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Columbus Energy Resources (CERP LN) has announced it has reached agreement on the terms of a recommended all-share takeover of the company by Bahamas Petroleum Co plc (BPC LN).
Columbus Energy Resources
Columbus Energy Resources (CERP LN) has announced the start of Phase 2 of the CO2 Pilot Project in the Trinity Inniss field with its partner (Predator Oil and gas (PRD LN). Following the extension of the IPSC CERP and PRD has now begun to inject further CO2 into the reservoir building up to continuous injection over the coming weeks. The steady build up should correspond to a positive impact on pressure levels and production and CERP indicates the potential for material increases in output.
Following the successful results from Columbus Energy Resources (CERP LN) first well at the Saffron prospect on South West Peninsula of Trinidad, the company has announced it has now submitted a drilling application to the Ministry of Energy and Energy Industries for a second appraisal well (Saffron 2). The well will be drilled as a twin to the first well and will use the same drill pad. The target of Saffron 2 is to firstly gain a further understanding of the Lower Cruse interval with an extended production test and then to progress to a producing well in order to extract the 40° API oil that has been identified which due to its quality will likely attract a strong price relative to its benchmark. Of particular interest are the over 300 feet of high-quality sands demonstrated by the logging of the first well. Saffron 2 will enable further evaluation of the project's potential.
Columbus Energy Resources (CERP LN) | Egdon Resources (EDR LN)
Columbus Energy Resources Egdon Resources PLC
Drilling success in Trinidad’s South West Peninsula opens up a new play and heralds the next phase of evolution for Columbus, which is set to move from mature asset producer to development operator. Successful development of Saffron would be highly economic, with a very low capex requirement and low oil price breakeven. Unusually in current times, partially de-risking Saffron increases our price target from 12.5p to 13p despite lower oil price assumptions. COVID-19 may be laying waste to the sector, but Columbus’s outlook remains attractive.
Columbus Energy Resources (CERP LN) has provided a detailed update on the successful well result and subsequent flow testing which has taken place recently in the South West Peninsula (SWP). CERP has confirmed that it has made successful discoveries in the Lower and Middle Cruse, the former being the primary target of the well, with six intervals of interest within a broad interval of 2,363ft (720m) accounting for 47% of the interval.
In light of the recent events Columbus Energy Resources (CERP LN) has announced that it has taken commensurate measures with a focus on cash preservation. There are two fundamental aspects to the approaches taken; direct cost cutting and payment in shares in lieu of cash where possible. With a cash balance of US$2.56m the company has a modest cushion, however, this package of measures will help to ensure that stakeholders and shareholders are able to benefit when a recovery takes hold.
Columbus Energy Resources (CERP LN) has announced that an additional extension from April 3 to June 30 2020 on the term of the Goudron Incremental Production Agreement Service Contract (IPSC) has been agreed.
Columbus Energy Resources’ (CERP LN), joint venture partner, Predator Oil & Gas Limited (PRD LN) has provided an update regarding the Inniss-Trinity CO2 pilot project. CO2 injection into AT-5X is progressing, as part of the second phase of the pilot project with early results indicating downhole pressure build up, which is positive for future extraction. As part of this second phase of injection, PRD is currently looking towards continuous injection of CO2 whilst working under the revised coronavirus related HSE protocols. Approval processes are now being worked on to enable PRD to increase the volume of CO2 supply whilst utilising existing equipment that is located in Trinidad.
Columbus Energy Resources (CERP LN) has announced that it has agreed a short extension to the term of the Goudron Incremental Production Agreement Service Contract (IPSC). The contract had been due to expire on 31 March 2020 however the agreement with the state-owned Heritage Petroleum Company Limited is extended until 3 April 2020 to provide further time to complete the formal agreement for a longer-term extension.
Columbus Energy Resources (CERP LN) has announced that flow testing of the Lower Cruse is underway with results expected in due course. Furthermore, at the last update logging of the Middle Cruse was still underway, however, now that it has been completed the company believe that it presents a valid commercial secondary target to the Lower Cruse and could produce at commercial rates. This is very positive, in our view, providing CERP with a clear development option for the initial commercialisation of the deeper South West Peninsular (SWP) targets.
