Proactive Investors - Run By Investors For Investors

Northland Capital Partners View on the City : Europa Oil & Gas, DiamondCorp, Allocate Software

OIL & GAS: Europa Oil & Gas - LON:EOG


  • Operator Egdon Resources (25% working interest), has received planning for the Wressle 1 exploration well in PEDL 180, Lincolnshire.
  • Europa Oil and Gas has a 33.34% interest, Energie Petroleum 33.33% interest and Union Jack Oil an 8.33% interest in the well.
  • Drilling operations are expected to commence in the second half of 2013 and likely to be the first half of FY14 for Europa with its July year end.


NORTHLAND UK VIEW: The Wressle-1 well will target the Brigg Broughton anticline extending through PEDL 180, 182 and 241 and host to several oil discoveries including the Crosby Warren oil field operated by Europa. Egdon estimates that Wressle could hold mean gross unrisked prospective resources of 2.1 million barrels of oil (c.700k bbls net to Europa). The well is considered around a 1 in 3 prospect, will target multiple prospective sandstone reservoirs in a ‘structurally favourable position’ near the crest of the structure and be deviated to a TD of c. 2,300 metres. We value the UK exploration portfolio at a risked valuation of c. £3m with an upside case of £24m (pending a successful Holmwood planning reversal). Wressle is a relatively small prospect but has the potential to dramatically enhance near term cashflows given the UK’s small field allowance and the relatively low capex requirement for the well (we estimate net c. £700k). There is the potential to generate cashflow up to £25m/around $50/bbl, though even a more modest contribution would help shore up Europa’s cash flow producing UK operation.


  • Treatment plant modifications completed on schedule and within budget.
  • Plant commissioning underway with tailings retreatment to begin next week.
  • First sale of diamonds expected to be September/October 2013.
  • Underground development work largely on schedule and under budget.
  • No change to price target or forecasts.

NORTHLAND UK VIEW: The completion of the modification of the tailings plant and the commencement of retreatment are significant steps forward for DiamondCorp. The Company expects retreatment of the tailings to commence next week and we forecast that around 300,000t of tailings will be treated with the Company recovering around 15,000cts, with the funds generated to be treated as a credit to capex. Next year, we expect the Company to treat around 600,000t of tailings recovering 30,000cts. With the underground development largely on schedule, we forecast that around 28,000cts will be produced from the development excavations in 2014, making a total of 58,000cts recovered during the year. The development of the box cut is three weeks behind schedule due to encountering more competent ground earlier than expected but as the box cut is not on the critical path it is not expected to cause a delay to the overall development schedule. DiamondCorp is fully funded to take the Lace Mine to production and there is now only a limited risk of equity dilution to existing shareholders as the project is moved to production. The pre-Run of Mine (ROM) production 2013-2015 is expected to result in the recovery and sale of around 300,000cts, worth around USD$42m (£27m), double DiamondCorp’s current market cap, before the mine begins ROM production in late 2015.


  • Very strong H2 performance with FY results in line with expectation at the revenue and EBITA line. Cash conversion materially better than forecast with ongoing transition to more recurring revenue and better working capital management.
  • Healthcare business secured sales for new products and with new customers. UK Healthcare bookings ahead of revenue with the number of recurring orders secured higher than anticipated. As a result, cash, deferred revenue and contracted, unbilled orders in hand are higher. This will boost revenue visibility. 
  • Number of new HealthRoster customers down slightly on FY12 but in line with expectations. Some competitive wins and 100% renewal rate. Successful launch of V10 and migration of customers ongoing.
  • Allocate Cloud, launched in July, exceeded management expectation. This has also benefited cash. 
  • Medics business benefited from a number of multiyear renewals as well as new customers.
  • Defence and Maritime businesses in line.
  • Audited results will be announced in the w/c 22nd July.

NORTHLAND UK VIEW:  Positive pre-close trading statement and with the shift to recurring revenue through multi-year support contracts and Cloud, revenue visibility should have been enhanced. The shift to the recurring model tends to mask growth dynamics in the short term and the comparator year benefited from a large order in FY12, the cash performance
points to a good trajectory. Trading on 13.2x FY13 and 10.2x FY14, undemanding in the sector. 








Europa Oil & Gas



Diamond Corp



Allocate Software



1. Northland Capital Partners Limited (“Northland”) acts as Nominated Advisor and/or Broker to the company.

2. Northland) and/or its affiliates companies do beneficially own 1% or more of any class of the issuer’s equity securities, as of the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month. 

3. The authoring analyst or any associate of the authoring analyst does maintain a long or short position in any of the issuer’s securities directly or through derivatives, including options or futures positions.

4. Northland, its affiliated companies, partners, officers, directors or any authoring analyst of Northland has provided services to the issuer for remuneration during the preceding 12 months other than investment advisory or trading services.

5. Northland or any of its affiliated companies has performed investment banking services for the issuer during the 12 months preceding the date of issuance of the report.  

6. A partner, director, officer, employee or agent of Northland or any of its affiliated companies is an officer, director, employee or advisor of the issuer.  Disclosures are applicable for all companies

7. The authoring analyst, or any associate of the authoring analyst, has viewed the material operations of the issuer. 

8. The authoring analyst, or any associate of the authoring analyst, received reimbursement for travel expenses.

9. Northland makes a market in the securities of this company.




This document is provided solely to enable clients to make their own investment decisions. It may therefore not be suitable for all recipients and does not constitute a personal recommendation to invest. It does not constitute an offer or solicitation to buy or sell securities or instruments of any kind. If you have any doubts about the suitability of this service, you should seek advice from your investment adviser. This document is produced in accordance with UK laws and regulations. It is not intended for any person whose nationality or residential circumstances may render its receipt unlawful.

The past is not necessarily a guide to future performance. The value of shares and the income arising from them can fall as well as rise and investors may get back less than they originally invested. The information contained in this document has been obtained from sources which Northland Capital Partners Limited believes to be re¬li¬able. The Com¬pany does not warrant that such information is accurate or complete. All estimates and prospective figures quoted in this report are forecasts and not guaranteed. Opinions included in this report reflect the Company’s judgement at the date of publication and are subject to change without notice. If the investment(s) mentioned in this report are denominated in a currency different from the currency of the country in which the recipient is a resident, the recipient should be aware that fluctuations in exchange rates may have an adverse effect on the value of the investment(s). The listing requirements for securities listed on AIM or PLUS markets are less demanding, also trading in them may be less liquid than main markets.

Northland Capital Partners Limited and/or its officers, as¬sociated entities or clients may have a position, or other material interest, in any securities men¬tioned in this report. Northland Capital Partners Limited does not provide recommendations on securities of firms with which it has a corporate relationship. More information about our management of Conflicts of Interest, Investment Research Methodology & Definition of Recommendations can be found at 

Northland Capital Partners Limited is authorised and regulated by the Financial Conduct Authority and a Member of the London Stock Exchange.

Published by/copyright: Northland Capital Partners Limited, 2013. All rights reserved

© Proactive Investors 2015