Market Update - 05/03/2021
Companies: Touchstone Exploration Inc (TXP:TSE)SDX Energy PLC (SDX:LON)
SDX Energy (SDX LN)C; Target price of £0.40: West Gharib contract extended by 10 years to 2031 – The increases SDX’s share of reserves in West Gharib (2.2 mmbbl at YE19), by 60%. The company plans to commence in 2Q21 a drilling programme of up to twelve wells over the next three years with the goal of growing gross production back to ~3,000bbl/d. The terms of the extension includes a commitment to drill six wells by YE22. In addition, up to six additional wells would have to be drilled if oil price remains high (>US$55-60/bbl). SDX will also have to pay a deferred signed bonus (US$1 mm net to SDX) in various regular payments by YE23. An additional contingent payment of US$1 mm (net to SDX) would have to be paid for higher oil price (US$75-85+/bbl). While the extension was expected, this is an important news for SDX that will allow the firm to progress its work programme. Overall West Gharib holds 2.3 mmbbl contingent resources upside (in addition to the 2P reserves and net to SDX) that SDX can now pursue. We value West Gharib at £0.04 per share.
Tethys Oil (TETY SS)C; Target price of SEK85 per share: Block 49 exploration well encounters hydrocarbon – The exploration well Thameen-1 on Block 49 onshore the Sultanate of Oman has encountered hydrocarbon net pay in the primary target, the Hasirah Sandstone. The secondary deeper target was dry. Importantly, the company was encouraged enough by the results to decide to test the well. The results of the testing program are expected within three weeks. The primary target was the horizon offering the largest potential. The well is a play opener with follow-on upside. We currently carry gross unrisked volumes (pre-drilling) of 15 mmbbl for Thameen-1 (excluding follow-on upside) with an unrisked NAV of SEK11 per share (50% WI). The shares continue to offer a combination of (1) ~6% dividend yield that could potentially increase at current oil prices, (2) support from a share buy back programme, (3) value and (4) reserves and exploration upside.
IN OTHER NEWS
Alvopetro (ALV CN): Production update in Brazil – Alvopetro's February natural gas sales averaged 12.7 mmcf/d with associated natural gas liquids sales of 99 bbl/d.
Canacol Energy (CEN CN): Reserves update in Colombia – Canacol held 111.8 mmboe 2P conventional gas reserves at YE20 (+2.2% versus YE19). Gross production in February was 187 mmcf/d. The Flauta 1 exploration well did not encounter commercial gas.
Frontera Energy (FEC CN): 4Q20 results and update in Colombia – 4Q20 production was 41,945 boe/d. The company held US$147 mm of net debt at YE20. At YE20, Frontera held 174 mmboe 2P reserves (YE19: 171 mmboe). On February 5, 2021, the service contract for Block 192 in Peru expired and Frontera is no longer operating on the block. FY21 production guidance has been set at 40.5-42.5 mboe/d with capex of US$200-295 mm including US$55 115 mm in Guyana. In the Corentyne block, Frontera plans to spud the Kawa-1 exploration well during 2H21.
Parex Resources (PXT CN): 4Q20 results and update in Colombia – 4Q20 production was 46,642 boe/d. Parex had US$331 mm net cash at YE20. The company anticipates producing 47-49 mboe/d in 2021 with US$165 185 mm capex. Parex expects 1Q21 production to be ~46,500-47,500 boe/d. The Boranda well encountered deeper oil bearing sands in the Lisama formation which are not present in the Boranda field.
Pantheon Resources (PANR LN): Technical issues at exploration well in Alsaka – Because of equipment failures and technical issues, the formation above the Kuparuk formation was damaged and it has not been possible to effectively set the 4 ½ inch liner. The company has now made the decision to drill a new modestly angled sidetrack into the Kuparuk. It is estimated that the sidetrack will take 2-3 days to drill ~650 feet through the Kuparuk formation approximately 25-50 feet lateral distance from the discovery location. The delay caused by adapting the drilling plan may impact Pantheon’s ability to test all zones as effectively as planned before the end of the drilling season.
Touchstone Exploration (TXP LN/CN): Reserves and operation update in Trinidad – YE20 2P reserved were 64.9 mmboe including 45.0 mmboe for Cascadura. This excludes any potential reserves from the Company's Chinook-1 and Cascadura Deep-1 wells drilled in 4Q20. At Chinook-1, two zones have been tested so far. The first test interval was in the lower sub-thrust sheet, which was a previously unknown thrust-sheet with 68 net feet of potential pay. The well recovered trace amounts of oil along with significant water. This zone is considered uneconomic. The second zone is in the Herrera formation and encountered 35 degrees API sweet oil and is being configured for an extended oil production test. Touchstone has yet to test the targeted gas bearing zones in the Chinook-1 and Cascadura Deep-1 exploration wells due to delays associated with third-party equipment. Touchtone is targeting initial gas production from Coho-1 in 2Q21. Touchstone plans to start production at Cascadura and Chinook prior to YE21.
