President Energy (PPC LN) (not covered): Update in Argentina | Jadestone Energy (JSE LN); HOLD, £0.60: Update in Australia | Ophir Energy (OPHR LN): Discontinuing Coverage | Soco International (SIA LN) (not covered): Operation update | EnQuest (ENQ LN); HOLD, £0.25: 1Q19 update | Panoro Energy (PEN NO) (not covered): 1Q19 results | Tethys Oil (TETY SS)1,6; BUY, SEK85: To repurchase shares | BW Offshore to spin off E&P business
| Tullow Oil (TLW LN); REDUCE, £2.00: Acquisition in Nambia
Companies: PPC JSE OPHR PHAR ENQ PENUSD TLW TETY
Sound Energy (SOU): Well Result and Strategic Update | Ophir Energy (OPHR): Completion of Acquisition
Companies: Sound Energy plc (SOU:LON)Ophir Energy (OPHR:LON)
We are discontinuing coverage on Ophir Energy as the company has been acquired by Medco.
Companies: Ophir Energy
Ophir Energy (OPHR LN): HOLD, £0.55; Completion of Medco acquisition | Sound Energy (SOU LN) (not covered): Operational update, Eastern Morocco
Companies: Ophir Energy (OPHR:LON)Sound Energy plc (SOU:LON)
Block Energy (BLOE): Result of £12 million Placing | Cairn Energy (CNE): AGM Statement | Falcon Oil & Gas (FOG): Proposed $10 million Placing | Lekoil (LEK): Resignation of CFO | Ophir Energy (OPHR): Sale of Mexico licence | SDX Energy (SDX): Q1 Results | UK Oil & Gas (UKOG): Production Test Update
Companies: BLOE CNE FOG LEK OPHR UKOG SDX
Ophir Energy (OPHR LN); HOLD, £0.55: Medco offer accepted | Exillon Energy (EXI LN) (not covered): February production in Russia | Nostrum Oil & Gas (NOG LN)6; Speculative Buy, £2.20: 4Q18 results | SDX Energy (SDX LN/CN)1,6: BUY, £0.65; Transferring coverage
Companies: OPHR EXI NOG SDX
Ophir Energy (OPHR LN); HOLD, £0.55: Increased final offer from Medco | Energean Oil & Gas (ENOG LN) (not covered): FY18 results | EnQuest (ENQ LN); HOLD, £0.25: FY18 results | Serinus Energy (SENX LN)1 ; Speculative Buy, £0.25: 4Q18 results | Aminex (AEX LN)1 (not covered): Farm-out update in Tanzania | Nigeria to sell down stake in JV to 40% | Maurel & Prom (MAU FP): FY18 results
Companies: OPHR ENOG ENQ SEN AEX 0F6L
Medco has made a final offer of 57.5p/sh (previously 55p/sh) to which the Ophir board has agreed. The offer would only be increased if another offer comes in from a third party. Coro Energy has decided not to make a formal offer. It had considered offering £0.40 per share in cash plus shares in Coro.
Ophir Energy (OPHR LN); HOLD, £0.55: 4Q18 results | Cairn Energy (CNE LN); BUY, £2.80: 4Q18 results | Nostrum Oil & Gas (NOG LN)1,6; Speculative Buy, £2.20: Valuation update | TransGlobe Energy (TGL LN/CN); BUY, £2.40: Dividend | ENI (ENI IM) (not covered): Farm out in Mozambique
Companies: OPHR CNE NOG TGL ENI
FY18 production of 29.7 mboe/d (proforma including Santos assets) had already been reported. YE18 net debt was US$35 mm (GMP FEe: US$35 mm). YE18 2P Reserves were 70.1 mmboe (+42%), principally driven by +23.3 mmboe through the Santos acquisition.