Columbus Energy Resources (CERP LN) has announced that it has successfully injected the first tranche of CO2 into well AT5X within the Trinity Inniss field. CERP and its partner, Predator Oil and Gas (PRD LN), will now continue to inject CO2 into the well and evaluate the impact the CO₂ injection on enhancing oil production from the offset wells in the AT-4 Block. Further updates on the results of the project will be provided in due course, a successful result could benefit Trinidad more broadly, not only enhancing oil production but helping to reduce CO2 emissions from the island by re injecting it.
Something of a holding statement from Columbus this morning with regards to its Saffron well in the South West Peninsula, which whets the appetite but leaves the market on tenterhooks and frustrated for more information. Management is being conservative with its messaging, which given some recent events in the sector is wise. It is clear that the company has encountered multiple sand packages with high sandstone content and multiple oil shows to the well Total Depth. Ultimately though, the results of the Saffron flow tests, planned for February, will be critical to understanding the scale and potential of the Saffron resource.
Columbus Energy Resources (CERP LN) | 88 Energy (88E LN)
Columbus Energy Resources 88 Energy Limited
Columbus Energy Resources (CERP LN) has announced that it has completed the interpretation of the Saffron cased hole logging for the Lower Cruse and the results justify progression to flow testing in February 2020, subject to Ministry approval.
Columbus Energy Resources (CERP LN) has announced an update on the recently completed Saffron well which successfully intercepted oil in the primary target; the Lower Cruse. CERP has now successfully completed the drilling of the well, reaching a total depth of 4,634ft (1,412m). A combination of open hole and cased hole logging was undertaken to a depth of 2,545ft (776m) with the final cased hole logging to total depth expected to be completed in the coming weeks.
Following the announcement in November 2019 of the agreement of a new convertible loan facility, Columbus Energy Resources (CERP LN) has announced that it has drawn down the second of three tranches of US$1.5m. With the company entering the final stages of drilling at Saffron this will enable to cover any unexpected final costs in the latter stages of drilling and/or move more quickly to monetise a successful result once the results are known.
Drilling at Columbus’ Saffron well in the South West Peninsula, onshore Trinidad, is continuing according to plan with encouraging results so far. The well has encountered hydrocarbon bearing zones on prognosis at the shallower secondary and tertiary targets, which can be returned to for well logging operations if the primary target does not come in. After a small delay due to encountering high pressure gas, the well is now drilling ahead towards the primary oil target, which should be reached within the next week. Saffron’s main Lower Cruse target has estimated recoverable resource of 11.5 mmbbls and carries a 45% geological chance of success. On a risked basis, we value this prospect at 2.9p/sh. Unrisked, we estimate it is worth 7.4p/sh. The shares remain strongly backed by producing assets (5.1p/sh), with further upside potential from existing enhanced oil recovery and appraisal/development projects (6.0p/sh). However, the real spice resides within its South West Peninsula exploration acreage, where a positive result with its first exploration well, Saffron, would be transformational, delivering rapid production and cash flow. It would also provide encouragement for over a dozen already identified follow-on prospects, some of which are materially larger. We maintain our Buy rating and 14p price target.
Columbus Energy Resources (CERP LN) has provided an update on the South West Peninsula (SWP) Saffron well where drilling is ongoing. CERP had previously indicated it would update investors after 45 days and today’s announcement indicates that whilst oil bearing intervals have been intercepted in both the tertiary and secondary targets as expected the primary target has not yet been reached.
Columbus’s Saffron well continues to drill ahead with results expected in the next few weeks. While this is the main event for Columbus, and a potential game changer (we estimate worth 7p/sh unrisked), its wider business continues to progress. A Lind credit facility has been put in place, in effect replacing the previous facility, which had just been fully repaid in cash, but on improved terms. This ensures sufficient funds to not only complete the Saffron well but also allows acceleration of any appraisal/development activities on both Saffron and its new Weg Naar Zee block in Suriname. Tony Hawkins has been appointed CEO, freeing up the Chairman to focus on strategy and growth. Finally, extensions to its Innis Trinity and Goudron licences have been granted.
