Civil works have started at Europa’s Wressle oil field, keeping the project on track for start-up in H2 2020 when it will more than double production and materially boost cash flow. This project is not only economically attractive, but it will also underpin Europa’s pursuit of additional exploration and development opportunities.
Companies: Europa Oil & Gas (Holdings) Plc
ANGLE (AGL): Corp | ANGLE (AGL): Corp | Lok'nStore (LOK): Corp | Surface Transforms (SCE): Corp | Synairgen (SNG): Corp
Companies: EOG LOK SCE SNG AGL
Byotrol (BYOT.L): Corp Introducing FY 2021 forecasts | Europa Oil & Gas (EOG.L): Corp Doubling up on Irish gas | Open Orphan (ORPH.L): Corp Major contract signed with leading pharma company
Companies: BYOT EOG ORPH
Avacta (AVTG.L): Corp | Europa Oil & Gas (EOG): Corp | Omega Diagnostics (ODX): Corp | Redcentric (RCN): Corp | Telit (TCM): Corp
Companies: AVCT EOG ODX RCN TCM
Europa has lagged its peers in the sector rally, which we believe is unwarranted as start-up of the highly profitable Wressle oil field remains on track for H2 2020 and will materially boost production and cash flow. Moreover, this first phase of development is not targeting the Penistone interval, which contains ~3x the resource. We take a closer look at this follow-on opportunity that would be relatively straight forward and quick to develop and would involve limited capex. De-risking this resource helps raise our risked-NAV and price target 15% to 5.3p/sh.
Europa Oil & Gas (EOG): Corp | Revolution Bars Group (RBG): Corp | Solid State (SOLI): Corp
Companies: EOG RBG SOLI
Straight forward, robust results from Europa underline that it is well positioned to ride out the current storm while continuing to progress its strategy, albeit at a slower pace. Some difficult decisions have been made, including cost reductions and licence relinquishments. But these ensure that Europa has the funds to develop the low-cost Wressle oil development onshore UK while still pursuing farm-outs offshore Ireland and Morocco, with both regions continuing to attract interest from a number of potential partners.
ANGLE (AGL): Corp | Europa Oil & Gas (EOG): Corp | Hardide (HDD): Corp | Intercede (IGP): Corp | M.P. Evans (MPE): Corp | Quixant (QXT): Corp | Synairgen (SNG): Corp | Tremor (TRMR): Corp | Trifast (TRI): Corp
Companies: EOG HDD IGP MPE QXT SNG TRMR TRI AGL
Europa has announced a cost-cutting programme to ensure it has sufficient funds for its Wressle development and ongoing farm-out activities. In light of the current depressed oil environment, we have removed Europa’s oil prospects offshore Ireland from our NAV, but kept the gas prospects. We have also cut our long-term oil price from US$60 to US$50/bbl. As a result, our risked-NAV and price target fall materially, from 12.5p to 4.6p/sh, and now only includes Europa’s onshore UK producing and development assets (1.0p/sh) alongside the Inishkea gas prospect (3.4p/sh) offshore Ireland. Even with this ‘bare-bones’ valuation, the shares still offer material upside in the event of a successful Inishkea farm-out.
Altitude Group (ALT): Corp Proposed disposal of ADP | Europa Oil & Gas (EOG): Corp Wressle economics highly robust | LPA Group (LPA): Corp COVID-19 update and Board appointments | Morses Club (MCL): Corp Substantial immediate upside opportunity in share price | Quixant (QXT): Corp Coronavirus delays audit sign-off for a week | Revolution Bars Group (RBG): Corp COVID-19 trading update | Synairgen (SNG): Corp COVID-19 Phase II trial to start imminently
Companies: ALT EOG QXT RBG SNG LPA
Europa Oil & Gas (EOG): Corp Board changes announced | Independent Oil & Gas (IOG): Corp Market update
Companies: Europa Oil & Gas (Holdings) Plc Independent Oil & Gas Plc
Europa has beefed up its Board to help it pursue lower-risk appraisal opportunities to fulfil its ambition to develop a third leg to its current portfolio. Europa is due to report interim FY 2020 results on 14 April, where we expect an update on the Wressle development timing and progress; we currently expect this field to come on-stream in Q3 2020. Europa has been unfortunate with its timing on this development; after finally winning development approval, oil prices have collapsed. Still, we estimate this asset has a breakeven below US$20/bbl and even in the current environment will deliver valuable free cash flow.
