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The End of the Day Wrap provides a summary of the most interesting articles published by Proactive Investors during the day, including all of the main stories and exclusive interviews with executives.
PROACTIVE NEWS SUMMARY: Nighthawk Energy, New World Oil and Gas, Range Resources, Leni Gas & Oil, Agriterra, Avocet MiningJanuary 25 2012, 4:39pm
Today’s news coverage by Proactive Investors was focused on the oil and gas sector with two of the main stories dedicated to small caps Nighthawk Energy (LON:HAWK) and New World Oil and Gas (LON:NEW).
Another in-depth report, which was published this afternoon, took a close look at the tie up between Range Resources (LON:RRL, ASX:RRS) and Leni Gas & Oil (LON:LGO) to develop onshore oilfields in Trinidad.
The deal will see Range taking a 50 per cent stake in LGO’s Goudron oilfield by spending US$8 million. And LGO has an option to acquire a 15 per cent stake in Range’s Beach Marcelle project by spending a maximum of US$7 million.
Range already owns a number of producing assets nearby and this tie-up gives it additional reserves and production growth in Trinidad, while LGO gets sufficient cash to buy out Goudron’s previous owner and take the project forward.
LGO struck a deal to buy the Goudron field in October 2011, agreeing to pay US$9 million for Goudron E&P Ltd – which has exclusive rights to acquire the production contract for the field.
The company can now take control of the asset and start a work-over programme to regenerate the old oilfield, which was first discovered in 1927.
Meanwhile, Westhouse said the recent shake-up at the group should revitalise investor investor interest.
In recent weeks Nighthawk has raised over £18 million and struck a deal to take control of the flagship Jolly Ranch shale project in Colorado.
It has agreed to buy an additional 25 per cent stake in the project, taking its stake up to 75 per cent.
At the same time, chief executive Tim Heeley is handing over the reins to the newly appointed management team, led by executive chairman Steve Gutteridge, before joining the operational and commercial team on the ground in Denver.
“These key elements of corporate activity should act as a “collective” catalyst to revitalise investor interest in the company and, crucially, enable Nighthawk to demonstrate its subsurface strategy and move forward to sustainable production,” said Andrew Matharu, head of oil & gas at Westhouse, said in a note to clients.
Peer New World Oil & Gas is ready to conclude a definitive deal to acquire a stake in the Danica Resources Licence 1/08 following a new competent person's report on the project.
The firm signed an initial letter of intent for the potential acquisition earlier this month. The area spans both onshore and offshore acreage on the northern flank of the productive South Permian Basin in Southern Denmark.
The new report provides significant evidence pointing to the presence of a working hydrocarbon system, chief executive William Kelleher told investors.
"We are highly encouraged by the results of this CPR, which confirms the essential findings of the Petroleum Engineer's report issued on 12 January 2012,” Kelleher said.
“Based on these results, we will immediately proceed to negotiate and finalise the definitive transaction agreements, in the form of a Farm-Out Agreement, as well as an amendment to the underlying Joint Operating Agreement naming New World's Danish subsidiaries as parties and operator.”
Away from oil and gas, one of today’s articles took a closer look at food producer Agriterra (LON:AGTA), which this morning unveiled plans to expand its Sierra Leone cocoa trading business Tropical Farms Limited to 40 locations this year from 12 currently as part of an aggressive growth strategy.
As part of the strategy, TFL will also extend its focus into coffee and palm oil.
Negotiations are already underway to secure a 15-acre site in the new airport development zone close to the capital Freetown, while advanced discussions are also taking place to acquire a cocoa plantation in the south-east of the country.
The group is well financed to roll out its ambitious plans after raising US$15 million last year from investors at 3 pence a share.
Today’s announcement underlines the commitment to diversify its agricultural operations, which is currently focused on the production and processing of maize in Mozambique, and rearing cattle.
Agriterra wants to be a “field to fork” operator across a number of sectors but focused on Africa, so cocoa, coffee and palm oil fit that bill.
It has also made a bold and decisive move into logistics by signing a concession agreement to run and develop the port of Conakry in Guinea.
Today’s research notes included a report on the mining sector from Numis. The broker rates Avocet Mining (LON:AVM) as its top pick gold stock and First Quantum Minerals (LON:FQM) for base metals in a note about the outlook for sector in 2012 today.
Analyst Cailey Barker said he expected this year to be another challenging year for mining firms as they battle with production targets, costs, resource nationalisation and issues of labour.
He added that he expected muted merger and acquisition activity, difficult financing conditions and expectations of value to remain a theme.
In terms of investing, he said the broker continued to recommend short term caution for base metals as opposed to relative confidence in the long term gold bull market.
"A common theme through all our favoured companies is a bias to solid management and a track record of delivery, over price and valuation," the analyst highlighted.
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