Columbus Energy Resources (CERP LN) has announced an interim extension to the term of the Goudron Incremental Production Service Contract (IPSC) to 31 March 2020. The extension will allow for CERP and the state-owned Heritage Petroleum (Heritage) to negotiate a longer-term extension. The original term of the Goudron IPSC was due to expire in November 2019, however this extension will allow for discussions to conclude between CERP and Heritage to ensure that the long-term agreement works for both sides.
Columbus Energy Resources (CERP LN) has announced that the Incremental Production Service Contract for the Inniss Trinity has been extended to enable the full implementation of the CO2 injection pilot project from January 2020 to December 2021 providing the project is implemented by 28 January 2020.
Columbus Energy Resources (CERP LN) has announced the agreement of terms for a new convertible loan facility to provide access to additional funds to enable the fast tracking of the company’s transformational development programme. The facility offers attractive terms, in our view, and provides access to up to US$4.5m over three equal tranches, the first of which will be drawn immediately.
Columbus Energy Resources (CERP LN) has announced that following an inspection of the site, approval for drilling has been granted by the Ministry of Energy and Energy Industries. The well spud has been confirmed and drilling the 8.5 inch pilot hole will commence in the coming days.
Columbus Energy Resources (CERP LN) has announced an update regarding drilling operations at the Saffron well in the South West Peninsula, Trinidad. CERP previously announced on 30 September 2019 that it had mobilised the rig and which having arrived on site is now ready to commence drilling operations in the next few days following official Ministry inspection and approval.
Columbus Energy Resources (CERP LN) has provided an update regarding the La Lora Concession in Spain which affected the company’s Spanish subsidiary, Compañía Petrolifera de Sedano S.L.U. (CPS).
Columbus Energy Resources (CERP LN) has announced that work is continuing with Predator Oil & Gas Limited (PRD LN) to progress the CO₂ pilot project on the Inniss-Trinity Incremental Production Service Contract.
Columbus Energy Resources (CERP LN) has announced its new country entry following the signature for a Production Sharing Contract (PSC) for the Weg Naar Zee Block which is located in onshore Suriname. This gives the company exposure to one of the most exciting regions for exploration, the Suriname-Guyana Basin where the likes of ExxonMobil (XOM US), Repsol (REP SM), Total (FP FP), Hess Corporation (HESS US), Apache (APA US), Cairn Energy (CNE LN), Tullow Oil (TLW LN) and Eco Atlantic (ECO LN) are currently highly active in offshore exploration. XOM has discovered over 5Bboe in Guyana, through 13 consecutive discoveries to date highlighting the region’s prospectivity.
Columbus Energy Resources (CERP LN) (not covered): Entry into Suriname | Panoro Energy (not covered): Oil discovery offshore Gabon
Columbus Energy Resources Panoro Energy ASA
Columbus has announced that it has been awarded acreage containing discovered resource onshore Suriname. This new country entry brings additional low-cost, low-risk growth potential into the portfolio and strategically, geographically and operationally complements its existing operations in Trinidad. Columbus now offers growth potential on multiple fronts via its producing assets, low-cost developments, enhanced oil recovery, and high-impact exploration. The latest evidence suggests that the market should react positively to this news, and despite strong recent performance, Columbus still trades at a NAV discount to its peers. We are maintaining our Buy rating and raising our price target by 34% to 13.7p.
Columbus Energy Resources (CERP LN) has announced that it has been granted approval from the Ministry of Energy and Energy Industries to drill the Saffron Well and commence its drilling programme on the South West Peninsula (SWP). The company is now close to spudding the well with the mobilisation of the rig now in process.
Drilling of the potentially transformational Saffron prospect is approaching rapidly. Ahead of that, Columbus has raised the estimated prospect size of Saffron, from 10mmbbls recoverable to 11.5mmbbls. Integrating this into our model results in our risked-NAV and price target increasing from 9.7p to 10.2p/sh. Columbus shares have performed well since our recent initiation, but we believe there is plenty more where that came from. We maintain our Buy rating.
