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Today's Oil and Gas Update - Mosman Oil & Gas, Union Jack Oil, Volga Gas and more...

Today's Oil and Gas Update - Mosman Oil & Gas, Union Jack Oil, Volga Gas and more...

8th January 2019


  • In Brief:
    • Mosman Oil & Gas*** (MSMN LN – 0.25p) – $9.80mm (1.63p) – Stanley Delayed, But Outlook Still Positive
    • Union Jack Oil*** (UJO LN – 0.13p) – $72.9mm (0.64p) – Biscathorpe Spudded
    • Volga Gas*** (VGAS LN – 52p) – $76mm (70p) – Production Update
    • San Leon Energy (SLE LN – 27p) – New RBL Improves Dividend Outlook

In Brief

  • Mosman Oil & Gas*** (MSMN LN – 0.25p) – $9.80mm (1.63p) – Stanley Delayed, But Outlook Still Positive: Poor weather in east Texas has contributed to a number of delays for UK companies operating in the area, which has also impacted Mosman’s operations, but this does not impact the subsurface.

The Stanley-2 appraisal well will provide a second data point following the positive outcome of the Stanley 1 well. The data will be used to confirm the geological model that has been developed to date and provide more data on the overall performance of the field.

Following the results, we look forward to the Company’s update on the asset and prospectivity of the new asset base. Ahead of the update, we are reiterating our $9.80mm (1.63p) valuation.

  • Union Jack Oil*** (UJO LN – 0.13p) – $72.9mm (0.64p) – Biscathorpe Spudded: News that Biscathorpe has spudded marks a significant step forward for the Company, as it is one of the three key activity drivers for the next 12 months. With West Newton expected in 1Q and Wressle’s appeal starting imminently, 2019 will be a year of activity.  
  • Volga Gas*** (VGAS LN – 52p) – $76mm (70p) – Production Update: News that production averaged 21.6mm cfpd for the December 2018 (year 218 – 18.8mm cfpd) sees the production average towards the historic longer-term production on 25mm cfpd.

As we highlighted previously, our plateau rate has been reduced and its length shortened until such times as the Company has undertaken the technical study and evaluated the performance of the reservoir, and outlined any remedial drilling as required.

We recognise that until such our estimate is likely to be on the conservative side, especially as we believe that the drive mechanism, coupled with further engineering solutions such as compression, could improve recoverability. Following today’s production update, our valuation remains $76mm (70p).

  • San Leon Energy (SLE LN – 27p) – New RBL Improves Dividend Outlook: While Eroton’s RBL does not directly impact San Leon, by refinancing the existing RBL on more advantageous terms, the extent of the previous restrictive covenants regarding the payment of dividends has been eased.

In so doing, it aides the classification of cash on the balance sheet as distributable cash, which is the key mechanism for the Company.



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