AIM-market farm out deals are back and that’s big news for two oil explorers in particular, with their short and medium-term financial positions now looking significantly brighter.
Challenger Energy shares immediately reacted to the company’s newly improved proposition, with the price more than doubling with the news that Chevron will now lead its exploration project offshore Uruguay.
The US oil major is paying Challenger $12.5 million in cash and it agreed to commit $35 million of investment to advance the project and drill a high-impact exploration well.
It leaves Challenger as a rarified position on AIM – comparatively cash rich, with an active and funded exploration programme
Shares saw a correction as the week wore on, but still closed a healthy 24% higher.
Challenger wasn’t alone- after a long wait, like a proverbial London bus, AIM market investors saw two major farm-out deals arrive at once.
Eco Atlantic Oil & Gas expanded its joint venture with big-name additions as French major TotalEnergies and Qatar Energy each bought into a project offshore South Africa.
Like Challenger, Eco will receive a vital injection of cash, up to $12 million in phases, and future costs will be covered by the new partners. Shares initially ran up 22% to 11.9p in mid-week trades before correcting to 9.92p come Friday
Investors across the sector will now look to their other small cap exploration holdings, hoping this is more than a coincidence and more industry deals may follow.
‘Meh’, says AIM All-Share on Hunt
It was a pretty flat week for the AIM All-Share Index, which fell 0.24% to 740p come Friday, roughly on par with the FTSE 100 blue-chip index.
The market responded generally well to Chancellor Jeremy Hunt’s Spring Budget, as evidenced by the mid-week swell in equities prices, though with few surprises on offer, the Budget’s impact was over before it started.
One curio came in the form of an import levy on nicotine-based vaping products. Specifics of the levy were not disclosed, but for reasons unclear, prominent AIM-listed vape distributor Supreme plc shot up 18% following the announcement.
Halifax’s February House Price Index print was also a bit of a non-event in an otherwise barren week for macroeconomic news. UK house prices rose 1.7% year-on-year in February 2024, slowing from a downwardly revised 2.3% growth the month before.
More risers and fallers
This week's London Stock Exchange delisting was brought to you by AIM-listed professional services group Mattioli Woods.
Mattioli on Friday agreed to be taken off the stock exchange by private equity player Pollen Street Capital for £432 million.
Pollen Street is paying 804p per share in cash for Mattoli Woods; a 34% premium to last Thursday’s closing price.
Investors took kindly to ImmuPharma PLC (AIM:IMM)’s financial update in which the group said it “is in active discussions with a broad range of potential commercial partners with the objective of completing deals across the portfolio in 2024”.
Noting the untapped value within the business, it said its 10.8% holding in Incanthera is worth £916,000, while it also has 7.3 million warrants that can be exercised at any time. Shares shot up 54%.
Active Energy Group PLC (AIM:AEG, OTCQB:ATGVF) shot to the top of the AIM movers leagues following news of a settlement deal with Player Design, resulting in a $1.65 million cash payment.
It recoups funds earmarked for the development of the Ashland Facility and includes the transfer of some non-essential production equipment. Shares rocketed 123% higher.
Tlou Energy Ltd (AIM:TLOU, ASX:TOU, BSE:TLOU) was another top mover in the energy sector, adding 34% in a week that saw the Africa-focused developer’s interim results.
“The company has made excellent progress over recent months and remains on track to get gas-fired power into the grid in Botswana later this year,” said the group.
Itaconix PLC (AIM:ITX, OTCQB:ITXXF) continued to rally on the back of last week’s trading update. The plant-based polymers group noted a record year of revenues and there were more share price gains in the tank with the stock adding 30% this week.
Lastly, Harland & Wolff Group Holdings PLC (AIM:HARL), operator of the iconic Port of Belfast dockyard, was awarded preferred bidder status for the Falkland Islands Port Replacement Project issued by the Falkland Islands Government.
It was a welcome development for the shipbuilding and fabrication firm after having its bid approach for an Isles of Scilly Steamship Company contract rejected in November.
H&W’s shares spiked 26% on the news.