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SP Angel Morning Oil & Gas: Victoria Oil & Gas, Northcote Energy, JKX Oil & Gas, Nighthawk Energy, Nostra Terra Oil & Gas

Published: 10:14 20 Jan 2016 GMT

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Headlines
Victoria Oil & Gas (VOG LN – 29p) – Operations Update Underlines the Opportunity: Investors should be pleased with today's update and the management team appear to be working in the same direction. The loss of James McBurney is a blow, and we believe that the board needs a strategic thinker to start pushing the development horizon out further, both in terms of time scale, and in a geographic sense too. Still, this is next announcements issue, for now, in the face of a dire commodity market, VOG is a bright spot.
Northcote Energy (NCT LN – 0.04p) – Shoats Creek Update Not the Key Takeaway: While we have some sympathy in the context of the current oil price environment, against this is the fact that the Company has alternate investments which are draining the management time, and ultimately, the all-important cash resources. We can't see how the management team can trade out of this position without dilution or loss of value for shareholders.
BG Group (BG/ LN – 918p) - Update Supports Shell: While the BG’s transaction price may seem steep in today's price environment, we believe that the mid cycle price of oil will support it, and whatever the immediate cost today, should the transaction not be completed, we believe that the ultimate cost to Shell will be far higher.

In Brief

• JKX Oil and Gas (JKX LN – 25p) – Does ISS support the JKX Board?: We aren't sure that the Institutional Shareholder Services report supports the existing management. It does however, oppose the recommendations proposed by Proxima. We agree. The management team have had a poor show in the past, but they have rectified the issues and are trading admirably in the face of what has been an exceedingly trying period to be an operator generally, let alone in the Ukraine. While we believe that there needs to be greater urgency surrounding how management take the Company forwards, we do not believe that the Company's owners are well served by the wholesale removal of the existing team.
Nighthawk Energy (HAWK LN – 0.70p) – Delays to Water Flood Project a Symptom?: Today's update in which the Company disclose that the Colorado state regulator wants more time isn't the reason why the delay has been caused, it's because the final plan hasn't been submitted. This is a poor show, requesting approval of a plan that hasn't been submitted is never likely to receive anything. We are now concerned that these basic mistakes are symptomatic of the chaotic nature of the Company, and wonder if there isn't a need for investors to take a closer look at the management structure and assess whether there is a need for management augmentation. With all of the recent missteps that have happened recently, we wonder if the involvement of a founder member might assist management to rediscover their direction.
• Nostra Terra Oil and Gas (NTOG LN – 0.08p) – East Ghazalat Deal Completes: The completion of the East Ghazalat acquisition brings with it a new direction and phase of growth for the Company. Now the Company must start to drive the asset to achieve the only real measure of value, which is free cash flow. Once it has a measure of the operating structure, and cost savings possible, only following that disclosure tongue market will the potential value of the acquisition be better reflected in the Company's value.

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