Companies: EOG PCIP FTC
Europa has relinquished one of its more peripheral licences in Ireland that showed limited prospectivity. This active portfolio management will preserve cash and allow management to focus on pursuing partners for its remaining Irish and Moroccan licences. Top of the list is the Inishkea gas prospect on FEL 4/19 in the Slyne basin. This prospect is large, low-risk, gas not oil, and adjacent to the producing Corrib gas field infrastructure. Our risked-NAV and price target did not ascribe any value to this licences and therefore remains unchanged at 14p/sh.
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Central Asia Metals (CAML LN) reported robust interim results in the context of the H1 2020 backdrop; solid production and the company’s fundamentally low cost base meant that CAML remained profitable despite the sharp pullback in commodity prices during the period which led to a 17% YoY decline in revenue to US$70.8m. Consequently, EBITDA was down 25% YoY to US$42.5m despite a decline in unit costs of 6% YoY at Kounrad and 9% YoY at Sasa to US$0.48/lb and US$0.43/lb respectively which cushioned the impact of the weaker the top line. With no significant one offs in the period, EPS of US$0.10/sh. was 33% lower YoY.
Companies: Central Asia Metals Plc
EQTEC announced (last Friday afternoon) an extension of the exclusivity period of the Billingham MOU until 22 November 2020. The extension of the MOU exclusivity period is with the aim of finishing the preparation of a legally binding option agreement with Scot Bros. which, if agreed, will grant EQTEC and its partners the right, but not the obligation, to purchase the entire issued share capital of Billingham EFW Limited (the project SPV) from Scott Bros. subject to an agreement on consideration and other terms.
Companies: EQTEC Plc
Talitha Shelf Margin Deltaic LKA resource report
Companies: Pantheon Resources Plc
West Newton B-1 drilling update
Companies: Union Jack Oil Plc
Three day CMD to detail how BP will redeploy hydrocarbons’ capital into renewables. The latter are expected to grow by 12% CAGR by 2030, which surely is more exciting than oil. Returns do not compare though, but BP intends to make good use of its trading division to bridge part of the gap. Lowering the dividend took care of the rest. Overall, BP diversifies its risks early, which might prove right if oil stays under $50.
Companies: BP Plc
Trinity has announced a strong set of interim results during a highly volatile period, with production increasing by 9% year-on-year to 3,282bopd (H1/19 3,007bopd). Operating break-even's post hedging in H1/20 reduced to US$22.3/bbl, a 15% year-on-year reduction and a 65% reduction since 2014. Similarly, a relentless drive to improve efficiencies and reduce costs has seen G&A and opex fall by 67% and 65% respectively since 2014. Despite the dramatic fall in oil prices, Trinity's strong production performance combined with its receipt of VAT receivables via a VAT Bond sale and the drawdown of a small working capital facility facilitated cash balances increasing by 43% to US$19.7m from YE2019. Trinity is well positioned to grow both organically and inorganically, with Trinity signing MoU's and submitting EOI's (in consortium with Cairn Energy Plc) to pursue new opportunities of scale. We set our price target a 31p/share, a 248% premium to the current share price and reiterate our BUY recommendation.