Westmount Energy (WTE LN): Uncommercial well in Guyana – The Bulletwood-1 on the Canje Block encountered quality reservoirs but non-commercial hydrocarbons.
Angus Energy (ANGS LN): Planning permission rejected in the UK – The West Sussex County Council's Planning Committee has rejected the Company's planning application for an Extended Well Test at the Balcombe Oil Field.
Hurricane Energy (HUR LN): Operational delay in the UK – Given its complexity, the drilling of a second production well at Lancaster by side-tracking from the existing 205/21a-7z well into the central area of the field will not take place in 2021. The company is considering various options to drill this well in 2022 instead.
Neptune Energy: FY21 guidance – FY20 production was 142.4 mboe/d. FY21 WI production guidance has been set at 140-155 mboe/d with US$700 mm capex for development and US$150 mm for exploration.
MIDDLE EAST AND NORTH AFRICA
ShaMaran Petroleum (SNM CN): Update in Kurdistan – 4Q20 Gross production at Atrush was 40,800 bbl/d. Atrush gross 2P reserves were estimated at 109.9 mmbbl at YE20 (108.5 mmbbl at YE19).
Africa Oil (AOI CN/AOI SS): 4Q20 results – Prime's 4Q20 WI production in Nigeria was 26,200 boe/d net to Africa Oil's 50% shareholding. FY21 WI production guidance has been set at 24,000-28,000 boe/d net to Africa Oil’s 50% shareholding in Prime. Prime's 2021 capital investment is expected to be US$35-$50 mm and its net debt repayment US$210-$280 mm, in each case net to Africa Oil's 50% shareholding in Prime. Prime had a cash balance of US$115.7 mm net to Africa Oil's 50% shareholding at YE20. Africa Oil's FY21 corporate budget is estimated to be ~US$18-$20 mm and includes pre-FID budget for Kenya, G&A and exploration activities. At YE20, Africa Oil held US$40 mm in cash with LT debt of US$141 mm.
Orca Energy (ORC.A/B CN): Reserves update in Tanzania – At YE20, gross 2P reserves were 229 bcf.
Seplat Petroleum (SEPL LN): 4Q20 results – FY20 WI production in Nigeria was 51,183 boe/d reflecting uptime at Forcados of 83%. Production losses were 9.4%. The company has declared a final dividend of US$0.05 per share for a FY20 dividend of US$0.10 per share. FY21 WI production guidance has been set at 48-55 mboe/d with capex of US$150 mm. Exports from OML 4, 38 and 51 through Escravos are now expected in 2H21. The ANOH project is expected to be completed in 1H22. At YE20, Seplat had 499 mmboe 2P reserves (509 mmboe at YE19). Seplat held net debt of US$440 mm at YE20.
EVENTS TO WATCH NEXT WEEK
08/03/2021: Diversified Gas and Oil (DGOC LN): 4Q20 results
09/03/2021: Cairn Energy (CNE LN): 4Q20 results
09/03/2021: Vaalco Energy (EGY US/ LN) – 4Q20 results
10/03/2021: GeoPark (GPRK US) – 4Q20 results
Companies: AOI FEC PXT SDX SEPL SNM TETY TETY TXP
An early Christmas present from Touchstone, which has finalised a long-term US$ natural gas sales agreement in Trinidad with NGC covering all future gas production from its Ortoire block. This is a major positive for Touchstone, which provides visibility on a long-term revenue stream and should boost confidence in the wider development potential of the prolific Ortoire block where four discoveries have been made and a further 21 exploration prospects identified. It is also getting ready for a series of production tests on the Chinook-1 and Cascadura Deep-1 wells, which will provide greater clarity on the development potential of these two discoveries.
Companies: Touchstone Exploration Inc
88 Energy (88E LN/AU): Farm out in Alaska – 88 Energy is selling 50% WI in the Peregrine project to Alaska Peregrine Development Company (APDC). in return, APDC will contribute US$11.3 mm towards the cost of the Merlin-1 well (estimated gross cost US$12.6 mm). APDC is a special purpose investment vehicle organized for Project Peregrine. Its members are a consortium of private US entities.
Bahamas Petroleum Company (BPC LN)C: PSC contract in Trinidad renewed and Resources update – The company has entered into a new PSC for the Goudron Block with Heritage. The contract is valid until 30 June 2030. 2P reserves on the company’s licences are estimated at 1.3 mmbbl. In addition, the company is estimated to have 7.5 mmbbl contingent resources in Trinidad and Suriname, excluding the Saffron discovery. The company’s base programme for 2021 will include (1) the drilling of the Saffron well with up to 7 production follow-on wells on success; (2) an EWT at Weg Naar Zee in Suriname in February 2021 followed by up to 6 development wells; and (3) up to 2 exploration wells on the South West Peninsula of Trinidad. The programme is expected to cost US$20 mm. An accelerated programme (US$35 mm capex) would include 8 further Saffron wells in Trinidad, 3 further Weg Naar Zee wells and one exploration well in the SWP.
Echo Energy (ECHO LN): Update in Argentina – Production in Santa Cruz from 1 January to 17 November 2020 was 1,990 boe/d.
