Market Update: 9 December 2022
Borders & Southern Petroleum (AIM:BOR) - Posting of Circular
PetroTal Corp (TSX-V:TAL, OTCQX:PTALF, AIM:PTAL) - Blockade impacts operations
DNO International (OSL:DNO) - Initiates $80m share buyback
Energy Prices
Brent Oil US$76.9/bbl vs US$77.7/bbl yesterday
WTI Oil US$72.4/bbl vs US$72.8/bbl yesterday
Henry Hub Gas US$5.92mmBtu vs US$5.78mmBtu yesterday
UK NBP Futures 343p/therm vs 382p/therm yesterday
TTF Dutch Futures €136/MWh vs €150/MWh yesterday
- Crude oil prices edged lower despite the closure of the 622kb/d Keystone pipeline in the US following a 14kb crude oil spill in Kansas.
- The week’s US EIA storage report detailed a draw of just 21bcf to 3,462bcf last week, driven by strong gas production from the Permian, with storage c.1.5% below a year ago and its 5-year average.
Company News
Borders & Southern Petroleum (AIM:BOR) 1.85p, Market Cap £13m: Posting of Circular
- Borders has today posted a Circular to Shareholders regarding the conditional portion of the fundraising, which sets out a notice of general meeting on January 4th, and a form of proxy for the proposed resolutions.
Last week’s fundraising should provide two years of working capital to progress Borders’ phased development concept on the large Darwin discovery, which contributed to the granting of a two-year licence extension by the local authorities. In our view, the stock now provides investors with a two-year option on improving market sentiment from a more attractive Darwin development option with less upfront capital, progress from the Navitas/Rockhopper joint venture on the Sea Lion development project and/or greater M&A activity in the E&P sector.
*SP Angel acts as Corporate Broker to Borders & Southern Petroleum (AIM:BOR) plc
PetroTal Corp (TSX-V:TAL, OTCQX:PTALF, AIM:PTAL) 36.7p, Market Cap £315m: Blockade impacts operations
- PetroTal confirmed that Asociacion Indigena de Desarrollo y Conservacion de Bajo Puinahua (“AIDECOBAP”) followers detained a barge traveling to Brazil with crude oil purchased from PetroTal in late November.
- The crew of the barge was subsequently released, however, territorial control of the river pathway continues, limiting further barge movements to and from the Company’s Bretana oilfield (100% WI).
- PetroTal has reduced production to between 4.5-5kb/d and will need to reduce production levels further should the river blockade persist as the Northern Peruvian Pipeline remains unavailable due to ongoing repairs.
- The Company also commented that the recent removal of the President of Peru and his replacement is expected to occur smoothly and should not impact PetroTal’s operations.
PetroTal’s operations remain restricted by domestic political actions, which may cause further revisions to its 12-13kb/d FY22 average production guidance, though this concern is somewhat offset by today’s new payment agreement with Petroperu. The next catalyst may be the Company’s upcoming corporate rebranding that will include a new ‘vision’.
DNO International (OSL:DNO) NOK11.9, Market Cap NOK12.6bn: Initiates $80m share buyback
- DNO announced the initiation of a share buyback programme to repurchase up to 53.1m shares, representing approximately 5% of total shares outstanding, for a maximum total consideration of US$80m.
- The Company plans to propose to the Annual General Meeting in 2023 to cancel the repurchased shares as well as 26.3m shares already held in treasury (c.2.5% of shares outstanding).
Following the reorganisation of the Company’s capital structure during the Summer, DNO said it would prioritise paying down debt and cash returns to shareholders in its capital allocation policy. Nonetheless, the management commented on the third quarter results conference call that while it expected pressure from investors to increase returns, it also planned to deploy capital to grow a third leg to the business from its new position in West Africa.
Research
David Mirzai – David.Mirzai@spangel.co.uk – 0203 470 0473
Sales
Richard Parlons – Richard.Parlons@spangel.co.uk - 0203 470 0472
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
Rob Rees – Rob.Rees@spangel.co.uk - 0203 470 0535
Abigail Wayne – Abigail.Wayne@spangel.co.uk - 0203 470 0534
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Sources of commodity prices
Oil Brent - ICE
Natural Gas - NYMEX
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