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Fox-Davies Capital

Fox-Davies Capital specialises in assisting international resource companies to gain access to the UK, European and North American capital markets and has a substantial background in emerging markets particularly in Africa, Asia, Russia and the CIS.

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Gulfsands Petroleum, Lansdowne Oil & Gas, Magnolia Petroleum and Premier Oil feature in Fox-Davies Newsflash

January 17 2013, 9:22am

Daily Oil & Gas Monitor    

Premier Oil (LON:PMO): Impressive 2012, 2013 Should be a Repeat – Today’s operation update highlights the steps that Management has taken to take the Company forward into the next phase of growth. 2013 should mark the second phase of that development (spending is expected to rise to $900mm) as not only does the production numbers start to hit levels that will throw off significant cash flow, but 2013 will also see the higher profile Sea Lion project start to take more concrete shape and development timing become more certain. On this last point, news that production will not commence until “late” 2017 is not unexpected, but certainly appears to be slipping, and while this will have little impact on PMO at this stage, it may have a knock-on impact on Rockhopper. All in all, we believe that this announcement underlines the fact that the near and medium term remain buoyant with a number of development and appraisal projects, and the longer term outlook is strengthened by the continued regeneration of the exploration hopper ($200mm spend and 14 wells in 2013). 

In this news:

2012 Financials: 

Production – 57.7m boepd

Revenues - $1.4bn

$160mm Exploration Write-off

2013 Exploration Programme:

Premier’s 2013 Exploration & Appraisal Programme

Country Well Name Estimated timing Licence interest 

(%) Gross resource range

low-most likely-high

(mmboe) Risk

Indonesia Matang-1 Drilling 41.67 18-40-73 Moderate

Norway Luno II Q1 2013 30.00 30-120-300 Moderate

UK Bonneville Q1 2013 50.00 2-10-20 Low

Pakistan Badhra BN-2 App Q1 2013 6.00 5-8-13 Low

Vietnam Ca Voi Q1 2013 40.00 35-120-190 High

UK Lacewing Q2 2012 20.20 24-58-110 Moderate

Vietnam Ca Duc Q2 2013 30.00 20-45-105 High

Pakistan K-32 Q2 2013 15.79 5-7-9 Low

Pakistan Badhra South

Deepening-1 Q2 2013 6.00 18-38-67 High

Pakistan Badhra-6 Parh Q2 2013 6.00 11-58-70 Moderate

Pakistan K-36 Q3 2013 15.79 2-5-9 Low

Mauritania Tapendar Q3 2013 6.23 TBC TBC

Indonesia Kuda Laut & Singa

Laut (2 wells) Q3/4 2013 65.00 52-100-148 Moderate

Kenya Exploration well Q4 2013 20.00/25.00 TBC TBC

Lansdowne Oil & Gas (LON:LOGP): Time for the Eating – Today’s operations update from Lansdowne, detailing the work carried out on its licences in the Celtic Sea reminds us just how underexplored this basin is as a hydrocarbon province, and as a consequence the remaining potential for a significant find. The Company has completed the majority of the work that it can do, and now all that is required is farming out the asset to mitigate risk to investors and the Company. Ultimately, the test of the prospectivity of exploration programme is drilling, or as the saying goes, the proof of the pudding is in the eating, and we have now reached that point. 2013 should be an exciting time for Company as we believe that the interest built iup in the basin following successes in the last 12 months support a favourable reception in the industry.  

In this news:

Seismic inversion fluid anomalies identified and interpreted as gas bearing Greensand reservoirs in the Galley Head gas accumulation and the Midleton and SE Rosscarbery prospects

Additional fluid anomaly identified as possible gas-bearing Upper Wealden reservoirs in Main Rosscarbery  prospect

Conceptual Development Study of Midleton gas prospect and Galley Head gas accumulation completed demonstrating commercially robust projects

Conceptual Development Study of Amergin oil prospect underway

Farm-out discussions of Amergin, Midleton & Rosscarbery prospects advancing ahead of drilling in 2013/14

Gulfsands (LON:GPX): Coping Well With One Hand Behind the Back – Management’s announcement of the closure of the Cabre Maroc deal in Morocco for $19mm (plus a $5mm performance bond), is a welcome step for the Company, which is seeking to diversify away from its position in Syria which is hamstrung by the incumbent administration’s conflict with its people. While the production and immediate cash flow potential is modest, the exploration potential is significant, which means that this transaction is more of a boon to the medium and longer-term outlook than the near term outlook. We continue to maintain that the risked fair value of the Company (even with the Syrian conflict) is 200p, but we are maintaining our HOLD recommendation as there is still greater and greater uncertainty as to when (not if) the current situation will resolve itself.

In this news:

Completion of Acquisition of Oil and Gas Exploration and Gas Exploitation Interests in Morocco

Discovered reserves and resources with development plans to produce cash flow from gas production as early as Q3-2013

Substantial development and exploration activity to commence in 2013

Opportunity for significant oil and gas exploration upside

 Magnolia Petroleum (LON:MAGP):  What Next? – Today’s announcement from Magnolia details Management’s decision to step away from the Prucha 1-23 MH well (the “Well”), on the basis that the funds that would have been spend on the well would be “on the basis that the funds allocated for Prucha may be better utilised elsewhere in the Company's portfolio.” It is hard to give any qualitative opinion as to whether they are right as we are not told why, nor are we informed as to whether it is just the Well, or the entire Prucha asset, nor are we told where the cash otherwise earmarked for the Well will be better employed. All in all, we are seeing a Company whose net Revenue Interests (“NRIs”) in the majority of wells is significantly below the ~18% NRI in Purcha. I am afraid that this announcement leaves more questions than it answers, and we would be keen to see a clarifying statement or circular to this effect, then we will be in a better position to opine as to the impact of this news. Regardless of this, we believe that the shares will trade down on the back of this announcement and are unlikely to move until there is greater clarity on how the Company is going to find projects that “move the needle.”

 

 

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