Touchstone Exploration (TXP LN/CN): Drilling results in Trinidad – The Cascadura Deep-1 well encountered natural gas pay totalling ~1,315 net feet in four unique thrust sheets in the Herrera sands. This includes 308 net feet in two previously untested Herrera thrust sheets located below the sands observed in the Cascadura-1ST1 well. While the well was originally planned to be drilled to a total depth of 10,600 feet, the gas sands encountered in the deepest sheet proved difficult to manage, and the decision was made to cease drilling at a depth of 8,303 feet to preserve the substantial pay section encountered in the well.
Jadestone Energy (JSE LN): Trading update – Group production from January to November was11,356 bbl/d. FY20 production guidance remains 11,000–12,500 bbl/d. At the end of November Jadestone held net cash of US$82.6 mm. The Maari acquisition is now expected to close in 1H21 rather than by YE20 as previously anticipated as a result of delays caused by COVID-19 and New Zealand’s recent general election.
Providence Resources (PVR LN) and Lansdowne Oil & Gas (LOGP LN): Farm out in Ireland – Providence and Lansdowne are farming out 50% WI in Baryroe to SpotOn. In return SpotOn will provide a non-recourse loan to Providence and Lansdowne for their share of the development cost. The funding will incur a blended average annual interest rate of less than 8% through the repayment period which will be repayable from SEL 1/11 production cashflow. SpotOn is entitled to 80% of the net production cashflow from SEL 1/11 until the debt is repaid.
UK Oil & Gas (UKOG LN): Consent for UK project refused - Surrey County Council has refused planning consent for the company's 100% owned Loxley-1/1z Portland gas appraisal project.
FORMER SOVIET UNION
Block Energy (BLOE LN): Raising new equity – Block has raised ~£5.3 mm of new equity priced at £0.03 per share (almost a 30% discount to the previous day close).
Caspian Sunrise (CASP LN): Update in Kazakhstan – The MJF field is currently producing at rates between 1,300 and 1,550 bbl/d. A consistent flow of oil has not been established at Deep Well A8 and the company had another stuck pipe at the Deep Well A5. The result of the acid treatments at Deep Well A6 have to date have been inconclusive. The domestic oil prices in Kazakhstan are only US$6/bbl.
MIDDLE EAST AND NORTH AFRICA
Genel Energy (GENL LN): Gulf Keystone Petroleum (GKP LN), ShaMaran Petroleum (SNM CN): Payment in Kurdistan – Genel, ShaMaran and Gulf Keystone have received respectively net payments of US$10.3 mm, US$7.5 mm and US$5.44 mm from the Kurdistan Regional Government for oil sales for the month of October 2020.
TransGlobe Energy (TGL LN/CN): Restructuring of Egypt Licences - The West Gharib, West Bakr, and North West Gharib concessions will be merged into the Merged Concession with a new 15-year development term and a 5-year extension option. Cost recovery terms are being improved and the production sharing terms will be scaled to oil price. The increased cash flows is expected to fund new investments in incremental recovery projects. Near-term operational netbacks are estimated to increase by respectively US$5-7/bbl at US$40/bbl (Brent), US$7-9/bbl at US$50/bbl and US$9-11/bbl at US$60/bbl. The company has estimated that the new terms increase the company’s risked economic contingent resources (best case) by 59.1 mmbbl. In return TransGlobe will make an initial equalization payment of US$15 mm and a bonus payment of US$1 mm on ratification. There will be five further annual equalization payments of US$10 mm each being made over five years.
United Oil & Gas (UOG LN): Operational update in Egypt – WI production from Abu Sennan is on target to exceed previous guidance of 2,300 boe/d for 2H20.
Eco (Atlantic) Oil & Gas: Licence update in Namibia- Four new Petroleum Exploration Licenses have been agreed on the company’s existing offshore blocks, leading to the expansion of its acreage position. The new licences cover approximately 28,593 km2, with over 2.362 Billion BOE of prospective P50 resources.
FAR Limited (FAR AU): Woodside Petroleum pre-empts divestment in Senegal – Woodside is pre-empting the sale by FAR to ONGC of its interest in the Rufisque, Sangomar and Sangomar Deep assets.
Companies: CASP BPC SNM TXP UKOG 88E GENL JSE TGL
Companies: Touchstone Exploration Inc (TXP:TSE)Eve Sleep PLC (EVE:LON)
Touchstone’s Ortoire block exploration programme onshore Trinidad has again exceeded expectations with its Cascadura Deep-1 well delivering another major gas discovery, its fourth in a row after Coho, Cascadura and Chinook. Further testing is required to determine the ultimate potential of the discovery, but this well again confirms the accuracy of Touchstone’s geological model and extends the runway for future production growth from this prolific acreage. Our risked-NAV and price target rise 58% to 188p/sh as a result of this discovery and a higher Royston pre-drill resource assumption.
