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Lansdowne looking to create value from Barryroe stake

Last updated: 10:14 26 Sep 2016 BST, First published: 08:42 26 Sep 2016 BST

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Lansdowne has a 29% stake in the Barryroe offshore project

Lansdowne Oil & Gas Plc’s (LON:LOGP) is looking forward to creating value from its main asset  - the 20% stake in the Barryroe oil field in the Celtic Sea - after what was a challenging first half.

The period to June 30 saw the firm dealing with an appeal ruling on a case between Providence Resources (the operator of Barryroe) and Transocean. Lansdowne, as a partner, ended up being liable for around US$1.4mln.

A placing was completed in the second quarter to raise £2.1 million to settle outstanding amounts due and for working cap. Lansdowne's shares returned to trading on June 22.

Notably, throughout the first half, Providence has continued farm-out negotiations on behalf of the Barryroe partnership and this process is continuing, it said.

The loss before tax was £516,000 compared to a loss of £550,000 in the same period last year.

Viscount Torrington, chairman, said: "Now that the immediate problems associated with the litigation payment have been resolved, it is time to look forward to creating value from our 20% interest in Barryroe.

"This is by any standards a significant resource with attractive costs of development and production and our entire focus is to move this project forward against a background of greatly reduced drilling and operating costs and a stabilising oil price environment."

House broker Cantor repeats a 'buy' and targets 7.5p for the shares.

Analyst Sam Wahab noted: "Renewed sector interest could accelerate farm out of Barryroe - The 2015/16 Atlantic Margin licensing round saw considerable interest from the industry as majors and independents looking to secure acreage counter-cyclically.

"In the first tranche, announced in February, ExxonMobil, BP, Statoil, and Eni were among the majors awarded license options, marking a significant shift for the basin. Woodside and Nexen also picked up license options in the first tranche, which focused on the southern Porcupine Basin. We believe this underlines offshore Ireland’s significance in terms of industry interest, and further highlights the long term potential in this underexplored hydrocarbon province."

Cantor values the group on  a post-farmed down basis, assuming it retains a 10% working interest, generating 15p per share. It also includes a a valuation of the company’s assets and liabilities.

Shares eased today 4.35% to 1.10p each.

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