Oil Man Jim Company Oil & Gas Podcast, 1st December 2019

 

lt turned out to be quite an exciting week. Global Petroleum (GBP) announced a new prospective resources estimate of 964 million barrels of oil for its petroleum exploration licence 94 in Namibia.

One reservoir is estimated to have best estimate unrisked gross prospective resources of 772 million barrels of oil with a 15% chance of geologic discovery. It's worth a go, yet at the same time it's worth nothing to them unless they can drill it, which will require either a farm-out or a large financing. News of that is still awaited.

Regal Petroleum (RPT) announced a memorandum of understanding to acquire licences in the Ukraine with estimated oil initially in place of approximately 675 million barrels. They intend to appraise the licences with the drilling of up to three wells. Existing 3P reserves for RPT currently are estimated at 3.89 million barrels of oil equivalent, so this transaction, if it proceeds, could represent a very significant uplift. Generally I'm cautious about companies operating in the former Soviet Union, but this now is one to keep an eye on.

More bad news for Providence Resources (PVR) unfortunately. TOTAL have withdrawn from the licence containing the "Avalon" prospect. And there's still no news of a replacement farm-in partner for Barryroe, so the share price just continues to drift lower.

Another Dublin company continues to go in the opposite direction. Petrel Resources (PET) pushed on with its remarkable journey higher, hitting 26.5p last week, up 2,550% from the 1p price at which I stated it as a favourite several times earlier this year. More companies like this in the private blog if you're interested.

Cluff Natural Resources (CLNR) announced that it has submitted multiple applications for additional licences in the latest 32nd UK Offshore Licensing Round. Interestingly, one has been made jointly with an established international operator (I would guess Shell). The blocks applied for contain a number of drilled discoveries, undrilled prospects and leads, which will create a strong pipeline of future drilling opportunities.

They say they're making significant progress on the existing portfolio, in particular the licences which Shell farmed into earlier this year, and they're now working towards a firm well commitment on Selene and Pensacola. With a £19 million market cap and a £15 million fundraising completed over 30% higher than the current 1.325p share price, it's certainly one for the watch list. Their farm out process on the Dewar prospect has generated significant interest and announcement of the completion of this could act as a catalyst.

UK Oil & Gas (UKOG) announced the completion of HH-2z. Extended well test operations are expected to start next week. Stephen Sanderson, UKOG's Chief Executive, is "confident that the 2,500 ft of permeable Portland sweet-spot reservoir section, 70 times that seen in HH-1, can deliver significant rates." What I think we can be confident of is that UKOG will issue the most positive press releases possible. Where this goes now though is very much going to be a function of how much the convertible loan note holders sell.

PetroTal (PTAL) announced a drilling and production update, providing an increased 2019 exit oil production rate of 11,000 - 13,000 barrels a day. They will complete new production facilities towards month end, increasing capacity to 10,000 barrels of oil per day, but expect that the facility will be able to handle in the order of 15,000 barrels per day. This is the first “forward looking” RNS that the company has issued and some are expecting a placing, but let's see.

Union Jack Oil (UJO) finally announced its placing. £5 million is being raised at 0.15p. They and Reabold Resources (RBD) now are funded for two further wells at West Newton, which are expected in the second quarter of next year. The interesting mystery here now is what is going to happen with Humber's share.

Independent Oil & Gas (IOG) announced that henceforth it will be known simply as IOG. The aim is to have a new identity and hopefully put behind controversial associations of the past. It's another one to keep an eye on and once the many loose shares in issue have found more permanent homes, it should start to work its way higher.

88Energy (88E) announced completion of the farmout with Premier Oil (PMO) and approval of the plan of operations for Charlie-1, which is expected to be drilled in February next year. The gross mean prospective resource across the seven stacked targets to be intersected by Charlie-1 is 1.6 billion barrels of oil (480 million barrels net to 88E).

Bahamas Petroleum Company (BPC) now is trying to raise funds from locals to finance next year's drill via the creation of a Bahamas-domiciled mutual fund that will exclusively hold BPC shares. It's quite a novel approach and I imagine people could be interested. It will be fascinating to see how this goes and I'm sure many other companies will be interested in the outcome.

I3 Energy (I3E) announced another disappointing well result, but many obviously knew about it in advance of the market. I said on Wednesday that this one is a rigged deck and unless you're an experienced trader I would suggest leaving it alone. The share price continued to collapse again on Thursday prior to a further announcement of the conclusion of its 2019 drilling campaign (people had been led to believe there might be a fourth well). I now view this as uninvestible.

Longboat Energy (LBE) listed this week. Essentially it's a cash shell looking for a deal. Could be interesting and I'll be looking into it further. Another one that appears to be entering the oil and gas space is MetalNRG (MNRG) which announced the signature of an exclusivity agreement to acquire 75% of an established operating company based in Romania, which owns 100% of an oil and gas concession. No details on this yet, but as they become available I'll share my thoughts.

Finally, Egdon Resources (EDR) announced licence extensions covering the Resolution gas discovery where a Competent Persons Report by Schlumberger reported estimates of mean contingent resources of 231 billion cubic feet of gas. They announced earlier this month an exclusivity agreement regarding these licences with a large internationally recognised exploration and production company and they have until 31 January next year to demonstrate to the Oil and Gas Authority's satisfaction that a farm-in agreement has been fully executed which provides for funding of the licence work programme. It's potentially interesting if they can pull this off.

In closing, if you'd like to know my trading ideas (and as those who follow me know, I'm rarely wrong), then subscribe to the private blog at https://www.oilnewslondon.com/oilman-jim The link is also on my Twitter profile page.