Touchstone Exploration (TXP LN): Cascadura Deep-1 well yields material gas discovery, Trinidad | Global Petroleum (GBP LN): 2D seismic acquired for Marula prospect, Namibia
Companies: Touchstone Exploration Inc (TXP:TSE)Global Petroleum Limited (GBP:LON)
Companies: RBG PPC TXP
GeoPark (GPRK US)C; Target price of US$20.00: Drilling success at first well in CPO-5 campaign - The Indico 2 appraisal well encountered 161 feet of net pay and flowed ~ 5,500 bbl/d of 35.2 degrees API light oil, with a 0.1% water cut. This appears to be a relatively low risk appraisal well. The well pays back in less than three months. The Indico 2 well could add imminently 1.5 mbbl/d net production to GeoPark’s ~40 mbbl/d (as of the end of 3Q20), which bodes well for the FY21 production guidance of 40-42 mboe/d. GeoPark expects to spud a well at the Aguila prospect by the end of November. GeoPark will then drill 5-6 wells (including 3-4 exploration wells) at CPO 5 in 1H21. Upon success and depending on oil prices, GeoPark could potentially drill additional development, appraisal or exploration wells at CPO-5 during 2H21. Even after the recent share price appreciation, the shares trade at ~50% discount to our Core NAV and ~25% discount to our 2P NAV of ~US$11 per share. Our unrisked NAV for the 2021 drilling programme is ~US$9.00 per share (mostly associated with Colombia), which represents over 100% of the current share price.
Tethys Oil (TETY SS)C; Target price of SEK75.00: Farming out exploration asset in Oman – Tethys is farming out 50% WI in Block 49 to EOG Resources. EOG will also have the option to assume operatorship of the Block and increase its interest to 85% for any operation relating to unconventional hydrocarbon resources. In return EOG will refund all costs incurred on the Block and fund the Thameen-1 exploration well, up to a combined amount of US$15 mm. The parties will retain 50% each of any operations relating to conventional hydrocarbon resources. We view this transaction as an endorsement of the quality of Tethys Oil’s asset. The Thameen prospect is expected to be spudded in December.
IN OTHER NEWS
88 Energy (88E LN): Resources update in Alaska – Total Prospective Resources of 1.77 bn boe have been estimated at the Ice Wine project. The Seabee formation is estimated to hold 1.4 bn bbl.
Alvopetro Energy (ALV CN): Update in Brazil – Gas sales at the Caburé Project was 10.8 mmcf/d (plus 84 bbl/d of condensates) in October. The company held US$2.2 mm in working capital surplus at the end of September.
Touchstone Exploration (TXP LN/CN): 3Q20 results – 3Q20 production in Trinidad was 1,310 bbl/d. The company had net debt of US$14.1 mm at the end of September. Drilling operations are ongoing at the Cascadura Deep-1 prospect.
Aker BP (AKERBP NO): Minor discovery in Norway – Exploration well 6607/12-4 on the PL 127 C licence encountered 3-6 mmboe (recoverable) at the Jurassic/Triassic primary target and 6-18 mmboe at the secondary Lower Cretaceous target.
ConocoPhillips (COP US): Discovery in Norway – Wildcat well 6507/4-1 on licence PL 1009 has encountered 55 180 mmboe of recoverable resources in the Lange Formation (primary target), with moderate but uncertain reservoir quality. The gas/water contact was not encountered.
Premier Oil (PMO LN) and Chrysaor: Operational update – Premier production from January to the end of October was 62.5 mboe/d with FY20 production guidance reduced from 65-70 mboe/d to 61-64 mboe/d on restrictions at Catcher. FY20 capex guidance is now US$325 mm (US$340 mm previously). Net debt at the end of October was US$2.05bn (up from US$1.97 bn at the end of June). Summer maintenance work at Catcher took longer than expected and production had to be shut down in early November due to a fire. Production is expected to restart next week. First gas at Tolmount remains on track for 2Q21. Chrysaor’s production averaged 175 mboe/d to the end of October. Chrysaor’s FY20 forecast remains unchanged at 170-180 mboe/d. The merger transaction between Premier and Chrysaor is expected to complete in 1Q21.
Serinus Energy (SENX LN): 3Q20 results – Production over January to September was 2,415 boe/d including 1,841 boe/d in Romania and the balance in Tunisia. The production exit rate the end of September was 2,211 boe/d including 1,730 boe/d in Romania. The duration of the Satu Mare licence in Romania has been extended by one year until October 2021 with a commitment to drill two new wells. Serinus carried a working capital deficit of US$22.3 mm (including US$15.6 mm due to the EBRD) at the end of September.
Valeura Energy 9VLE CN/VLU LN) : 3Q20 update – 3Q20 production in Turkey was 615 boe/d. The company held US$32.2 mm in working capital at the end of September. The company continues to evaluate inorganic opportunities, spanning Eastern Europe and the greater Mediterranean region. Valeura will only consider assets that would add both cash flow in the near term and opportunities for significant follow-on organic growth in the medium term.
FORMER SOVIET UNION
Zenith Energy (ZEN LN: Exiting Azerbaijan – The Contract Exploration Area of the 25-year Rehabilitation, Exploration, Development and Production Sharing Agreement has been terminated.
