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Views from the Trading Floor - Featuring Providence Resources, San Leon, Aurelian Oil & Gas and First Quantum Minerals 24th May
Saints & Sinners: Oil & Gas
Providence Resources (LON:PVR) pushed 2.5% higher during early trading after the company said it has completed further analysis of the 48/24-10z well test data which were acquired by Schlumberger during well testing operations. The data were analysed using a leading wellbore modelling software system to determine the potential Initial Production (IP) rates achievable from a single horizontal development well. This analysis indicates that the tested basal oil bearing sandstone package is of high quality with an average test derived permeability of c. 400 millidarcies, confirming the high productivity potential as demonstrated during the well testing operations. The analysis forecasts that a 1,000' horizontal well could deliver an IP of c. 12,500 BOPD & c. 11 MMSCFD (c. 14,300 BOEPD) through a standard 4.5" outer diameter (OD) production tubing under natural lift. Further well deliverability analysis and optimization studies are on-going to incorporate artificial lift which is expected to form part of the field development plan. Updated oil in place estimates are expected to be finalised during Q3 2012 with the estimated recoverable reserves and associated development concept being available in Q4 2012.
Lansdowne Oil & Gas (LON:LOGP) jumped 7% to 36.5p on decent volume on the back of the update from Providence Resources. Lansdowne hold a 20% interest in the Barryroe Field. Commenting the update, Steve Boldy, CEO of Lansdowne said "The results of the Barryroe well test analysis are very encouraging, demonstrating that the Lower Cretaceous Basal Wealden sands have the potential to deliver at high flow rates. This is important not only for Barryroe, but for pursuing this play elsewhere in the North Celtic Sea Basin and in particular in Lansdowne's Amergin Prospect where the basal Wealden sands form one of the key target reservoirs."
San Leon Energy (LON:SLE) moved 3% better to 8.5p during afternoon trading on the back of the Barryroe update. San Leon announced, on 23 December 2011, that the Company has assigned its 30% working interest in Standard Exploration Licence 1/11 to Providence in exchange for a 4.5% NPI on the full field. San Leon Energy will not pay any further appraisal or development costs on the Licence and is not paying any costs towards the 48/24-10 well. We are also waiting for core results from the first 3 drills from San Leon, that should be due shortly.
After yesterday's fantastic run, it was no surprise to see a few profit takers turn up to the Roxi Petroleum (LON:RXP) party. The share were 10% easier at 3.375p, albeit on thin volume. The shares did actually hit an intraday high of 4p, before slipping back into negative territory.
Aurelian Oil & Gas (LON:AUL) made an interesting move once again today, slipping right back to a new 52 week low of 15.5p before pushing back up to trade at 16.5p during afternoon trading. The shares are a long way off of the 52 week high of 73p, and management are still trying to find a buyer for the company.
Xcite Energy (LON:XEL) have really been yo-yoing over the last few days, trading at a low of 75p and a high of 115p. The shares were 4% easier at 93p on decent volume. The last update from the company was back on the 8th of May that said drilling of the 9/3 billion-7 well on the Bentley field in the North Sea is progressing satisfactorily, having reached a total depth of 6684 feet. The 17[1/2]" section has been drilled, 133/8"casing set, cemented and pressure tested. The 12[1/4]" hole has been drilled. After the 10[3/4]" x 95/8" liner has been set, cemented and pressure tested, drilling to the reservoir section will follow. Following the announcement on Dec. 14, the company's 100% subsidiary, Xcite Energy Resources Ltd, has now signed a time charter contract with Teekay Navion Offshore Loading Pte. Ltd., for the provision of the dynamically positioned "Scott Spirit" shuttle tanker vessel. The Scott Spirit is planned to be used as the in-field storage and off take facility for Bentley crude oil during the Phase 1A of the Bentley field development program now being undertaken.
