CVE:AEN | C$0.025 | US$3.6m | Speculative Buy
Antrim Energy has announced its financial results for the three months to 31 March 2016. The company remained bolstered by a comfortable working capital cushion of US$9.2m at the end of the period, including cash and equivalents of US$9.4m. It also benefits from a debt-free balance sheet and satisfied its North Sea well abandonment obligations in 3Q15. With a market cap of just US$3.6m, the company therefore has an EV of US$(5.8)m. The cashflow used in operations for the period (excluding forex losses) was US$0.3m; in addition to this, the strengthening C$ vs. US$ drove a forex loss of US$0.6m, bringing total operating cashflow to US$(1.0)m. To maintain balance sheet strength the company is continuing to focus on managing the G&A base and implementing cost cutting initiatives where possible.
COMMENT: Corporately, identifying a strategically aligned M&A deal providing current or near-term cashflow remains a priority for Antrim, with the company continuing to review opportunities in the space actively; key criteria for such a transaction would include viability in the ongoing supressed oil and gas environment.
Operationally, Antrim is continuing to seek an extension to the first exploration term on Irish licence FEL 1/13 (due to expire in July 2016) by a further two years, which would be associated with an additional technical work programme. Since the company is to assume a 100% interest in the licence following Kosmos’ withdrawal, it is seeking a farm-in partner to assume operatorship during this extension period, which it hopes would then provide a carry on an initial exploration well on the acreage. Encouragingly, as a barometer for interest in frontier exploration in the region, in February 2016 the first round results for the Ireland 2015 Atlantic Margin Licensing Round were announced: 14 new licensing options were awarded, with successful participants including majors such as ExxonMobil, Eni, BP and Statoil.
100% interest in FEL 1/13, subject to finalisation and government approval of the transfer of Kosmos’ interest — Following Kosmos’ withdrawal from its Irish interests in order to focus more specifically on its African exploration portfolio, Antrim will become operator of the acreage at no additional cost. Kosmos farmed into the licence in 2013, taking over operatorship and carrying the full costs of a 3-D seismic programme, in addition to reimbursing a portion of prior exploration costs incurred by Antrim.
Antrim had previously announced an aggregate summary of unrisked gross best estimate prospective resources for the 17 independent leads evaluated within FEL 1/13 — These were 260MMbbl of oil, 4.7Tcf of gas and 87MMbbl of condensate. The two largest leads (‘C’ and ‘M-3’) represent 43% of the total unrisked property best estimate prospective boe resources: 126MMbbl of oil, 1.9Tcf of gas and 35MMbbl of condensate. Prior to the notice to withdraw, Kosmos had prepared a prospect inventory, highlighting three prospects (two tilted fault blocks and a submarine fan), one of which has yet to be reviewed independently.