West Newton B-1 drilling update
Companies: Union Jack Oil Plc
Placing raising £7m; H1 2020 results
Union Jack Oil* (UJO LN): 1H 2020 results, Multiple near-term valuation catalysts | Mosman Oil & Gas* (MSMN LN): Completion of drilling at Stanley-4 | Reabold Resources (RBD LN): IMIC-1 Well Flow Test Update
Companies: UJO MSMN RBD
Against a challenging sector backdrop, Union Jack successfully navigated the first six months of 2020, progressing its core asset portfolio in addition to securing additional interests in key projects (Wressle and Biscathorpe). The remainder of the year promises to be a transformational period for the Company, with first commercial oil production at Wressle in addition to the imminent drilling of the West Newton B-1 well and an Extended Well Test at the West Newton A-2 appraisal discovery. We therefore retain our rating and 0.82p/share TP.
Lekoil* (LEK LN): FY19 results, strong operational progression | Union Jack Oil* (UJO LN): Settlement proceeds received regarding PEDL253 | Pharos Energy (PHAR LN): 1H 2020 results, large impairment recognised
Companies: LEK UJO PHAR
Eco (Atlantic) Oil & Gas* (ECO LN): 1H 20 results, remains fully funded ahead of active drilling campaign | Union Jack Oil* (UJO LN): Further progress at West Newton | Premier Oil (PMO LN): 1H20 results and comprehensive refinancing package outlined
Companies: Union Jack Oil Plc Premier Oil Plc
Union Jack Oil* (UJO LN): Operations ramp up at West Newton | PetroTal (PTAL LN): Q2 2020 results - operational progress despite challenging market backdrop | Enteq Upstream (NTQ LN): Contract award in Saudi Arabia
Companies: Union Jack Oil Plc Enteq Upstream Plc
Union Jack Oil* (UJO LN): Significant progression made at flagship West Newton project | Pharos Energy (PHAR LN): Two-year extension granted at TGT field, Vietnam
Companies: Union Jack Oil Plc Pharos Energy Plc
Union Jack Oil* (UJO LN): First commercial oil at Wressle on track for this year, OGA approval received | Independent Oil & Gas (IOG LN): EPCI awarded to HSM Offshore for the Company’s Core Project Phase 1 | San Leon Energy (SLE LN): Shrewd investment confirmed in Energy Link Infrastructure | United Oil & Gas (UOG LN): Tullow relinquishes 80% interest to United Oil & Gas in Walton Morant Licence, Jamaica
Companies: UJO IOG SLE UOG
Union Jack Oil* (UJO LN): OGA approves acquisition of additional interest in PEDL253 | Tower Resources* (TRP LN): Considerable read across potential confirmed offshore Namibia | Gulf Keystone Petroleum (GKP LN): June 2020 payment received from KRG | Genel Energy (GENL LN): US$9.8m net received in June
Companies: UJO TRP GKP GENL
Union Jack Oil* (UJO LN): Union Jack takes further 3% interest in Biscathorpe | Mosman Oil & Gas* (MSMN LN): Comprehensive trading update, continued focus on capital discipline | Serius Energy (SENX LN): Debt repayment deferred
Companies: MSMN UJO SEN
Eco (Atlantic) Oil & Gas* (ECO LN): Initiation of Coverage – Transformational resource base | Union Jack Oil* (UJO LN): West Newton ascribed the highest (AA) rating for Carbon Intensity | PetroTal (PTAL): Strong FY19 financial and operational results
Companies: EOG UJO TAL
Union Jack Oil* (UJO LN), STRONG BUY, TP: 0.82p: Increase in stake at Wressle, note published | Energean Oil & Gas (ENOG LN): Trading update, work in Singapore set to recommence | Echo Energy (ECHO LN): Reserve and resource update at Santa Cruz Sur
Companies: UJO ENOG ECHO
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In H1, 2020 and the period directly following (Q3, 2020), EQTEC has made substantial operational progress, significantly boosting its project pipeline and strengthening its balance sheet with an over-subscribed £10m fund raising in July 2020. Revenue generation in H1, 2020, however, was constrained due to the impacts of Covid-19 and severe fires in California. We now forecast revenue of €2.4m in 2020E, compared with our previous forecast of €7.0m. Importantly, no projects have been cancelled. Delayed revenue is expected to flow into 2021E. Select new projects, having been secured in 2020, are expected to reach financial close in 2021E and 2022E, in addition to those existing projects under development in those years. As a result, we are increasing our 2021E and 2022E forecasts.
Companies: EQTEC Plc
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
Talitha Shelf Margin Deltaic LKA resource report
Companies: Pantheon Resources Plc
The stock was up 12% on Friday, 25/09, sparked by the positive outcome on Vodafone’s dispute with the Indian tax authorities. This is encouraging for Cairn, but note that both cases differ. While the tax authorities simply erased Vodafone’s tax bill, they owe up to $1.4bn to Cairn, and could offer more resistance.