MIDDLE EAST AND NORTH AFRICA
Energean Oil & Gas (ENOG LN): Resources update in Israel – Gross 2P reserves at the Karish, Karish North and Tanin fields have been estimated at 3.5 tcf and 99.6 mmbbl of liquids. Approximately 241 mmboe of gross 2C resources associated with Karish North have been upgraded into the 2P category following approval of the Field Development Plan by the Israeli government. Liquids production from the fields is now expected to average 28 mbbl/d over a plateau period of approximately five years. Gross best estimate risked prospective resources across the Karish and Tanin leases and Block 12 are estimated at 2.2 tcf of gas plus 33.4 mmbbl of liquids. The Geological Probability of Success of these prospective resources ranges from approximately 15% to 79%.
Africa Energy (AEC SS, AFE CN): 3Q20 update in South Africa - The Gazania-1 exploration well on Block 2B is now expected to spud in 2Q21. At September 30, 2020, the Company had cash of US$39.1 mm and no debt.
FAR Limited (FAR AU): Selling Senegal – FAR is selling its 13.67% stake in the Sangomar project offshore Senegal to ONGC for US$45 mm in cash. In addition ONGC will repay US$66 mm in working capital. There is also a contingent payment of up to US$55 mm if the oil price increases above US$58/bbl.
Kosmos Energy (KOS US/LN): 3Q20 results – 3Q20 net production in Africa and the USA was 56,700 boe/d. FY20 production is expected to be 61,000 - 62,000 boe/d (62,000-70,000 boe/d previously) with US$140-150 mm capex. Net debt at the end of September was US$2.1 bn. Gross production rates at Jubilee averaged ~87,700 bbl/d during the quarter with FPSO uptime of around 98%. TEN production averaged ~49,600 bbl/d gross in 3Q20 with FPSO uptime of 98%. Production in Equatorial Guinea averaged ~33,000 bbl/dd gross.
Victoria Oil & Gas (VOG LN): Positive update in Cameroon – The litigation with CHL regarding the payment of a royalty has been settled. Overall, Victoria will have to pay CHL a total of US$12.5 mm at a monthly rate of US$0.09 to US$0.1 mm. The fish that prevented production at the La-1089 well has now been removed. Following the perforation of two sand intervals in the Upper Logbaba formation, the well flowed 19 mmcf/d on test. The company believes that the full potential of the well is likely to exceed the capacity of the plant, which is 20 mmcf/d.
EVENTS TO WATCH NEXT WEEK
17/11/2020: Nostrum Oil & Gas (NOG LN) - 3Q20 results
18/11/2020: BWE Energy (BWE LN) - 3Q20 results
19/11/2020: SDX Energy (SDX LN) - Capital Markets Day
Companies: 88E AKERBP ALV COP ENOG GPRK KOS PMO SEN TETY TETY TXP VLE VOG
GeoPark (GPRK US)C; Target price of US$20.00: Re-instating dividend and up to 10% Buy back - FY21 production guidance has been set at 40-42 mboe/d excluding any contribution from exploration/appraisal with US$100-120 mm capex at US$40-45/bbl. This includes US$95-115 mm in Colombia (US$30-35 mm for exploration/appraisal) and US$4-5 mm in Ecuador. FY21 operating net back is guided at US$210-280 mm. 3-4 exploration wells will be drilled at CPO-5, some of which will test the continuity of the Guadalupe play encountered on Llanos-34 into CPO-5. The initial results of the Indico-2 well already look promising with more details expected imminently.1-2 exploration wells could be drilled in Ecuador in 2H21/early 2022. The company is re-instating its quarterly dividend set at US$0.0206 per share representing ~1.1% annual yield. An exceptional dividend of the same amount will be paid in 4Q20. GeoPark is also launching a share buyback programme for up to 10% of the issued shares. With shareholder distributions now re-instated, the very attractive investment profile of GeoPark (with production growth, material exploration upside, balance sheet strength and shareholder distribution) has been completely restored to what it was pre COVID-19 while oil prices continue to oscillate around US$40/bbl. This showcases the resilience of GeoPark’s assets and business model. The shares trade at ~60% discount to our Core NAV and ~40% discount to our 2P NAV of ~US$11 per share. Our unrisked NAV for the 2021 drilling programme is ~US$9.00 per share, which represents over 100% of the current share price. Most importantly, and contrary to most peers, the programme is diversified across multiple wells and relatively low risk.
Tethys Oil (TETY SS)C; Target price of SEK75.00: Adding near term exploration – The 3Q20 financials were inconsequential with negative working capital movements to be recovered in 4Q20. The company held US$48 mm in cash at the end of the period; which is in line with our expectations. The 4Q20 capex at Block 3 & 4 is likely to be similar to 3Q20 capex (U$6.5 mm), which is lower than what we were anticipating (US$10 mm). The main near term focus continues to be the upcoming drilling of the Thameen prospect on Block 49. Our unrisked NAV for the Thameen prospect, assuming 15 mmbbl resources, is SEK17 per share (~50% of the current share price). The Anan-1 well on blocks 3 & 4), to be drilled in 4Q20, is a near field exploration well for which we are not carrying any value yet. It is relatively low risk but could have a small positive impact on the company reserves. The current share price represents EV/DACF multiples of only 1.8x for 2020 and 1.7x for 2021 and the core dividend implies>5% yield. Our target price of SEK75 per share has been set close to our ReNAV.