President Energy (PPC LN) (not covered): Independent reserves report in Argentina | Ophir Energy (OPHR LN): HOLD, £0.55; Sinphuhorm update | Pan Orient Energy (POE LN) (not covered): Drilling program update | Angus Energy (ANGS LN) (not covered): Equity placing | Eni (ENI IM) (not covered): FY18 results | Dana Gas: FY18 prelim results
Companies: PPC OPHR POE ANGS ENI
G3 Exploration (G3E LN) (not covered): Operational update in China | Ophir Energy (OPHR LN): HOLD, £0.55; Recommended cash offer for Ophir | Lundin Petroleum (LUPE SS) (not covered): FY18 results | Anglo African Oil & Gas (AAOG LN) (not covered): Congo well encounters oil at deeper horizon
Companies: G3E OPHR LYV AAOG
The boards of Ophir and Medco have agreed a recommended acquisition of Ophir by Medco at £0.55/sh, valuing Ophir at c. £361 mm. The acquisition is conditional on amongst other things, a courtsanctioned scheme of arrangement which needs 75% shareholder approval. The Ophir board intends to recommend unanimously the transaction to Ophir Shareholders. The company expects the scheme will become effective in 1H19.
At the request of Ophir, the Takeover Panel has extended the deadline for Medco to either announce a firm intention offer for Ophir or announce that it does not intend to make an offer, until 5.00 pm, 31 January 2019.
FY18 production was 29,700 boe/d (GMP FEe: 25 mboe/d), 8% ahead of guidance with Madura, Sampang and Block 12W contributing 18,000 boe/d (GMP FEe: 15 mboe/d).
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Parkmead’s portfolio has evolved to the point where it is now a full-cycle E&P company with a low-cost Dutch production base and a broad spectrum of high-quality UK growth opportunities, encompassing material development projects and an attractive range of risk/reward exploration. Recently, it has diversified into renewables, future proofing its equity story and opening up a new ‘investor-friendly’ avenue of growth. A core strength of this management team is its commercial acumen and portfolio-driven approach to optimising value. Parkmead has been in portfolio construction mode to date but is now well positioned to start crystallising its intrinsic value. We initiate with a risked-NAV based price target of 155p/sh. Investors would do well to get on-board with a management team that has a strong track record of delivering shareholder value.
Companies: Parkmead Group PLC
EQTEC has announced today that the Company and Scott Bros. Enterprises Limited have agreed to extend the exclusivity period of the Billingham MOU until 18 December 2020. The Billingham MOU has been subject to previous extensions, as announced on 23 October 2019, 23 June 2020 and 18 September 2020.
Companies: EQTEC PLC (KEU1:FRA)EQTEC PLC (EQT:LON)
Edison Investment Research is terminating coverage on Diversified Gas & Oil (DGOC), Vermilion Energy (VET) and Circle Property (CRC). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant.
Companies: Diversified Gas & Oil PLC
Pan African Resources (PAF) has announced that it is to acquire 100% of Mogale Gold and Mintails SA Soweto Cluster from Mintails’ liquidator for ZAR50.0m (US$3.2m). Combined, the two assets host a mineral resource of 243Mt (in tailings), containing 2.36Moz gold. As such, consideration equates to US$1.31 per oz of contained gold cf an average valuation of US$9.88/oz for London-listed pre-production gold assets (see Gold stars and black holes, published in January 2019). Closure of the deal is subject to the usual due diligence, including the evaluation the assets’ amenability to retreatment.
Companies: Pan African Resources PLC
Savannah’s acquisition of a key strategic Nigerian gas asset with strong growth potential has been ignored by the market. Its significant exploration success in Niger has also gone unrewarded. Delivery of the strong free cash flow potential these assets offer will re-rate the shares, which are materially undervalued. Management’s tenacity in getting the Seven Energy acquisition across the line alongside the impressive early progress with the acquired assets should give investors confidence. We initiate with a Buy rating and risked-NAV based price target of 49p/sh.
Companies: Savannah Energy Plc
Salt Lake Potash's AGM update reported that the Lake Way project is now 74% complete. Construction of the process plant is on-schedule with practical completion and first SOP production planned for Q1/21. Drawdown of the Senior Facility Agreement funds and repayment of the Taurus bridge loan is expected soon.
