Research that is free to access for all investors. Companies commission these providers to write research about them.
Brokers who write research on their corporate clients and make it available through our main bundle offering.
Research that is paid for directly by asset managers. Only accessible to institutional investors permissioned for access.
Event in Progress:
View the latest research on other companies in the sector.
Tri Ri Asset Management ("TRAM") announced an investment of up to US$187mm into San Leon (SLE), the proceeds of which will in turn fund Energy Link Infrastructure ("ELI"), making SLE the majority ~55% shareholder in ELI, fulfilling its long-held strategy. We see a low completion risk with this much simpler transaction. It is one of the largest fundraisings by an AIM E&P company in recent years, aligning SLE with a long-term focused strategic funding partner through an investment arrangement, which includes them becoming a major shareholder. Demonstrating confidence, TRAM is subscribing for shares at 30p/sh, ~100% premium to the SLE price pre-suspension, the convertible will have a 50p/sh conversion price and TRAM’s profit share will be tied to the success of ELI. TRAM has a portfolio of US$850mm in assets under management in public market and real estate investment, with a deep understanding of the pipeline business. TRAM highlighted SLE’s professionalism and understanding of Sub-Saharan Africa and it is excited by the scale of OML 18 and the efficiencies that ELI's new infrastructure will bring.
San Leon Energy Plc
Since San Leon’s announcement in July 2022 of the “Proposed Transactions” (detailed below) it has continued discussions to secure an alternative US$50mm loan facility for the Proposed Transactions and working capital. The refinancing discussions have progressed more slowly than the Board expected although the discussions are now at a very advanced stage. However, with significant progress in the past weeks, the Board is still optimistic that a conclusion will be reached and expects to provide an update in due course. The Company has received only very limited cash inflows and currently has ~US$10.5mm of unpaid creditors. The Board is confident that, following the proposed refinancing being successfully concluded, all creditors will be settled in full shortly afterwards. Also, San Leon’s shares are expected to be suspended from 3rd July, as it will not be able to publish FY’22 accounts before month end, because it has not received audited results from Midwestern Leon Petroleum Limited. SLE's current unaudited balance sheet has a significant asset base with, inter alia, >US$115mm and US$20mm owed by Midwestern Leon Petroleum Limited and Energy Link Infrastructure (ELI) respectively.
San Leon released interim results, reporting revenue of $116k (1H21 zero) with net loss of $(8.9m) (1H21 $8.1m). Net cash at June was $267k. We would argue that the results are largely irrelevant as the company moves towards completion of the (previously announced) restructuring/consolidation which will see the company’s indirect stake in OML18 in Nigeria increase to 44.1% and ownership of ELI (which owns the ACOES export system) to 50%. This will clearly transform San Leon and the new structure and growth in production at OML18 should generate significant FCF that that can be returned to San Leon by way of dividends. The deal is anticipated to complete by the end of 2022. With commodity prices remaining high and demand for oil unabated in Nigeria, the outlook is positive. Progress at Oza also could deliver near-term upside. We reiterate our BUY recommendation and Target Price of 86p.
San Leon shareholders have approved a series of transactions that will simplify the corporate structure and lead to San Leon increasing its initial indirect interest in OML18 to 44.1% (from 10.5%), along with its stake in ELI (which owns the ACOES export system) to 51% (from 10.6%). The OML18 field is set for rapid production growth, with production >100kbopd targeted by 2025. This coupled with high oil prices should see substantial FCF generated in Nigeria in due course that can be returned to San Leon by way of dividends. We see this deal as transformational for San Leon as it maintains its low-risk approach whilst garnering greater potential upside from a world-class asset. We have adjusted our forecasts to reflect the new structure and greater indirect stakes, which leads us to raise our target price to 86p (from 66p). We reiterate our BUY recommendation.