Companies: Cairn Energy 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.
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
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Davenport owns three perpetual mining licenses and two exploration licences covering 659km2 in the South Harz potash basin in central Germany. Davenport's experienced European-based management is now focussed on developing Europe's largest potash inventory of 5.3 billion tonnes at 10.8% K2O.
Companies: Davenport Resources Ltd.
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
Shanta Gold (AIM: SHG), the East Africa-focused gold producer has today announced a summary of historic exploration drilling carried out at its recently acquired West Kenyan project. We have included the significant drill intercepts that the company highlighted in the announcement.
Companies: Shanta Gold Ltd.
i3 Energy provided its interim results for the period ended 30 June 2020 (published yesterday after the market close, with a correction to the interims published today at 10:04AM). The financial statements of i3 Energy do not reflect the reverse takeover completed by the company (post-period end) pursuant to its £29M equity raise and its acquisition of assets in western Canada, “the Gain Assets”; however, i3 Energy did provide the financial results of the Gain Assets for the period. These show revenues net of royalties of £16.0M operating costs of £13.0M and cash flow from operations before changes in working capital of £3.0M. For perspective, the average price of benchmark American oil (WTI) was $36.58/bbl and the average price of benchmark American natural gas (NYMEX, Henry Hub) was $1.80/mmbtu during the period. We retain our 17.7p preliminary fair value estimate on i3 Energy, which is premised on the 2P resource evaluations of GLJ and Sproule. We believe commodity prices will recover from the sell-off of recent days and believe the timing is opportune for acquirers of i3 Energy.
Companies: i3 Energy 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
• As the industry adjusts to a ~US$40/bbl world, companies with Strong balance sheets such as GeoPark are returning to exploration and development drilling.
• As production at Llanos 34 (GPRK WI 45%) continues to recover after temporary shut-ins in 2Q20 and following the resumption of drilling activities, the asset continues to be a source of reliable, stable free cash flow to fund future exploration and appraisal activities elsewhere. With this in mind, we see the adjacent CPO-5 block becoming a key area of focus in the next 18 months and the main reason behind the acquisition of AMERISUR in January 2020.
• By YE20, GeoPark will drill two wells in the highly prospective CPO-5 block. This will include an imminent development/appraisal well in the Indico light oil field followed by an exploration well. The only existing well in the Indico field is still flowing naturally at >5 mbbl/d since first oil in December 2018. The implied very strong reservoir performance and the fact that the oil pool boundaries have not been encountered yet suggest the field offers production and reserves upside that could start to be unlocked with upcoming drilling.
• The CPO-5 exploration well in 2020 will target the Aguila prospect (same play concept in the existing Indico and Mariposa fields).
• In 2021, GeoPark could drill an additional 5-7 wells at CPO-5 comprising a combination of exploration, delineation and development wells. According to the latest CPR, 3-4 new Indico wells could add 7.5-12.5 mbbl/d gross production (2.5-4.2 mbbl/d net to GeoPark) in 1-2 years. The exploration program for 2021 will likely test the continuity of the Guadalupe play encountered on Llanos-34 into CPO-5.
Other exploration well candidates for 2021
GeoPark holds a large exploration portfolio with meaningful exploration acreage surrounding its core Llanos-34 Block. On Llanos-34, there are a handful of exploration prospects plus some appraisal drilling opportunities on other relatively minor fields, some of which could be drilled in 2021. Exploration targets on the recently acquired Llanos-87, 123 and 124 blocks could be drilled within the next 18 months. Other likely catalysts in 2021 include 1-2 exploration wells in Ecuador, in blocks located close to the best fields of the prolific Oriente basin. This could open-up a new area of focus.
Value and big exploration
The share price trades at ~55% discount to our Core NAV of ~US$17. Overall there could be 350-700 mmboe gross prospective resources across the Llanos blocks (including CPO-5) that GeoPark is imminently starting to explore. Our target price of US$20 per share reflects our ReNAV. It represents ~150% upside to the current levels.
Companies: GeoPark Ltd.
Advanced amplitude vs offset (AVO) studies have identified several similarities between the ConocoPhillips' 450-750mmbo Willow oil discovery and 88 Energy's Project Peregrine prospects, Merlin and Harrier. In particular, the fluid factor signatures between the Willow oil discovery and the Merlin and Harrier prospects are very similar. This recent analysis builds upon previous seismic reprocessing work, conducted in 2019, which indicated that the same shelf margins and geology extend from the Willow oil field, south into 88 Energy's acreage, with analogous seismic signatures evident in both the Harrier and Merlin prospects. Farm-out discussions are ongoing, with 88 Energy targeting a year-end completion in preparation of the drilling of two wells at Project Peregrine in Q1/21. In our view, the AVO work is highly encouraging, further de-risking both the Harrier and Merlin prospects.
Companies: 88 Energy Ltd.