IN OTHER NEWS
Frontera Energy (FEC CN): 3Q20 results – 3Q20 production in Colombia was 43,202 boe/d. The company held US$421 mm in cash (including US$162 mm in restricted cash) with debt of US$557 mm at the end of September. Working capital at the end of September was negative (-US$79 mm).
i3 Energy (I3E LN): Production update in Canada – Group production from the Gain and Toscana’s assets during October averaged 9,407 boe/d (61% gas, 39% liquids). A first dividend is expected to be declared and paid in 1Q21 with up to 30% of cashflow being distributed. The company anticipates that the dividend yield will be >10% on an annual basis.
Maha Energy (MAHA-A SS): Production update in Brazil and resources update in Oman – Production in October was 2,971 boe/d. The award of Block 70 in Oman to Maha has now been approved by the authorities. The Block is estimated to hold 1 mmbbl of 2P reserves and 22 mmbbl of 2C contingent resources of heavy oil.
Parex Resources (PXT CN): 3Q20 results – 3Q20 production in Colombia was 44,305 boe/d. 4Q20 production is expected to be 45,500-47,500 boe/d with US$35-45 mm capex. At Aguas Blancas, the rates of the AB-11 and AB-24 exploration wells did not meet minimum thresholds to warrant the development of the Southern Aguas Blancas area at current oil pricing. In 2021, Parex expects to produce 47,000-49,000 boe/d with US$165-$185 mm capex. The 2021 share buyback programme is budgeted at $155 million at US$45/bbl with YE21 working capital forecasted at US$335 mm (YE20e: US$330 mm).
Touchstone Exploration (TXL LN/CN): Raising new equity – Touchstone is raising US$30 mm of new equity priced at £0.95 per share. The proceeds will be used for the Cascadura surface facility development, the testing of Chinook-1 and the drilling of the Chonook-1 and the Royston exploration wells.
Independent Oil & Gas (IOG LN): Update in the UK North Sea – Phase 1 of the SNS core project is on schedule for first gas in 3Q21 with drilling due to start in 1Q21.
MIDDLE EAST AND NORTH AFRICA
ShaMaran Petroleum (SNM CN): 3Q20 results – 3Q20 gross production at Atrush was 46.1 mbbl/d. FY20 gross production guidance remains 44-50 mbbl/d At the end of September, the company held US$29.9 mm in working capital.
Africa Oil (AOI SS/CN) & Impact Oil & Gas: Transactions in South Africa – Impact Africa is farming-out of a 50% WI and in the Transkei & Algoa exploration right, offshore South Africa to Shell. Shell has also been granted the option to acquire an additional 5% working interest should the joint venture elect to move into the Third Renewal Period, which is expected to be approximately 2024. Impact is acquiring 90% WI of Area 2 from Silver Wave Energy. Being immediately east and adjacent to Impact’s Transkei & Algoa Blocks, Area 2 compliments Impact’s existing position by extending the entire length of the ultra-deep-water part of the Transkei margin. Together, the Transkei & Algoa Blocks and Area 2 cover over 124,000 km2, with plays extending across both blocks. Africa Oil holds 31.10% of Impact.
Attis Oil & Gas (AOGL LN): Becoming a Helium business – Attis is merging with Helium One. Attis shareholder will be issued 1 Helium One share for every 236 Attis shares. The merger values Attis at £1.76 mm, and Helium at £6.0 mm. Helium One has Helium exploration assets in Tanzania. Helium One will be admitted to AIM in December subject to minimum fundraise of £5 mm.
BWE Energy (BWE NO): Update in Gabon – 3Q20 production at Dussafu was 15,449 bbl/d. Production cost (excluding royalties) was US$19.6/bbl. This includes approximately US$2 mm of additional costs related to the COVID-19 pandemic in the quarter. BWE has also acquired two jack-up drilling rigs for US$14.5 mm for the development of Hibiscus. A jack-up conversion is expected to reduce gross capital investments by ~US$100 mm compared to previous development plan.
Vaalco Energy (EGY US/LN): 3Q20 results – 3Q20 production in Gabon was 5,064 bbl/d. Vaalco held US$42 mm in cash (and no debt) at the end of September. 4Q20 WI production is expected to be between 5,300 bbl/d and 5,750 bbl/d.
EVENTS TO WATCH NEXT WEEK
09/11/2020: Kosmos Energy (KOS US/LN) – 3Q20 results
Companies: EGY AOI FEC GPRK I3E MAHAA PXT SNM TETY TETY TXP
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UK railway privatisation, which was launched in the mid-1990s, has finally turned full circle: the Department of Transport has recently confirmed that its controversial railway franchise system will be scrapped.
