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SP Angel Morning Oil & Gas: Tethys Petroleum, Circle Oil and Ophir Energy

Published: 08:44 20 Mar 2014 GMT

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Circle Oil (LON:COP)

Not Giving Away Much

Circle's trading update doesn't provide much in the way for new information for investors - for that we will have to wait until the results. However, that the Company has not had to highlight any issues in connection with Egypt is a strong sign that while the country remains volatile, there has been no adverse impact on the Company's operation - yet; we maintain a watching brief.

Elsewhere, we believe that the Company's asset base will start to feed in to the activity hopper, especially Oman, where we see activity picking up. However, the high risk exploration well in Block 49 is marginal at best in our opinion, given the fact that the predrill resources estimate is 14mm bbl and Geological chance of success at less than 12%. For us the real prize is in block 52 especially as Rex International has reported a discovery nearby which had an open hole flow of 3m bpd, which to our mind significantly de-risks not only the basin, but the area as a whole.

Elsewhere in its portfolio, as far as we can tell, it is business as usual.

We believe that the Company remains undervalued and as such is a good prospect for investors and target for predators alike.

Other News:

Ophir Energy (LON:OPHR): Full Year Results - Nothing new, and in any case, the Company is all about the future. While gas takes longer to monetise than oil, and generally requires heavier capital investment, the current market valuation does not reflect underlying value of the assets. At these levels, Ophir makes an interesting takeover target for those seeking exposure, or greater exposure, to the growing gas market.

Tethys Petroleum (LON:TPL) - Well Success, But Will it Matter? - The latest drill results are promising and support the Company's appraisal/exploration programme. However, there is a question as to whether it will actually matter in the face of the rising geopolitical tensions in the CIS region. Given that Russia has so adroitly wasted the goodwill that had accrued to it following the winter games, and the west is looking increasingly feeble in its response, one questions what is next, which places the whole region on alter, not just Kazakhstan.

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