Magnolia Petroleum (LON:MAGP) continued to charge ahead once again today, pushing yet another 17.75% to 1.825p during afternoon trading. It was only the 11th of April that these were trading a pretty much 1p per share, so a very handsome return for any of the long term holders that have stayed with this one over the last few months.
After the recent fall from 26p to 16.5p it was no surprise to see a few bottom fish buyers showing up in Amerisur Resources (LON:AMER) pushing the shares 6.5% higher during afternoon trading to 18.5p on decent volume.
Saints & Sinners: Mining
Arian Silver (LON:AGQ) have slipped to a very interesting level down here at 16.5p a share, which is a fair way from the recent high of almost 30p. The last few times the shares have been down at this level, October last year and January this year, they have jumped rather aggressively. We will be watching for any signs of another bullish turn around in the stock, as I type the share are 3% higher at 16.75p at the mid-price.
Canada's second-largest copper producer First Quantum (LON:FQM) pushed 9% better to 1161p on renewed bid speculation. Rio Tinto (LON:RIO) and BHP Billiton (LON:BLT) have been touted as possible bidders but we can't see this happening given they have both stated their intention to focus less on growth and more on managing costs. However, Anglo American has also been talked of as a possible interested party. Anglo should have a war chest on selling interests in Chile and we think they are the most likely suspect should a bid arise. Regardless of a bid we think First Quantum offer good mid-term value. They have strong growth projects and are projected to boost EBITDA by 84% over the next three years, according to analysts' estimates compiled by Bloomberg. It plans to more than triple copper production within five years as it starts up mines in Peru, Finland and Zambia.
ATH Resources (LON:ATH) collapsed 22% to 10.25p at the mid-price during early trading after the company said that reduced coal prices continue to impact its margins resulting in further reductions to trading performance expectations, adding that it will defer the planned Glenmuckloch Eastern extension due to the lower coal prices. While demand for coal generally remains strong, international prices have fallen significantly in the past nine months, especially in the past few months. The Board will either proceed or begin final restoration of the current site towards the end of this calendar year. The deferment will have little impact on production levels in the current financial year, but if the Board decides not to proceed at all, volumes would be reduced by 500,000 tons during the following two years.
Aquarius Platinum (LON:AQP) eased another 4% to 71.75p on decent volume after Morgan Stanley started the company at Underweight. The shares have been under a lot of pressure since they announced the underground fire at its Mimosa mine in South Africa has been extinguished and a damage assessment has been made, adding that mining operations are expected to restart by May 28 and that mining output will be at an average of 70% of normal production for about three weeks.
The rollercoaster ride that is Rare Earths Global (LON:REG) jumped 36% to 450p after hitting a recent low of 330p. The shares are still a long way from the 52 week high of 1250p.
After the recent slip from 5p down to 1.875p it was no real surprise to see a few bargain hunters stepping in on a very bullish day in the markets on Botswana Diamonds (LON:BOD) The shares jumped by 13% to 2.125p at the mid-price during afternoon trading.
From the Trading Floor
Another bullish session in the FTSE 100 today, but the real question is, can we string more than just a one day bonce together before we have another big sell off? As I type the FTSE 100 is 74 points higher at 5340 +1.36% on volume of 437 million shares, which does not show me that people are jumping in feet first believing this rally will continue. The FTSE AIM All-Share Index is 0.29% higher on volume of 487 million shares.
Commodities Corner
Gold - ↑Trading at $1568, up $8 (+0.56%)
Silver - ↑Trading at $28.29, up 51c (+1.86%)
Copper - ↑Trading at $7572, up $29 (+0.38%)
Zinc - ↓Trading at $1867, down $6 (-0.32%)
WTI Crude - ↑Trading at $90.61, up 71c (+0.79%)
Brent Crude - ↑Trading at $106.19, up 64c (+0.61%)
Any questions please don't hesitate to contact me at steve.asfour@fox-davies.com or visit www.viewsfromthetradingfloor.com or www.fox-davies.com
