Market Update: 22 May 2023
ATOME Energy PLC (AIM:ATOM)* - NAV Update - Green fertiliser to enhance Villeta project NPV
Lansdowne Oil & Gas (AIM:LOGP)* & LON:BEY- Barryroe application refused
Petro Matad Limited (AIM:MATD, OTC:PRTDF) - Delays continue to frustrate Heron development
Helium One Global Ltd (AIM:HE1, OTCQB:HLOGF) - Independent CPR highlights potential
Energy News
Brent Oil US$75.6/bbl vs US$76.4/bbl last Friday
WTI Oil US$71.7/bbl vs US$72.4/bbl last Friday
Henry Hub Gas US$2.55/mmBtu vs US$2.60/mmBtu last Friday
UK NBP Futures 65p/therm vs 68p/therm last Friday
TTF Dutch Futures €29/MWh vs €30/MWh last Friday
- Energy prices traded down as stalled bipartisan talks in Washington on a debt-ceiling deal continue to weigh on wider market sentiment.
- The US Baker Hughes rig count was down 11 units to 720 rigs last week (-8 y/y), with oil rigs down 11 to 575 and gas rigs unchanged at 141 units, largely due to a reported 9-rig drop to 357 units in Texas.
Company News
ATOME Energy PLC (AIM:ATOM)* 94p, Mkt Cap £34m: NAV Update - Green fertiliser to enhance Villeta project NPV
Valuation: 190p/sh, BUY
- ATOME announced a £2.4m strategic subscription by the global energy technology giant Baker Hughes for a 6.6% equity stake at a price of 95p/sh (based on the 30-day VWAP).
- ATOME also confirmed that the Phase 1 120MW Villeta project in Paraguay has been upgraded to produce a final end product of Calcium Ammonium Nitrate (CAN), which is a premium green fertiliser.
- The Company has been out talking to potential offtakers who have identified green fertiliser as a high-graded product that will warrant a pricing premium from consumers in the agriculture industries looking to market their own low-carbon credentials.
- We have updated our financial models and NAV for today's updates and reiterate our BUY rating with a new TP of 190p/share (from 181p/sh), offering over 100% potential upside to the current share price.
- Investors can register here for a management presentation on Friday 26th May 2023 at 1pm (GMT).
*SP Angel acts as Corporate Broker to ATOME Energy
Lansdowne Oil & Gas (AIM:LOGP)* 0.25p, Market Cap £2.5m: Barryroe application refused
- Lansdowne has confirmed that the Minister for the Department of Environment, Climate and Communications (DECC) in Ireland is unwilling to grant the Barryroe Lease Undertaking on the grounds of financial capability.
- The DECC had confirmed that the application was satisfactory from a technical perspective, but the applicants did not meet the investment cover criterion and the SEL1/11 licence is considered expired as of 13th July 2021.
- The operator, Barryroe Offshore Energy (BEY LN), previously announced it had secured funding for up to €40m, which covered 100% of the estimated cost of the work programme in the Lease Undertaking application.
- The Company now plans to pursue a claim in international arbitration pursuant to the investment protection regime established under the Energy Charter Treaty to which both Ireland and the UK are signatories.
Both stocks are down by over 40% in early trading as investors digest this frustrating update. The revised Barryroe Lease Undertaking for appraisal drilling was submitted to DECC in April 2021 and the decision by the Minister, who is also the Leader of the Green Party in Ireland, to refuse the application has been taken while Ireland continues to import significant amounts of oil & gas, something the development of Barryroe could help to address. We remain of the view that material fields such as these should come into greater focus set against the backdrop of elevated commodity pricing and domestic energy security concerns. With great reluctance, the partners will now resort to legal proceedings.
*SP Angel acts as Nominated Advisor and Broker to Lansdowne Oil & Gas (AIM:LOGP)
Petro Matad Limited (AIM:MATD, OTC:PRTDF) 5.05p, Market Cap £56m: Delays continue to frustrate Heron development
- Petro Matad announced that the Mongolian Ministry of Construction and Urban Development has now insisted that it is the ministry responsible for land issues, and is therefore responsible for the licence submission.
- Submission to secure Cabinet approval to certify Block XX (100% WI) as a Special Purpose Area is therefore delayed, further putting back plans to complete the 2019 Heron-1 oil discovery well as a producing well.
- The Velociraptor-1 high risk/impact exploration well on Block V (100% WI) is due to spud in mid-June and is expected to take c.30 days to reach the prognosed total depth 1,500m at a cost of under $2m.
- The Velociraptor wildcat is targeting an inversion anticline with 200mb of prospective resource potential, which on success would de-risk the adjacent Oviraptor and Tsagaanraptor prospects along the exciting Raptor Trend.
The stock is off by over 15% in early trading, reflecting investor frustration at Petro Matad’s long struggle with local and central government authorities to obtain the required land access (2022) and permitting (2023) on Block XX to allow the company to start developing the Heron discovery. However, this is the first oil project to be put through this bureaucratic process based on regulations introduced in 2017 and the authorities involved have no obvious precedent to follow, such that this process will hopefully smooth the path for future certifications. Preparations to drill a wildcat exploration well on the Velociraptor prospect are also advancing and investors can look forward to testing the potential of the Raptor trend, with 1Q23’s $6m raise providing sufficient funds to carry out its planned activities.
Helium One Global Ltd (AIM:HE1, OTCQB:HLOGF) 7.0p, Market Cap £57m: Independent CPR highlights potential
- Helium One announced the Tai prospect (100% WI) has been independently estimated to hold 2.8bcf of net helium prospective resources, as part of 212bcf in unrisked 2U total gas prospective resources.
- The updated CPR by ERC Equipoise represents a 61% increase from the 2020 resource estimate as a result of more detailed interpretation of the additional 2D seismic data acquired over the prospect in 2021.
- Last month, the Company signed a Letter of Intent, alongside Noble Helium (NHE AU), with SOFORI to contract a rig for a three-well drilling programme commencing 3Q23 in the onshore Tanzania Rukwa Basin.
Helium One considers the drill-ready Tai structure to be the best-defined prospect within the Company’s portfolio and is fully funded for drilling through a £10m fund raise last December. With a new CEO in place, the Company is looking to make good on a commitment to shareholders in securing a rig to test the helium potential within the Rukwa Rift Basin onshore south-west Tanzania. We look forward to further updates regarding the conclusion of a rig contract and the potential for drilling operations to commence in the latter half of this year.
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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