Columbus Energy Resources (CERP LN) has confirmed that civil works and contracting are underway enabling the rig to be on site for the end of September ahead of the upcoming and potentially transformational drilling of the South West Peninsula (SWP) and we expect the well to be spudded shortly after the rig is on site.
Columbus is a high potential E&P company focused onshore Trinidad. Its new management team has cleaned up legacy issues over the last two years and is now ready to pursue growth from a stable platform. The shares are strongly backed by producing assets, with further upside potential from existing enhanced oil recovery and development projects. However, the real spice resides within its South West Peninsula exploration acreage, with the first prospect expected to be drilled in late-September. Success will be transformational, delivering rapid production and cash flow. An imminent new country entry would be the icing on the cake, bringing in discovered resource at minimal cost. We initiate with a Buy rating and 9.7p price target.
Columbus Energy Resources (CERP LN) delivered robust H1 2019 results, continuing its steady progress in earnings improvement despite sluggish WTI oil prices which traded within a narrow range averaging US$58.24/bbl in H1 2019. In H1 2019 CERP received an average price of US$57.6/bbl (down 6% YoY) which was partially offset by a 3.7% YoY increase in sales of 92kbbl resulting in net revenues after royalties of £3.4m, a 6% decline YoY. However, as we have previously highlighted the impact of the Supplemental Petroleum Tax (SPT) in the current US$50-60/bbl WTI trading range has resulted in a keen focus on costs and despite the reduction in the top line a reduction in COGS resulted in a 61% YoY increase in gross profit to £691k. Furthermore, the impact of one off costs which impacted SG&A in 2018 in relation to Spain and the Steeldrum acquisition has been significantly reduced meaning that EBIT improved from a loss of £2.4m to £1.3m YoY while the loss from net income narrowed from £2.5m to £1.7m YoY.
Columbus Energy Resources (CERP LN) (not covered): Half-year report
Providence Resources (PVR): Barryroe Site Survey Commences | Columbus Energy Resources (CERP): Half Yearly Report
Columbus Energy Resources Barryroe Offshore Energy PLC
Columbus Energy Resources (CERP LN) has provided an update and is continuing to make strong progress in combination with Predator Oil & Gas Limited (PRD LN) to advance the CO₂ pilot project on the Inniss-Trinity field. CERP’s wholly owned subsidiary Fram Exploration (Trinidad) Ltd (FRAM) is operator of the Inniss-Trinity field and workover operations at the At-5X well have now been completed in preparation for CO₂ injection and subsequent enhanced oil production.
Columbus Energy Resources (CERP LN) has announced its intention to drill a low cost well in early Q3 2019 with a second well likely to follow soon after. Each likely to take two to three weeks to complete and are located within CERP’s wholly owned licenses on the highly prospective South West Peninsula (SWP). We highlight the high chances of success for these exploration wells of 45% and 65%. One initial target indicates a mean prospective resources of 66mmbbls and our analysis suggest a NAV of US$81m with the potential to deliver near term and transformational growth which could be largely funded internally based on management guidance.
Columbus Energy Resources (CERP LN) has announced full year results for 2018 demonstrating operational progress through improved financial results. Revenue of £7.6m was up 58% YoY as higher Trinidad production of 541bopd, up 47% YoY, significantly offset the closure of the Spanish operations. This was, however, complicated by the range bound oil price environment around the Special Petroleum Tax (SPT) threshold meaning royalties paid by CERP increased 88% YoY to £2.2m with revenue 12% below our estimate.
Columbus Energy Resources (CERP LN)# has announced it has been granted a Private Petroleum Licence for the Bonasse Licence Area in the South West Peninsula of Trinidad. The licence, which includes the Bonasse field is granted by the Trinidad Ministry of Energy and Energy Industries and formally recognises that Columbus hasthe right to exploit any oil and gas in the licenced area. Having previously announced that a well location had been chosen this is an important step in terms of regulatory clearance and confirms that the well will be drilled in 2019.