Companies: Salt Lake Potash Limited
Panoro Energy (PEN NO)c; Target price of NOK23.00: Revisiting Gabon - BW Energy provided an update on Dussafu with FY20 production guidance expectation marginally below previous guidance (14.25 mbbl/d versus 15 16 mbbl/d) due to COVID-19 restrictions and OPEC+ quotas. This results in FY20 opex expected to be US$19/bbl which is slightly above the previous guidance of US$17-18/bbl. The drilling of DTM-7H, and the tie-in of DTM-6H and -7H, has been deferred to mid-2021 with first oil expected in 3Q21 and our estimate of the timing of the field production ramp-up has been delayed by one quarter. BWE continues to expect production from the Dussafu area to reach >30 mbbl/d in 2023 and ~40 mbbl/d in 2024. The Hibiscus development is expected to offer 15% IRR at
Companies: TGL TGA 88E FEC JSE LUPE LUNE LNDNF LYV NOG GB_NTRM NSTRY 3NO PANR P3K PTHRF PTAL TETY TETY AOI ENOG PEN SDX EGY
• In an Important development, PetroTal has signed a contract with an international oil trader for a pilot shipment to export 0.12 mmbbl into the Atlantic region using the Amazon river through Brazil. The shipment will be sold FOB Bretana, priced at the forward month Brent ICE price, and paid within two weeks of loading at Bretana. There are no subsequent oil price adjustments.
• At November 19, 2020, PetroTal had cash resources of US$9.8 mm, with accounts payable and accrued liabilities of ~US$39 mm, a reduction of ~US$11 mm from the end of 2Q20. The company has been paid US$5.5 mm for delivery of 0.192 mm bbl of oil to Petroperu in October. Production is constrained to ~5,000 bbl/d pending the reopening of the export pipeline.
• We understand that the pilot should start in December. This would not only provide ~US$5 mm in cash to PetroTal but also allow production to return to recent levels (11.5 mbbl/d), effectively unlocking the fundamental value of the asset.
Balance sheet considerations
The potential financial derivative liability has been reduced from US$22.5 mm at the end of June to US$17 mm at the end of September. Of the US$39 mm current payables 46% are not due before 2021 and we note that the company still holds US$13 mm in account receivables and US$4.7 mm in inventory.
Financials on “a back to normal” scenario with flat production
We are now assuming production remains constrained at 5 mbbl/d over 4Q20 with minimum capex with cashflow and receivables being used to repay the due payables over the period.
On production of just ~11.5 mbbl/d during 2021, we estimate operating cashflow of US$85 mm at US$48/bbl Brent. This would result in free cashflow of >US$40 mm assuming capex of US$20 mm to maintain production and US$20 mm to repay the remaining payables. This compares with a current market cap of just US$75 mm, suggesting FY21 free cashflow would represent over 50% of the current market cap in a no growth scenario assuming production can be exported.
Our target price of £0.45 per share represents 6x the current share price.
Companies: PetroTal Corp.
Central Asia Metals (CAML LN) following a successful ramp up at Sasa, progress in the environmental clean up and confirmation of the remedial costs in line with the previously guided US$1.5m the company has declared an interim dividend of 6p/sh. This will be paid on 11 December 2020 with a record date of 20 November 2020.
Companies: Central Asia Metals Plc
88 Energy has raised A$10m (before expenses) at a price of A$0.006 (0.33p) to fund the ongoing evaluation of the Company's portfolio and to enable it to identify and exploit new opportunities on the Alaskan North Slope. The net proceeds will fund 88E's share of any potential costs associated with the drilling of the Harrier and Merlin prospects at Project Peregrine, scheduled to commence in Q1/21. Harrier and Merlin are on trend and south of the ConocoPhillips Harpoon and Willow discoveries, and are estimated to contain >1bn boe of gross unrisked net prospective resources. Lying at a depth of 5,000ft, both prospects can be drilled at a gross cost of cUS$15m, providing shareholders with access to a huge potential resource at a relatively low cost. Following strong industry interest, a preferred bidder has been selected, with 88 Energy looking to conclude the farm-out of Project Peregrine in the next few weeks. Following yesterday's placing, we value the Merlin and Harrier prospects at 0.5p/share (risked) in aggregate, increasing to 8.0p/share unrisked. We update our target price to 2.3p (a 597% premium to the placing price and reiterate our BUY recommendation).