San Leon Energy (“San Leon”; “SLE”) has increased its stake in OML 18 and the ACEOS export infrastructure via a series of transactions that have also simplified the ownership structure. SLE is effectively quadrupling its economic interest in OML 18 through the issuance of 418mm shares to Midwestern. This adds 93% to SLE’s share count while Midwestern’s stake in SLE increases to 55%. SLE’s existing ~US$100mm of loan notes underwritten by Midwestern have been cancelled and ~US$50mm of new debt will be issued. SLE's 44% effective ownership will be via 100% of Martwestern, which in turn will have a 98% initial economic interest in Eroton, which will own 45% of OML 18. The other 55% will continue to be owned by the Government of Nigeria. San Leon is also increasing its stake in the ACEOS export infrastructure to 51% from 10% and is increasing its lending to ELI, the operator of ACOES, to ~US$50mm.
AUCTUS PUBLICATIONS ________________________________________ Calima Energy (CE1 AU)C; Target price of A$0.70: Production expected to bounce back in 3Q22 – June production was impacted by the gas processor’s scheduled plant turn-around in Thorsby that resulted in production being reduced by 625 boe/d for seven days. This work was anticipated and is included in the company’s budget and production guidance. At Brooks, the gas compressor at the 2-29 battery went down on 24 June. The compressor was replaced in ~6 days during which production was reduced to around 50% of capacity. Production is expected to be back at ~4.1 mboe/d in early July. This is expected to grow further with the expected imminent tie-in of production from Gemini#8, Gemini#9 and Leo#4. We have reduced our production forecast for 2Q22 from ~4.3 mboe/d to 3.7 mboe/d and from 4.3 mboe/d to 4.2 mboe/d in 3Q22. We continue to forecast ~5.0 mboe/d in 4Q22. We have marginally reduced our FY22 production forecasts from ~4.4 mboe/d to ~4.2 mboe/d. We have also slightly reduced our target price from A$0.75 to A$0.70 per share. The results of the Leo#4 well (that could have a positive impact on the company’s 2P reserves) in 3Q22 could be a catalyst to re-rate the share price. See website for full report PetroTal (PTAL LN/TAL CN)C; Target price of £1.30 per share: High production and cash. Another good well result. Increasing production guidance - 2Q22 production was ~14.5 mbbl/d. This is above the guidance of ~13.5 mbbl/d and our forecast of ~13 mbbl/d. 12.6 mbbl/d were sold through Brazil. Well 11H was put on production at 9,550 bbl/d over the first four production days. This is another very good well that is estimated to payout in ~90 days. Production averaged ~22 mbbl/d over the first few days of July, peaking at 26 mbbl/d. However production will be maintained below that level due to the ONP still being closed. The Company expects to maintain production between 18,000 and 19,000 bbl/d with Brazilian exports increasing until the ongoing ONP repairs are completed, which is expected by September 2022. This is again above the guidance of 16.6 mbbl/d for 3Q22 and our forecast of 16 mbbl/d.nThe shares continue to offer deep value and growth. We are increasing our target price from £1.20 per share to £1.30 per share as we incorporate the increased production and strong financial position. See website for full report IN OTHER NEWS ________________________________________ AMERICAS Alvopetro Energy (ALV CN): Operational update in Brazil – The 183-B1 exploration well on Block 183 in the Recôncavo basin has discoveries in multiple formations with a total of 34.3 metres of potential net hydrocarbon pay, with an average porosity of 10.6% and average water saturation of 29.0%. June sales volumes averaged 2,480 boe/d. Canacol Energy (CNE CN): Operating update in Colombia – Sales in June were 199 mmcf/d. The Cornamusa 1 exploration well located on the VIM-5 Block encountered multiple gas filled sandstones between 6,010 and 7,514 feet true vertical depth within the primary Cienaga de Oro sandstone reservoir target with average porosity of 21 percent. Echo Energy (ECHO LN): Operating update in Argentina – Net liquids and gas production in 2Q22 averaged respectively 272 bbl/d and 6.8 mmcf/d during Q2 2022. Over the next six months production is expected to increase by up to ~600 boe/d as a result of new infrastructure projects at a net cost to Echo of US$2.1 mm. Royal Helium (RHC CN): Helium well performance estimate in Canada – Single-leg horizontal fracture stimulated wells in the unconventional Nazare play are expected to flow initially 20-56 mcf/d of helium and recover 30-75 mmcf of helium. A dual-leg horizontal well could initially flow 40-112 mcf/d of helium and recover 60 147 mmcf of helium. ASIA AND AUSTRALASIA Great Eastern Energy (GEEC LN): Reserves update in India – 2P reserves were estimated at 357 bcf with 2C contingent resources of 517 bcf resources and ~1 tcf of 2U prospective resources. Net debt as at the end of March was ~US$43 mm. Jadestone Energy (JSE LN): Resumption of production in Australia – Following a temporary repair of the leak point in the 2C tank and its complete isolation from the production system, production at Montara was reinstated on 3 July 2022. Windfall tax in India – A new windfall tax of US$294.3/t (~US$42/bbl) on domestic production has been imposed in India. EUROPE DNO (DNO NO): Dry hole in the UK – The Edinburgh exploration well (30/14a- 5) drilled in offshore UK license P255 failed to encounter commercial quantities of hydrocarbons. IOG (IOG LN): Operational update in the UK – Gross gas productionat Elgood and Blythe reached 60 mmcf/d by the end of June. 2H22 Saturn Banks gas gross production is projected to be in the 45-60 mmcf/d range, with condensate rates of 250-350 bbl/d. OKEA (OKEA NO): Trading update in Norway – OKEA produced 16,039 boe/d in 2Q22. The company held NOK49 mm in net cash at the end of June. OMV (OMV AG): Trading update – 2Q22 production was 345 mboe/d. Parkmead (PMG LN): Operating update in the Netherlands – Gross production to for the year ending 30/06/2022 was 21.8 mmcf/d. Repsol (REP SM): 2Q22 update – 2Q22 production was 540 mboe/d. Shell (SHEL LN): 2Q22 update – 2Q22 production is expected to be 2,780-2,930 mboe/d, FORMER SOVIET UNION Enwell Energy (ENW LN): Operating update in Ukraine – 2Q22 production was 2,478 boe/d with the VAS field shut in. Current production is ~2,600 boe/d. Enwell held US$77.6 mm in cash at the end of June. Kazakh export through Russia t risk of shutdown? – A Russian court ordered a 30-day stoppage of the CPC Terminal, through which ~1 mbbl/d of mostly Kazakh crude gets exported. MIDDLE EAST AND NORTH AFRICA United Oil & Gas (UOG LN): No oil to surface at exploration well in Egypt – The ASV-1X well had encountered both primary and secondary reservoirs, but after over a week of testing with a sucker rod pump installed, no hydrocarbons have yet been recovered. SUB-SAHARAN AFRICA Invictus Energy (IVZ AU): Resources estimates in Zimbabwe – The Mukuyu prospect is estimated to hold combined gross prospective resources of 20 tcf and 845 mmbbl of conventional gas condensate. Orca Energy (ORC.A/B CN): Share Buyback – Orca is launching a buyback programme for up to 500,000 Class B Shares, representing approximately 2.75% of the total outstanding Class B Shares. San Leon Energy (SLE LN): Operating update in Nigeria and restructuring – FY21 sales at OML-18 of 4.4 mbbl/d of oil plus 29.6 mmcf/d of natural gas have been affected by combined losses and downtime of approximately 79%. San Leon held ~US7 mm in cash at YE21. San Leon is making a series of transaction that would take its interests in OML 18 to 44.1% with the remaining 55% interest being held by NNPC. San Leon will issue 344,334,257 new shares to Midwestern and 73,782,535 new shares pursuant to the ELI transaction. San Leon will also issue preference shares to San Leon Shareholders with the preference shareholders having a preferential right to the first US$40 mm of future dividends paid by San Leon. EVENTS TO WATCH NEXT WEEK ________________________________________
SLE ALV CE1 CNE ECHO JSE PMG TAL REP RHC RHC OMV DNO ALV DNO OMV1 REP1 IO7
San Leon has announced that it is acquiring a further 1.323% stake in ELI - the owner of the ACOES export pipeline in OML18 - for $2m. This will take the company's stake to 11.323%, with an option to acquire a further 4.302% stake for an additional $6.5m. Both investments would be paid in cash. The ACOES export pipeline is expected to be completed before end of 2021 and should reduce downtime and pipeline losses from the fields in OML18 to less than 10%. This additional investment could be very lucrative for San Leon as the bigger share of tariff income could be significant. We upgrade our target price to 66p to reflect the greater stake in ELI's future income stream. We reiterate our BUY recommendation.