Columbus Energy Resources (CERP LN)# has provided Q1 2019 quarterly operational update demonstrating significant progress in progressing the SWP exploration programme with a well location chosen for Q3 2019 and advanced discussion in relation to the acquisitive growth strategy in South America.
Columbus Energy Resources (CERP LN) (not covered): Operational update in Trinidad | PetroTal (PTAL LN/TAL CN)1; BUY, £0.40: Exploration drilling results in adjacent block | G3 Exploration (G3E LN) (not covered): FY18 results | Jadestone Energy (JSE LN/CN); HOLD, £0.50: 4Q18 results | Equinor (EQNR NO) (not covered): Divestment in Norway | Valeura Energy (VLE CN)7; BUY, C$10.00: London listing | Maurel & Prom (MAU FP) (not covered): 1Q19 update
CERP PTAL G3E JSE 0F6L 83PN
Columbus Energy Resources (CERP LN) has provided an update regarding its Inniss-Trinity Incremental Production Service Contract (IPSC). Following the receipt of approval for conduct of the CO2 Enhanced Oil Recovery pilot project from Heritage Petroleum Company, Predator Oil and Gas (PRD LN) will commence first injections in Q2 2019, subject to the receipt of the remaining regulatory approvals.
Columbus Energy Resources (CERP LN) reported Q4 2018 production averaging 670bopd resulting in full year average production of 615bopd in 2018 which was up 67% YoY and ahead of our full year estimate of 600bopd despite the impact of severe weather and record rainfall in Q4 2018. Quarterly production was 9% lower QoQ as moving workover rigs and routine operations were prevented by flooding which made roads impassable in Trinidad. Gross revenues of US$3.23m were down 16% QoQ owing to lower production and lower oil prices which averaged 5% lower QoQ at US$57.58/bbl.
Columbus Energy Resources (CERP LN) (not covered): Operational update in Trinidad | President Energy (PPC LN) (not covered): Production update in Argentina | Regal Petroleum (RPT LN) (not covered): Ukraine update | Soco International (SIA LN) (not covered): Trading update | Faroe Petroleum (FPM LN); HOLD, £1.75: DNO increases its offer for Faroe | Independent Oil & Gas (IOG LN); BUY, £0.70: Boosting the value of the core developments | Lundin Petroleum ( LUPE SS) (not covered): Dry hole in Norway | Orca Exploration (ORC.A/B CN) (not covered): Operational update in Tanzania
CERP MEN ENW PHAR FPM LYV ORC/B IO7
Having recently completed a £2.5m fundraise and closed the Steeldrum acquisition, Columbus Energy Resources (CERP LN) has diversified its production base setting the company up for a strong 2019F where CERP will begin to test the full potential of the South West Peninsula. The acquisition brings immediate production along with upside potential from low cost optimisation as well as new drilling. The shares have been range bound recently, however, we believe that CERP now has a stronger platform for achieving its combined organic and acquisitive growth strategy which will deliver the expected rerating, in our view.
Columbus Energy Resources (CERP LN) (not covered): Placing for Trinidad | Maurel & Prom (MAU FP) (not covered): Potential transaction in Venezuela | President Energy (PPC LN) (not covered): Acquisition in the USA | Independent oil & Gas (IOG LN) (not covered): Resources update at Goddard in the UK
CERP 0F6L MEN IO7
Columbus Energy Resources (CERP LN) (not covered): 1H18 results | Independent Oil & Gas (IOG LN) (not covered): 1H18 results | MX Oil (MXO LN) (not covered): Aje update in Nigeria | World Crude Oil Markets: The tightening of oil markets has arrived and with it, higher prices | World natural gas markets: Overseas gas markets still tightening and still price bullish | Commodity price update: Impact on International Oil & Gas Producers
CERP MXO IO7
Edison Investment Research is terminating coverage on Columbus Energy Resources (CERP). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.
Columbus Energy Resources (CERP LN) has announced that it has been granted an extension of the license for the Cory Moruga Block until 2032. The extension of the license provides CERP with sufficient certainty to bring on a new field before the end of 2018 subject to completion of the acquisition which is expected Q3/Q4 2018. The combined group will then have six operating fields which will provide CERP with a more diversified and stable production base.
