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SP Angel Morning Oil & Gas Union Jack Oil, Madagascar Oil, Solo Oil, SacOil, Europa Oil & Gas

Published: 10:22 02 Mar 2016 GMT

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Headlines

• In Brief:
 Union Jack Oil* (LON:UJO – 0.15p) (BUY – 0.63p) – Investor Update
 Madagascar Oil (LON:MOIL – 0.63p) – Conditional Framework Agreement
 Solo Oil (LON:SOLO – 0.42p) – Horse Hill at a Cantor
 SacOil Holdings (LON:SAC – 1.38p/ZAR30) – Lagia Field
 Europa Oil and Gas (LON:EOG – 4.38p) – Offshore Ireland Prospectivity Bank Enlarged

In Brief
Union Jack Oil* (LON:UJO – 0.15p) (BUY – 0.63p) – Investor Update: Today's update is a timely reminder of the value that the Company has created either through judicious investment in appraisal and development assets, or through the drillbit. With an active exploration and appraisal programme ahead, coupled with the development of Wressle, we believe that the Company is delivering on its mission statement: to provide investors with growth in the oil sector without excessive risk. We are reminding investors of our 0.63p Target Price and BUY Recommendation.
Madagascar Oil (LON:MOIL – 0.63p) – Conditional Framework Agreement: The choice would appear stark, delist or dissolve. It is a little unfortunate that at this stage in the Company's life cycle, just when it has completed the difficult exploration and appraisal phases (which are the higher risk elements), and the Company enters the materially lower risk development and cash generating production phases, it should be taken from the market. However, this is an unfortunate confluence of high operating cost and low oil prices, which has precipitated a lack of equity investor appetite to fund the business further. Nevertheless, this has been compounded by the management's desire to utilise debt as the funding mechanism, which is always a dangerous animal when the cash flows to control it are absent. We can't see this continuing to be listed and as such, investors are likely to sell out of the stock in droves, even though a mechanism exists for the forward growth of the Company.
Solo Oil (LON:SOLO – 0.42p) – Horse Hill at a Cantor: today's news is a timely update on Horse Hill, and while there is a long way to go before commerciality can be declared, this is a promising start. While the real prize remains the shale zones, the conventional play will provide a nice fillip for the participants, and provide no small measure of flexibility to the operating group going forwards.
SacOil Holdings (LON:SAC – 1.38p/ZAR30) – Lagia Field: today's news continues to support the Company's ongoing focus on the development of the field, but as with all these things, it remains to be seen if the current successes will result in commercial production. Against that, however, is the fact that there is already infrastructure in place which will lower the hurdle rate appreciably. We believe that the Company needs to get to grips with the wider market belief that the management team's focus is diffuse and not concentrated enough on one country or segment sufficiently to allow it to generate meaningful long lasting value.
Europa Oil and Gas (LON:EOG – 4.38p) – Offshore Ireland Prospectivity Bank Enlarged: while today's news will provide support to management's investing thesis, in real terms we do not believe that this adds much to the underlying value proposition of the Company. We say this as there is already a significant value averting to the investors that is not reflected in the market value of the shares, and this just gets lost in that already existing noise. On the basis that the Company needs to fund these exploration assets, however, given that the size of the potential prize continues to get bigger, this will have a marked benefit to the Company when the exploration farmin market reopens.

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