Companies: 88 Energy Limited
Jubilee today releases its audited annual accounts for the year ending June 30 2020. As expected, the results show the real progress made through the year. Production up, revenues up (132% to £54.8), Operating profit up (226% to £15.9m and EPS up (96% to 0.94/sh). We have seen solid progress on the expansion in the chrome and PGM projects in South Africa and consolidation of ownership of the projects against a background of Covid – which Jubilee successfully navigated. The year also saw robust plans for expansion in Zambia at the Sable Refinery in Kabwe. Security of supply has been achieved by three transactions which tie up dump resources all set to feed into the (to be) expanded Sable Refinery and making Jubilee a producer of scale in Zambia. We see fair value in Jubilee at 12p and present our first forecasts for the company (FY2021E).
Companies: Jubilee Metals Group PLC
Oil rose to the highest in nearly three months with positive Covid-19 vaccine developments paving the way for a more sustained recovery in oil demand.
Futures rose 5% in New York this week for a third straight weekly gain as Pfizer Inc and BioNTech SE requested emergency authorisation of their Covid vaccine Friday. Moderna Inc also released positive interim results from a final-stage trial and said it is close to seeking emergency authorisation. Still, further gains were limited by broader market declines amid a dispute between the White House and the Federal Reserve over emergency lending programmes.
Even with vaccines on the horizon, a recovery in oil demand faces obstacles with governments under pressure to tighten restrictions and curb the spread of the virus. UK Prime Minister, Boris Johnson's officials are considering tougher pandemic rules placed on broader regions of England next month after a national lockdown is set to end and the country returns to its tiered system. Meanwhile, the shift toward working from home may have a lasting chill on gasoline demand, according to Federal Reserve Bank of Kansas City President Esther George.
The recent climb in headline prices has been accompanied by significant moves in timespreads, where traders bet on the price of oil in different months. The spread between West Texas Intermediate for December 2021 delivery and the following month moved to backwardation, while the closely watched gap between December 2021 and 2022 WTI contracts is close to also flipping.
West Texas Intermediate for December delivery, which expired Friday, rose 41 cents to settle at $42.15 a barrel.
The January contract rose 52 cents to end the session at $42.42 a barrel.
Brent for January settlement gained 76 cents to $44.96 a barrel. The contract rose 5.1% this week.
Pfizer and BioNTech's vaccine could be the first to be cleared for use, but first it must undergo a thorough vetting. The filing could enable its use by the middle to the end of December, the companies said in a statement. Yet, it could take at least three weeks for a US Food and Drug Administration decision.
Companies: FOG PVR 88E DGOC EME TRIN UOG
Trifast has reported FY21 interim results that highlight the tough operating conditions with material falls in revenue, and operating leverage driving sharp reductions in profitability. The c.£16m equity raise helped to cushion the financial impact and the ongoing recovery exiting the first half provides some optimism for the Group heading in to FY22. We reinstate our buy recommendation.
Companies: Trifast plc (TRI:LON)Trifast plc (25D:BER)
Hargreaves’ AGM statement confirms a positive start to FY21, building on the resilient FY20 performance. Trading is in line with expectations, the Industrial Services business has won a number of new contracts, and Hargreaves Land is said to be close to announcing the completion of its first plot sale at Blindwells. In our view, the shares are yet to reflect the earnings growth forecast for the next three years or the prospect of a 20p total dividend, which is expected to be paid first in FY22 as previously restricted HRMS profits are distributed. A further update on trading will be provided in early December, ahead of interims at the end of January.
Companies: Hargreaves Services plc
Interim results reflect the severe impact of Q1 lockdowns on the business followed by a recovery in Q2 with the EU leading the rebound, helped by a strong domestic appliance sector, while the UK and automotive sectors have both been slower to recover. Finances were boosted by the £15.4m placing proceeds, with c£40m of financial headroom providing management with the security and confidence to pursue their growth agenda. We re-establish forecasts indicating an EPS decline of 49% for the remainder of this year followed by growth of 45% in FY22. Our price target is reintroduced at 175p, offering 24% upside.
Companies: Trifast plc