Columbus Energy Resources (CERP LN) has provided an update in relation to the decision made by the Trinidad government to restructure Petrotrin which will involve the closure of the Point-a-Pierre refinery. Transition to a new structure for Petrotrin will begin as early as October 2018 although CERP have indicated that they do not expect any adverse impacts from the decision. We also note that there were no negative impacts to CERP’s operations from the recent earthquake in Venezuela which impacted Trinidad.
Columbus Energy Resources (CERP LN) has provided a significant update announcing the signing of a sale and purchase agreement for the acquisition of producing oil assets in Trinidad as well as a positive operational update for Q2 2018 with gross revenue in H1 2018 of US$5.65m and operating netbacks of US$1.64m. This demonstrates the successful achievement of positive operating cashflow while the announcement highlights in no uncertain terms management’s ability to deliver on the ambitious growth strategy necessary to deliver the further positive returns for shareholders we expect. Indeed, CERP now has rising production from Goudron and BOLT as well as potential additional production from onshore Trinidad properties alongside the considerable exploration potential at the South West Peninsula.
Columbus Energy (CERP LN) (not covered): Acquisition in Trinidad | Aker BP (AKERBP NO) (not covered): 1H18 results | Regal Petroleum (RPT LN) (not covered): Work-over results in the Ukraine | Gulf Keystone Petroleum (GKP LN) (not covered): Payment in Kurdistan | Tethys Oil (TETY SS)1,6; HOLD, SEK100: Production update in Oman
CERP ENW GKP 0A1V
The announcement in late June 2018 by Columbus Energy Resources (CERP LN)# that it had signed the Sale and Purchase Agreement for Icacos represents another milestone completed by the new management team. With the operational turnaround at Goudron well underway, management’s efforts have also been focused on unlocking the value in the South West Peninsula where an estimated 1.3BBoe are in place. The announcements in relation to BOLT, and now Icacos, pave the way for exploration drilling in 2019, which will enable the value realised by CERP shareholders to be maximised, in our view.
This Morning’s News Columbus Energy Resources (CERP LN)
Columbus Energy Resources (CERP LN) has announced full year results for the year ending December 2017. The new team, which took charge in May 2017, has recapitalised the company, which ended the year with a cash position of £4m, and began an ambitious operational overhaul seeking to realise the significant value potential of the underlying assets whilst instilling capital discipline.
Columbus Energy (CERP LN) (not covered): Potential acquisition in Trinidad | Echo Energy (ECHO LN) (not covered): FY17 results | President Energy (PPC LN) (not covered): Work programme in Argentina | Trinity Exploration & Production (not covered) (TRIN LN): 1Q18 operational update in Trinidad | G3 Exploration (G3E LN) (not covered): Reserves update in China | Faroe Petroleum (FPM LN)6 ; BUY, £1.60: DNO (DNO NO) (not covered) increases stake in Faroe | Frontera Resources (FRR LN) (not covered): Arbitration in Georgia | JKX Oil & Gas (JKX LN) (not covered): Production update in Russia and the Ukraine | KNOC & Schlumberger (SLB US) (not covered): FDP agreement in Kenya
CERP ECHO MEN TRIN G3E FPM FRR JKX
Columbus Energy Resources (CERP LN) has announced that it has agreed in principle to purchase the remaining 50% of the Icacos Field from its JV partner Touchstone Exploration (TXP LN/CN) via their respective subsidiaries; Leni Trinidad Limited (LTL) and Primera Oil & Gas Limited. LTL will subsequently become the 100% owner of the Icacos field and the operator. The Icacos Field is located at the far end of the South West Pensinsula and we believe that the transaction will enable both CERP and TXP to focus more fully on their respective strategies.
Columbus Energy Resources (CERP LN) has announced robust production improvements at Goudron, in line with company guidance, resulting in positive operating cashflow of US$0.7m in Q1 2018. Goudron is, however, designed to provide a platform for growth and CERP has highlighted the significant progress made across the broader asset portfolio with the previously announced closure of the La Cora concession and successful renegotiation of the BOLT transaction for the South West Peninsula.