In this month's feature article, Nigel Hawkins, the Infrastructure analyst at Hardman & Co, examines the 25-year history of railway privatisation and chronicles its ups and its downs. The successes of railway privatisation, such as new rolling stock, are addressed, along with the many shortcomings, which included minimal vertical integration.
With the winding up of the franchise system, the UK railway sector is effectively reverting to its former status as a nationalised industry, a shift started with the renationalisation of the collapsed Railtrack – later re-badged as Network Rail – in 2001.
Companies: ARBB BBGI CLIG DNL FLTA ICGT OCI PCA PIN PXC RECI SCE TRX SHED VTA YEW
Shanta Gold (AIM: SHG), the East Africa-focused gold producer has, this morning, released its full year results for 2020. The company previously announced production and operational figures for 2020 alongside group-wide reserves and resources update. As such the figures reported today are in line with our forecasts down to EBITDA level, but generally better than expected elsewhere– see Fig 1. Overall it has clearly been a strong year financially with revenue, EBITDA and EPS up by 31%, 34% and 270% respectively from the previous year. The company has also kept to its promise of a maiden dividend with 0.10p per share payable in April as part of a semi-annual programme.
Companies: Shanta Gold Limited
Proposed move to AIM from the main market (standard) by Emmerson (EML.L) to provide Emmerson with access to a market and environment which is more suited, in the Board's view, to the Company's current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work. Subject to EGM on 21st March. Rogue Baron plc have announced its application for admission to the AQSE growth market. Rogue Baron owns five subsidiaries, namely: Shinju Spirits, Inc., Shinju Whiskey LLC, Mazeray Corporation, STI Signature Spirits Group LLC and Legacy Retail Group LLC. The Company’s goal is to build each of its brands that makes them a buyout target. Deal size TBC an expected admission date 12th March 2021. Global review platform, Trustpilot has announced its intention to float on the premium list of the LSE. Trustpilot provides an open platform, which creates a place where businesses and consumers can gain actionable insights and collaborate. Consumers are able to share feedback, at any time, about any business with a website and review feedback left by other consumers. Total revenues were US$64.3 million, US$81.9 million and US$102.0 million for the years ended 31 December 2018, 2019 and 2020, respectively. The Offer would comprise new Shares to be issued by the Company (raising gross proceeds of approximately US$50 million to support Trustpilot's growth plans and repay indebtedness) and an offer of existing Shares to be sold by certain existing shareholders, directors and employees. Timing TBC. In The Style, the e-commerce womenswear fashion brand with an influencer collaboration model, announces their intention to float on AIM. In The Style is a pure-play e-commerce fashion brand with a l customer base of women predominantly aged between 16 and 35. Founded in 2013, the group has delivered £35.4 million net sales and £3.6 million Adjusted EBITDA in the nine months to 31 December 2020, with sales up 159% from £13.7 million for the nine months to 31 December 2019. Admission is expected to take place on or around 17 March 2021. Deal size TBC. Media reports video game firm, Catalis is mulling a London IPO, just over a year after being bought by a private equity firm. Catalis’s accounts are reportedly expected to show revenues increasing to £60m in 2020, up from £43m, with adjusted earnings of £15m. Deal details and timing TBC. tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5m. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo is expecting to release its IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: LND GDR GAMA SOLI SHED RLE CRU WRES SBI MNO
Today's news & views, plus announcements from MRW, BNZL, HICL, AGK, SEPL, SEIT, SDY, BGO, SHED
Companies: BGO SEIT SEPL
Lancaster activity update
Companies: Hurricane Energy Plc
Pantheon Resources has this morning announced that the better than expected well-logs from the Kuparuk formation warranted a change in plan for the testing of that formation, namely, from an open hole test to a more rigorous cased hole test (with a 4 ½ inch liner). However, due to equipment failures and technical issues, the formation started to become damaged in its current location and as such it was not possible to set the casing string (4 ½ inch liner). Accordingly, the company has made the decision to drill a new modestly angled sidetrack in the Kuparuk formation. It is estimated that the sidetrack will take 2-3 days to drill, some 650 feet through the Kuparuk formation, which should then allow a better testing operation. As a result of the cold weather in Alaska, the drilling season may be extended into early April.