San Leon Energy PLC's (LON:SLE) 2016 acquisition of an interest in OML 18 in Nigeria is starting to generate value for shareholders and provides not only a strong presence in a highly prospective region but also the liquidity with which it can execute a growth strategy optimised in its favour. We h
San Leon, with a world class asset in Nigeria, is in a strong financial position given it has cash on the balance sheet and no debt - rare amongst peers. The stock has been a significant outperformer over the last couple of years (+27% TSR vs. Main Market E&Ps -37%) given a shareholder-friendly distribution policy. SLE is looking to add value and cashflow to strengthen the dividend policy further after its maiden 6p/sh dividend in May 2020. In total, the Company has returned US$66mm to shareholders, with a commitment that 50% of free cash flow from Nigeria will be distributed. San Leon’s management has shown in the past its openness to entertain offers for the business and the shareholder structure also means that it would be a more likely acquisition target than many of its E&P peers.
San Leon has a hidden gem. This relates to its 4.5% net profit interest in the undeveloped Barryroe oil and gas field in the Celtic Sea Basin, offshore Ireland. Following the recent announcement by the operator, Providence Resources (PVR.L), of a farm-out and development programme, the gem is now poised to be unlocked. Providence has struck a deal with Norway-based SpotOn Energy to undertake the development and funding of Barryroe in conjunction with a consortium of world class oilfield service companies. Appraisal and development drilling are expected to commence in late 2022 with production, we believe, possibly following in H2 2023 or more likely 2024. Barryroe is one of the largest undeveloped oilfields in Irish/UK waters with audited 2C recoverable resources of 346mm boe. We see Barryroe development as being low risk technically given that oil has already flowed prolifically from four wells. Our assessment is that San Leon’s net profit interest in Barryroe could be worth £27m or 6p/share.
San Leon Energy (SLE LN): Three-week extension to Decklar financing | I3 Energy (I3E LN): Comprehensive operations update post Toscana acquisition | Serinus Energy (SENX LN): Covenant waiver received
SLE I3E SENX
SLE is a Nigeria focused mid-tier E&P independent. Its strategic move into the country in 2016 has been a great success story. Initially a significant indirect interest was secured in the operator of the Niger Delta licence OML 18. Meanwhile, substantial cash flow has derived from high yield loan notes obtained at the time of the acquisition. The OML 18 move has been followed by two recent investments which again focus on near-term cash flow. These are the interests taken in the new ACOES export pipeline linking the core of the OML 18 operations with an offshore FSO and in the Oza field development project in the northern Niger Delta. High yield debt is a feature of both investments. The stock is selling on an EV of a mere £29m net of cash and financial receivables. This implies that the equity interests in OML 18 and the ACOES pipeline are being assigned little value. Based on our sum-of-the parts calculation our valuation is 82p/share. Note SLE is leveraged to a potential recovery in oil prices in the coming months.
San Leon Energy (“SLE”) announced it has agreed a US$7.5 million loan (5-year maturity with 10% coupon) to Deklar Petroleum Limited (“Decklar”) against a 15% equity interest (+ 15% option) in the company. Decklar holds a Risk Service Agreement (“RSA”) with Millenium Oil and Gas Company Limited (“Millenium”) on the Oza field in Nigeria, which it was awarded during the 2003 Marginal Fields Bid Round with a 60% interest. Oza is an onshore conventional oil field located in the northern part of Shell-operated OML 11, in the Abia State of eastern Niger Delta. Three existing Shell wells have produced over 1.0 MMbbl cumulatively from gross 2P Reserves estimates of 2.6 MMbbl, 2C of 23 MMbbl and Prospective Resources of 10 MMbbl. The SLE loan is part of a US$26 million funding arrangement that Decklar intends to deploy to fasttrack the initial development of the Oza Oil Field including a re-entry on the existing Oza-1 well, anticipated to test three oil bearing zones and place the well into production from two of the three zones tested. This is another trademark “loan for free-equity” investment from SLE which provides a free access to a potential stream of future production cash flows from the Oza Field with a fairly low risk profile from the perspective of the asset (2P+2C) and partners (RSA and Loan Agreement include favourable cash sweeps).
