Research, Charts & Company Announcements
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ZARGON OIL & GAS LTD
ZARGON OIL & GAS LTD
30 Sep 16
Due to a reallocation of resources, we are discontinuing coverage of Zargon Oil & Gas with a Market Perform ranking and $0.75 per share 12-month target price (last effective date - August 16, 2016). Zargon remains in a strategic alternatives process, which has thus far resulted in the disposition of the Company’s Southeast Saskatchewan assets for proceeds of $86.8 mm and Killam, AB assets for proceeds of $4.0 mm. Combined production from these disposed assets was ~1,340 boe/d (91% oil and NGLs). Pro-forma the dispositions, Zargon retains a low-decline production base of ~2,600 boe/d (83% oil and NGLs) from its remaining properties in Alberta and North Dakota.
Second Quarter Results
15 Aug 16
Zargon‘s second quarter results were slightly behind on production while ahead on cash flow, although largely irrelevant in the context of the sale of the Company’s southeast Saskatchewan assets subsequent to quarter-end along with the ongoing strategic alternatives process. Recall at the end of July, Zargon announced the sale of its Southeast Saskatchewan assets for gross proceeds of $89.5 mm in what was the first transaction executed since initiating its strategic alternatives process. Management noted no changes to proforma guidance announced with the aforementioned sale, and expects to be in a position to provide further clarity on guidance upon closing of the sale in early September. We maintain our $0.75 per share target price and Market Perform ranking coming off of the second quarter release.
Announces Sale of Southeast Saskatchewan Assets
27 Jul 16
Zargon announced the sale of its Southeast Saskatchewan assets in what is the first transaction executed since initiating its strategic alternatives process. We view the transaction positively as the disposition was done at highly accretive metrics, and significantly reduces the Company’s outstanding debt position providing increased financial flexibility as the Company continues to work through its strategic alternatives process. Management provided an updated capital expenditure program for 2H16e and 2017e that will continue to see limited investment absent of a recovery in the commodity price complex. Updating our estimates for the asset sale, we have increased our target price to $0.75 per share while maintaining our Market Perform ranking.
2Q16e Quarterly Preview
26 Jul 16
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.
ANNOUNCES SALE OF SOUTHEAST SASKATCHEWAN ASSETS
25 Jul 16
Impact - positive as the disposition was done at highly accretive metrics, and significantly reduces the Company's outstanding debt position providing increased financial flexibility as the Company continues to work through its strategic alternatives process
30 Nov 16
Abzena (ABZA): Interim results indicate happy customers (BUY) | Horizonte Minerals* (HZM): Fund raise completed (CORP) | SacOil* (SAC): Half-year trading statement (CORP) | Revolution Bars (RBG): New openings (BUY) | Amino Technologies* (AMO): Multi operator FUSION roll out (CORP)
Small Cap Breakfast
29 Nov 16
Asia Pacific Investment Partner - the research-driven emerging and frontier markets real estate development business intends to float on AIM and conduct a placing in December RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m Diversified Oil & Gas— Schedule One now out. $60m to be raised. Expected admission 6 December. Creo Medical Group —UK based medical device company focused on surgical endoscopy, a recent development in minimally invasive surgery. Admission due 7 December. Fundraising details TBA.
GTL transaction not going ahead
01 Dec 16
Intelligent Energy (IEH) has announced that the deal to acquire the Energy Management Business of GTL will not now be consummated. The move leaves management free to concentrate on driving sales of commercially ready B2B products, which is a key element of its strategy. We adjust our FY17e revenue estimate while leaving our pre-exceptional losses and cash-flow forecasts unchanged.
01 Nov 16
Since our last outlook note, Quadrise has begun to supply MSAR for extended LONO sea trials, paving the way for commercial adoption from calendar H217 onwards. In August it signed a memorandum of understanding with clients in the Kingdom of Saudi Arabia (KSA), which is a key enabler for progressing the production-to-combustion pilot there. In October it completed a placing and open offer raising a total of £5.25m (gross). This should enable it to transition comfortably to the commercial phase on successful completion of the LONO and KSA trials.
24 Nov 16
Quixant* (QXT): Gaming gains (CORP) | SCISYS* (SSY): Bringing good news from Germany (CORP) | Hayward Tyler Group*: Contract wins (CORP) | Sound Energy (SOU): TE-7 flow rate and fund raise (BUY) | Water Intelligence* (WATR): Growth and improving returns in a defensive market (CORP) | Imaginatik* (IMTK): Interim trading update (CORP)