Companies: Pantheon Resources plc
Anglo Asian Mining* (AAZ LN) BUY – H2/20 exploration work returns exciting results at Gedabek CA
Bushveld Minerals* (BMN LN) - Strong Buy 31p – Vanadium prices rise as new demand meets tight supply
Gemfields (GEM LN) – Resumption of operations at Kagem and Montepuez after a year of disrupted production and sales
GoldStone Resources* (GRL LN) – Exercise of warrants raises £1.2m
Power Metal Resources* (POW LN) – Portfolio update
Strategic Minerals* (SML LN) – Continued access to Cobre confirmed while current copper prices boost Leigh Creek economic returns
Companies: GML AAZ BMN GRL POW SML
tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to take place during March 2021. The Company intends to raise approximately £7m by way of a placing of new ordinary shares in the capital of the Company. Timing TBC. Samarkand Group Limited, the cross-border eCommerce technology and retail group opening up the world's largest market for brands and retailers, intends to IPO on the Apex Segment Aquis Stock Exchange Growth Market. Admission is targeted for March 2021. NextEnergy Renewables to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally. Targeting a £300m raise. NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company's target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021. Digital 9 Infrastructure launch an initial public offering on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be published in March 2021. Team PLC announced their plans for an AIM IPO. Team owns Theta Enhanced Asset Management Ltd, trading as Team Asset Management. This is a Jersey-based active fund manager providing discretionary and advisory portfolio management services to private clients, trusts and charities. Assets under management were GBP291m in November, up from GBP140m in December 2019 . The Company is seeking to raise no less than £5m. The Placing will be priced on a pre-money valuation for the Company of £7m. Targeting March Admission. Fix Price announces its intention to float on the Main Market of the London Stock Exchange. Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company. Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA. Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT's investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance. According to media reports, Deliveroo, are expecting to release their IPO plans on 8th March. The company raised more than $180m in January with a valuation of more than $7bn.
Companies: ADME NFC CHAR WHR MKA IXI MOS D4T4 ALS TERN
Oil fell the most since November with a stronger dollar and concerns surrounding inflation weighing on crude's best start to the year on record.
Futures in New York declined 3.2% on Friday, with a rising dollar reducing the appeal of commodities priced in the currency. Yet, the US crude benchmark still managed to post a nearly 18% gain this month as inventories worldwide tighten and pockets of demand return. Domestic crude production dropped in 2020 for the first time in four years, according to the US government.
Crude prices have notched the largest year-to-date gain than in any year prior for the same time period, in part due to OPEC+ production curbs helping to deplete global stockpiles. Plus, the unprecedented cold blast that recently halted millions of barrels of US output means oil markets are about 100,000 barrels a day tighter than previously thought, according to JPMorgan Chase & Co. Supply scarcity may worsen in the coming months as North Sea fields undergo major maintenance.
The Organisation of Petroleum Exporting Countries and its allies will meet next week to decide on output levels. While Russia has signalled it favours a further easing of production cuts, the country's oil output dipped below its OPEC+ target this month, meaning it failed to take full advantage of the more generous quota it was afforded after January's OPEC+ meeting.
West Texas Intermediate for April delivery fell $2.03 to settle at $61.50 a barrel.
The US crude benchmark rose 3.8% this week.
Brent for April settlement, which expires on Friday, declined 75 cents to end the session at $66.13 a barrel.
The contract gained 5.1% this week.
The more actively traded May contract declined $1.69 to settle at $64.42 a barrel.
Soaring bond yields on Thursday were the latest sign that accelerating inflation could trigger a pullback in monetary policy support that has helped fuel gains in risky assets during the pandemic. While global bonds have since stabilised, a less accommodative approach to monetary policy could have ripple effects across commodity markets.
Companies: FO 88E DGOC EME TRIN UOG
Today's news & views, plus announcements from SMDS, PSN, POLY, RIO, BIFF, SONG, HSX, PAGE, RLE, SHED
Companies: PSN RLE RIO
Concept select update
Companies: Jersey Oil & Gas PLC
Today's news & views, plus announcements from RIO, TW, CRDA, TPK, PHP, MGGT, SHI, WHR
Companies: PHP RIO SHI TPK
Arc Minerals* (ARCM LN) – Immediate appointment of Rothschild & Co as financial adviser
Chaarat Gold* (CGH LN) – Fatal incident at Kapan in Armenia
Kodal Minerals* (KOD LN) – Progress report on West African gold exploration
Phoenix Copper* (PXC LN) – Raising £16.45m to develop the Empire mine open pit development project
Trans-Siberian Gold (TSG LN) – High grade Vein 25 mining operations resume after accident investigation is completed
Companies: ARCM CGH KOD PXC TSG
Central Asia Metals (CAML LN) has reported Q4 2020 production with 3,365t of copper taking full year output to 13,855 in line with our forecast of 13.9kt and at the top end of guidance. Q4 lead output was 7,442t meaning 29,741t over the full year, up 2% YoY and in line with our forecast of 30kt while zinc output of 5,848t took full year output to 23,815t again in line with our forecast of 24kt and up 2% YoY despite the disruption at Sasa which CAML has overcome rapidly as we expected.
Companies: Central Asia Metals Plc
BlueRock Diamonds (BRD LN) – BlueRock reports $423/ct tenders, raises £1.5m in oversubscribed placing
Cornish Metals* (CUSN LN) – Warrants exercised
Metal Tiger (MTR LN) – Progress at Kitlanya East
Pure Gold Mining (PUR LN) – Further drilling results from Red Lake
Savannah Resources* (SAV LN) – Processing circuit optimization points to capital and operating costs savings at MdB
Nornickel to Stabilize Water Inflows at Arctic Mine by Next Week
Companies: CUSN PGM BRD SAV MTR