San Leon Energy (SLE LN): FY19 results, robust liquidity position | Victoria Oil & Gas (VOG LN): Trading update, ENEO receivables grow to concerning levels | IGas Energy (IGAS LN): Production guidance downgraded due to volatile commodity prices
SLE VOG STAR
San Leon Energy (SLE LN): US$40m received from Midwestern Leon Petroleum | 88 Energy (88E LN): Disappointment at Charlie-1, North Slope, Alaska | Block Energy (BLOE LN): New cost cutting measures in place, stable financial position | SDX Energy (SDX LN): FY19 results - strong operational progress | Falcon Oil & Gas (FOG LN): Additional 7.5% farmed down to Origin – Beetaloo Basin
SLE 88E SDX BLOE FOG
San Leon Energy (SLE LN): ACEOS to be commissioned in May 2020 | Serica Energy (SQZ LN): Production from Bruce, Keith and Rhum fields suspended | Echo Energy (ECHO LN): CLix-1001 encounters the top of its primary target | TransGlobe Energy (TGL LN): Incremental production added in Canada
SLE SQZ ECHO TGL
On the 20th February, San Leon announced a proposed $30m tender offer at 46pps, a 50% premium to the prior day close, on the back of a strong financial position, confidence around future cash flows and management’s view that the share price does not reflect the full potential of the business. This morning San Leon announced that there was a 100% take up of the tender (£23.3m, 9.97% share capital). San Leon remains committed to future shareholder returns.
Repsol, Petronas & Moeco: Significant gas find in Indonesia | San Leon Energy (SLE LN) (not covered): Proposed return of US$30 mm by a tender offer at 46p/sh | Valeura Energy (VLE CN)1,6; BUY, C$10.00: Devepinar-1 commences drilling in Turkey | Eland Oil & Gas (ELA LN) (not covered): Capital returns policy | Panoro (PEN NO) (not covered): 50% increase of 2P reserves offshore Gabon
SLE ELA 0N08 83PN
Independent Oil & Gas (IOG LN) (not covered): UK pipeline integrity confirmed | Lundin Petroleum (LUPE SS) (not covered): Alta update in Norway | Exillon Energy (EXI LN) (not covered): August production report in Russia | TransGlobe Energy (TGL LN/CN)1 ; BUY, £3.70: Disappointing exploration well somewhat offset by strong IP rates at new infill wells | Kuwait Energy being sold to United Energy | San Leon Energy (SLE LN) (not covered): 1H18 results
SLE TGL LYV EXL IO7
San Leon has today released its interim results and an update on the operations in Nigeria. The results are largely academic, owing to the period end being before the transformational OML 18 Production Arrangement and associated fundraising; however contained in the results is an update on the OML 18 field.
Following the completion of the OML 18 Production Arrangement, we forecast that San Leon could return over $280m cash to shareholders over the next 5 years, equivalent to an average annual yield of 18%. We value the cash flows attributable to San Leon from its interests in the 2P reserves on OML 18 at 91p per share, post Admission, and highlight that these assets could deliver another 68p of unrisked upside as resources are converted to reserves.
SAN LEON ENERGY PLC | SOLGOLD PLC
San Leon Energy Plc SolGold Plc
The company has conditionally agreed to conduct a placing to raise £29m by issuing 36.25m new ordinary shares at an equivalent price of 0.8p (80p post consolidation). The company will also consolidate its currently issued shares. The monies raised will be used to progress its activities across the portfolio with a particular focus on Poland, Morocco and Albania.
SCISYS*: FY 2015 profits hit by contract issue (CORP) | Vectura: VR942 enters clinical development (BUY) | San Leon Energy*: Valuation update (CORP) | Global Invacom*: Analyst interview (CORP)
SLE SSY VEC RAD
Share: