploration Inc. (RRX) Reports Third Quarter Results In Line | Trilogy Energy Corp. (TET) Announces 3Q15 Financial and Operating Results and Provides Revised Guidance | Pacific Exploration and Production Corporation (PRE): 2016 Cash Flow Estimate Reduced, Post 3Q15
Results | Canyon Services Group Inc. (FRC) Moving to a Variable Cost Structure | PHX Energy Services Corp. (PHX): Noisy 3Q15 Results; Reduces 2015e Capital Spending by $10 mm | Pason Systems Inc. (PSI) Cost Restructuring Helps 3Q15 Results; Boosting Target Price | SECURE Energy Services Inc. (SES) Top Pick and $14.00/Share Target Price Maintained
Companies: BNP 0UR7 CR PWT RRX TET PRE FRC PHX PSI SES
With this publication we briefly summarize our projections for 3Q15e quarterly results for our Junior E&P (Intermediate, Mid & Small Cap) coverage universe. Within the backdrop of continued weakness in the commodity price complex that saw the retrenchment of crude oil pricing during the quarter, after what was a short lived rally during the second quarter, we are anticipating yet another lacklustre reporting period in the Junior E&P space, with the key themes coming out of the quarter likely to be centered on further reductions to capital programs, ongoing takeaway capacity constraints, potential dividend cuts, reduced bank lines from fall credit reviews, continued weakness in the Station 2 and CREC natural gas price markers, and for some, the rollout of formal 2016e budgets.
Companies: 0UG9 ARX BTE BNP 0UR7 ERF POU 0VCO PGF PWT PSK VII TOU TET VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PNE RRX RMP SRX SGY TOG ATU CKE GXE IKM LXE ROAOF MQL RE SPE SKX TVE TVETF YGR YO
With this publication we highlight forecast revisions stemming from an interim commodity price update centered around the crude oil pricing complex. Moves for crude oil weighted producers are significant, with 2016e cash flows down 12%-15%, and portended NAVs reduced sizably on the employment of a materially lower terminal value within the scope of the forecast period, though not reflective of the potential attrition in E&D capital investment and dividend policy should the current forward strip come to fruition in the cash market.
Companies: 0UG9 BTE BNP 0UR7 ERF POU 0VCO PGF PSK PWT VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PNE RRX RMP SRX SGY TOG TET CKE GXE IKM LXE ROAOF MQL RE SPE SKX TVE TVETF YGR YO
Research Tree provides access to ongoing research coverage, media content and regulatory news on Trilogy Energy.
We currently have 22 research reports from 1
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
Pantheon announced that is has contracted a rig to drill the Talitha well and that drilling operations are expected to commence in January 2021. The well will target four independent reservoirs, in three separate trapping sequences, which the company estimates has the potential to contain in the region of a billion barrels of recoverable oil, although ongoing work is required to formally delineate the full potential of the targets.
Companies: Pantheon Resources plc
The Prime Minister vowed last week to “restore Britain's position as the foremost naval power in Europe” and promised an extra £16.5bn in defence spending over the next four years. Mr Johnson expects this investment to “spur a renaissance of British shipbuilding across the UK”, and specifically mentioned five locations where this would occur, including Belfast and Appledore – the location of InfraStrata's shipyards. Other supportive policy initiatives emanating from the government include Mr Johnson's pledge in October that offshore wind will power every home in the country by 2030. We believe this demonstrable support from the highest level of government vindicates InfraStrata's strategy, and demonstrates the significant opportunities available to the company as it bids on numerous shipbuilding and fabrication contracts. We reaffirm our Buy rating.
Companies: InfraStrata 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
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
Jersey Oil & Gas announced today that is has entered into an agreement to acquire the entire share capital of CIECO V&C (UK) Limited, which is currently owned by two international entities headquartered in Japan. The acquisition secures an additional 12% working interest in Licence P2170 (Blocks 20/5b & 21/1d), which provides Jersey Oil & Gas with 100% of the licence. The licence contains the majority of the Verbier oil discovery in addition to three drill ready prospects: Verbier Deep, Wengen and Cortina. The acquired entity has approximately £15M of tax losses which will provide value to Jersey Oil & Gas. Consideration will consist of £150k in cash and contingent payments of i) £1.5M upon field development plan approval of Verbier within P2170 (as already discovered) by the OGA ii) £1.0M upon the 1st anniversary of attainment of first oil. The acquisition is conditional on OGA approval amongst other technicalities, which we do not anticipate will be problematic. The acquired entity will be free of debts.
Companies: Jersey Oil & Gas PLC
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
• 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.
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)
Acquisition of CIECO P2170 interest
Companies: JOG JYOGF TPC1
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
Oil rose to the highest in nearly three months with positive Covid-19 vaccine developments paving the way for a more sustained recovery in oil demand.
Futures rose 5% in New York this week for a third straight weekly gain as Pfizer Inc and BioNTech SE requested emergency authorisation of their Covid vaccine Friday. Moderna Inc also released positive interim results from a final-stage trial and said it is close to seeking emergency authorisation. Still, further gains were limited by broader market declines amid a dispute between the White House and the Federal Reserve over emergency lending programmes.
Even with vaccines on the horizon, a recovery in oil demand faces obstacles with governments under pressure to tighten restrictions and curb the spread of the virus. UK Prime Minister, Boris Johnson's officials are considering tougher pandemic rules placed on broader regions of England next month after a national lockdown is set to end and the country returns to its tiered system. Meanwhile, the shift toward working from home may have a lasting chill on gasoline demand, according to Federal Reserve Bank of Kansas City President Esther George.
The recent climb in headline prices has been accompanied by significant moves in timespreads, where traders bet on the price of oil in different months. The spread between West Texas Intermediate for December 2021 delivery and the following month moved to backwardation, while the closely watched gap between December 2021 and 2022 WTI contracts is close to also flipping.
West Texas Intermediate for December delivery, which expired Friday, rose 41 cents to settle at $42.15 a barrel.
The January contract rose 52 cents to end the session at $42.42 a barrel.
Brent for January settlement gained 76 cents to $44.96 a barrel. The contract rose 5.1% this week.
Pfizer and BioNTech's vaccine could be the first to be cleared for use, but first it must undergo a thorough vetting. The filing could enable its use by the middle to the end of December, the companies said in a statement. Yet, it could take at least three weeks for a US Food and Drug Administration decision.
Companies: FOG PVR 88E DGOC EME TRIN UOG
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
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
Union Jack’s latest drilling update of the West Newton B-1 well (WNB-1) outlines that the Kirkham Abbey formation is hydrocarbon bearing which supports pre-drill expectations and previous drilling results from the A-1 and A-2 wells. The secondary target (the Cadeby formation) was always deemed to be much higher risk and therefore we had not previously valued this interval, therefore today’s update has no impact on the material base case resource estimates at West Newton (146MMBbl oil, 211Bcf gas). The JV partners continue drilling activities with a side-track of WNB-1 to further appraise the Kirkham Abbey which we fully expect to yield positive results given significant de-risking achieved to date. As such, we retain our STRONG BUY stance and 0.82p/share TP.
Companies: Union Jack Oil Plc