Columbus Energy Resources (CERP LN) has announced that it has received official notification of the closure of the La Lora concession covering the Ayoluengo oil field.
Columbus Energy Resources (CERP LN) has announced that the Collective Dismissal Procedure in relation to the La Cora concession in Spain has been completed. The CDP has been completed within the previously announced time frame and this represents the resolution of another legacy issue which will enable management to focus on the company’s core assets. Additionally, we see this as further evidence that CERP is building a track record of successfully delivering on its outlined objectives.
Columbus Energy Resources (CERP LN) (not covered): Renegotiation of transaction in Trinidad | Total (FP FP) (not covered): New concessions in the UAE | Caspian Sunrise (CASP LN) (not covered): Operational update in Kazakhstan
CERP CASP TTE
Columbus Energy Resources (CERP LN) has announced a significant update in relation to the South West Peninsula (SWP) and the successful completion of the restructuring of the Beach Oilfield (BOLT) transaction. This will enable CERP to begin a fully funded exploration programme including well reactivation in Q2 2018 on the Bonasse field as well as analysis of 3D seismic on the SWP. This is expected to be followed by 2-3 appraisal wells drilled in H1 2019, subject to results. Although the operational turnaround at Goudron is a critical part of the strategy and drives near term cashflow generation, it is the exploration potential at the SWP which provides the key catalysts for a major rerating of the stock; this announcement is therefore a significant milestone for CERP in realising its longer term strategy.
This Morning’s News Columbus Energy Resources (CERP LN) Egdon Resources (EDR LN)
Columbus Energy Resources IOG PLC
The new management team despite only being appointed earlier this year has rapidly brought about the start of a material turnaround which we expect to unlock significant unrealised potential at Columbus Energy Resources (CERP)# . The new team has announced an achievable growth strategy, strengthened its financial position with institutional support from Schroders and begun to deliver tangible operational improvements.
Columbus Energy Resources (CERP) has a new name, new management and new strategy. Leo Koot, an experienced and well respected CEO, has joined the company to reassess and revitalise the assets in Trinidad, bringing in new personnel. Management overheads have already been cut and a programme of in-fill wells has been put on hold. Instead, a series of low-cost interventions should increase production in the short term, moving the company towards a virtuous cash flow circle; we should see the results of the initial work programme in Q417. Any cash flow can be recycled into further development and potentially fund a material exploration programme, which could be game changing (SWP holds an estimated 1.3bnbbls OIP across a number of targets).
This Morning’s News LGO Energy (LGO LN) Oil & Gas Prices
This Morning’s News LGO Energy (LGO LN)
This Morning’s News | LGO Energy (LGO LN)
LGO Energy (LGO) has announced that its second new development well in the 2017 drilling programme successfully reached a total depth of 1,250ft. Electric log interpretation of the Mayaro Sandstone target interval confirms the presence of oil and will shortly be put into production over a net oil pay of 269ft.
This Morning’s News | LGO Energy (LGO LN) | Solo Oil (SOLO LN)/Helium One#
Columbus Energy Resources Scirocco Energy PLC
Following the restructuring of its balance sheet in December 2016 and the 20 for 1 share consolidation in early March, LGO Energy (LGO)# now appears to have turned the corner and preserved its reputation as an operator in Trinidad. It is now refocusing its efforts on the Goudron Field development plan and looking to capitalise on its acreage position in the South West Peninsula.
Positive. LGO has reached an agreement with BNP Paribas (lending bank) to get access to approximately US$0.5 mm to recomplete up to five wells on the Goudron Field (100% WI) in Trinidad.
The GY-50 well was successful recompleted and has been put on test production. Production for 1Q16 of 574 bbl/d is slightly below our 1H16e production forecast of 616 bbl/d.
Market Impact: Positive. LGO has successfully recompleted the GY-671 well, which will help offset natural production declines. The Company has identified at least five other recompletion opportunities that are expected to increase production.