Companies: Trinity Exploration & Production Plc
Saudi Arabia's warning to OPEC+ cheaters and short-sellers alike helped oil prices stage their biggest weekly rally since June, despite a grim start to the week as industry heavyweights painted a troubling demand picture for the petroleum complex. Futures in New York rose 10% this week following a show of determination by Saudi Arabia, the most influential nation in the Organisation of Petroleum Exporting Countries, to defend the market on Thursday. The Saudis hinted they are prepared for new production cuts, and lambasted OPEC+ members that have cheated on production quotas. Prices briefly fell as much as 1.6% on Friday following an announcement from Libyan military commander Khalifa Haftar that he will allow crude production and exports to resume. But while Haftar reached the agreement with the country's deputy premier, it was unclear whether the deal that excluded the National Oil Co would actually restart exports. Haftar controls most of eastern Libya and has halted operations and shipments from his territory as part of a campaign against the internationally recognised Tripoli government. The OPEC member is pumping just 80,000 barrels a day, but produced 1.2 million a day last year. Oil reversed last week's losses, which pushed West Texas Intermediate futures toward $37 a barrel amid a slew of downbeat demand forecasts from the International Energy Agency to Trafigura Group and BP Plc. Helping support prices this week, US government data showed crude and gasoline stockpiles declining. American oil stockpiles are now at their lowest since April. But crude may not be out of the woods just yet, with distillate supplies at record highs and refining margins for the fuel deteriorating in the US and Europe. Meanwhile, rising coronavirus infections in Europe raise the spectre of a return to tighter restrictions that have crippled consumption. Prices West Texas Intermediate for October delivery rose 14 cents to settle at $41.11 a barrel. Brent for November settlement lost 15 cents to end the session at $43.15 a barrel. The contract rose 8.3% this week, its largest weekly gain since June.
Companies: FO PRP 88E DGOC EME TRIN UOG
Falcon has announced the resumption of activities at Kyalla 117 with the fracture stimulation of the well, and extended production test to follow. Initial results from the production test are expected in Q4/20, with final results expected by the end of Q1/21. Following the farm-down of a 7.5% participating interest to JV partner Origin Energy in April, Falcon is fully funded through the upcoming drilling campaign. We believe success at the Kyalla well will result in the JV further evaluating the potential of the Kyalla liquids rich gas play, thereby fast-tracking the potential commercialisation and monetisation of Falcon's 22.5% working interest. We reiterate our 39p price target (a 406% premium to the current share price) and our BUY recommendation.
Companies: Falcon Oil & Gas Ltd.
UKOG has this morning announced that the Xodus Group has estimated that the Loxley gas field has a best estimate recoverable resource of 44bcf gross and 34 bcf net to UKOG within its 100% held PEDL234 licence. The company has indicated the resource estimate must be proven by future production results and that the development of Loxley is subject to planning consent.
Companies: UK Oil & Gas Plc
Ready to steppe it up – initiating coverage
Companies: Enwell Energy Plc
Hargreaves’ FY20 results are very solid indeed. As previously reported, the only noticeable impact from COVID was in the slippage of Blindwells’ land sales, which were due to conclude during the lockdown period. Site activity has resumed and sales remain on track to conclude in the current year. A final dividend of 4.5p has been declared and the outlook statement is measured but confident. We reintroduce forecasts today, effectively reinstating our pre-COVID expectations. Hargreaves is well positioned to deliver a period of significant, renewed growth with the prospect of a double digit dividend yield from FY22 as HRMS profits are distributed.
Companies: Hargreaves Services Plc
There was less tension this quarter, as Shell had already cut its dividend in Q1. The trading units rose to the occasion, bringing a positive surprise in this horrendous quarter. The company has recorded a very large impairment, and is poised to announce a strategic shift once 2020 is in the books.
Companies: Royal Dutch Shell Plc
The COVID-19 pandemic has had a significant impact globally in many areas. While primarily a health issue, it has had wide-ranging implications for stock markets, which have now rallied after the plunge in share prices in mid-March when the full severity of the emerging pandemic became more widely appreciated. Nonetheless, the FTSE 100 Index remains almost 20% off its late February 2020 figure.
Companies: AVO ARBB ARIX CLIG DNL GDR ICGT NSF PCA PIN PXC PHP RECI STX SCE TRX SHED VTA YEW
Production Unit licence for Talitha progressed