LGO Energy (LGO) is an E&P company specialising in the reactivation of mature oil fields in Trinidad and Spain. Its main field in Trinidad, Goudron, has both low lifting costs and longer-term potential through enhanced oil recovery (EOR). However, LGO needs to find a refinancing solution to alleviate current funding constraints in Trinidad, allowing it to progress low-cost workover solutions and ultimately develop 2P reserves.
Neutral.
Market Impact: Mixed. While a non-binding term sheet has been signed with an institution for a US$20 mm investment, there is no certainty that any such financing will be completed. Given that the market capitalization of the Company is approximately US$15 mm, current shareholders will suffer dilution if the investment proceeds. An injection of US$20 mm would repay bank debt of US$10.4 mm and outstanding net account payables of US$5 mm.
LGO Energy has initiated a formal strategic review of the Company's business and assets with a view to consider all options to maximize shareholder value. The final outcome could potentially include a strategic partnership, strategic investment, asset sales, mergers and potential offers for the Company.
Market Impact: Negative. LGO has agreed to pay approximately £0.95 mm to settle a number of outstanding invoices with existing creditors and advisors. Based on the stock's current trading price, we estimate that LGO will issue approximately 244 mm shares, which represents dilution of approximately 8%. The Company continues to have a net creditor balance of approximately £0.7 mm, exclusive of drilling funds of approximately £2.7 mm drawn down from its bank facility and ultimately available to pay creditors.
Slightly positive. LGO has announced that the Company has reached an agreement with BNP Paribas with respect to the early termination of a pre-paid swap and debt repayment schedule. The Company's strategic investments process continues and could potentially take another two months until completed.
LGO has provided an operational and financial update, which we view negatively. The Company reported 3Q15 production volumes of 896 bbl/d, which was well below our 2H15e production forecast. Our 2015e production forecast has decreased 26% to 1,024 bbl/d and our cash flow estimate has decreased to negative US$4 mm. LGO is financially constrained, which negatively impacts capital reinvestment in 2016e. As such, our 2016e production outlook decreases 43% to 890 bbl/d and our cash flow estimate decreases to negative US$4 mm.LGO is currently facing financing risk. LGO’s liquidity ratios as specified in the Company’s banking arrangements have dropped below the covenants associated with the bank facility. Furthermore, the lender will not allow any more funds to be drawn against the facility. LGO requires an injection of debt and/or equity to recapitalize the Company to clean up the balance sheet and for capital expenditure
Market Impact: Negative. The GY-678 well has been plugged and abandoned after an unsuccessful attempt to recover downhole equipment. The well cost of US$1.9 mm and potential liability of US$1.5 mm for equipment lost downhole are greater than anticipated. The Company is now in breach of its debt covenants and the bank has indicated that no additional draws can be made at this time.
Market Impact: Negative. LGO has issued approximately 111 mm shares to raise gross proceeds of £1.0 mm. The issue price of 0.9 pence per share is near our core NAV estimate of £0.01 per share. The stock has traded down 12% today to near the issue price.
LGO Energy is an oil and gas exploration and production company that was incorporated in 2006 and is listed on the AIM, with the ticker symbol “LGO LN”. The Company’s primary asset and main focus is the Goudron Field, located onshore Trinidad. The Company is undertaking a multi-well, multi-year, development drilling program that will drive reserves and lower-risk production growth.Since taking over operations of the Goudron Field in 2012, LGO has undertaken an active production optimization program and has drilled 15 successful development wells in 2014 and 2015. The Company’s production has increased from approximately 300 bbl/d in 2013 to our estimate of 1,380 bbl/d in 2015e, which is due to low-cost, low-risk development drilling. We are forecasting additional production growth of 11% to 1,570 bbl/d in 2016e. Due to success and low reserve recovery to date, LGO is seeking additional environmental approvals that will allow the current 30-well program to be expanded to at least 60 wells.We are initiating coverage on LGO Energy with a target price of £0.02 per share and a Market Perform ranking. While the potential return to our target price is meaningful, we note that LGO is currently trading at a premium to other South American E&P companies.
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