It is a rarely mentioned oil & gas minnow that kicks off our review of this week’s activity in the sector, with shares in Petro Matad Limited (LON:MATD) having soared on Wednesday after the Mongolia-focussed explorer announced it had signed up the services arm of Chinese oil giant Sinopec for a rig contract.
Petro Matad is planning to start exploration drilling in September, with the first well targeting the Snow Leopard (or Irves) prospect in the Taats Basin, hosted in the company’s wholly owned Block V asset.
The Snow Leopard prospect has an estimated 160mln barrels of oil-in-place, though the ‘upside’ case estimating some 350mln barrels. September’s well is planned to be drilled down to a total depth of 3,150 metres, and the programme is due to last 50 days.
Hurricane calms down
Among the more closely followed stocks in the oil space, it was a fairly quiet week for Hurricane Energy PLC (LON:HUR) having last week landed just over half a billion dollars to fund its Lancaster field development through to first oil, via an ‘early production system’ that’s targeted to come online in the first half of 2019.
However, there was plenty of broker comment on the sector darling, with Macquarie reckoning there could be a much longer wait for Hurricane’s expected farm-out deal for Lancaster than the oil firm’s more ambitious guidance.
In a note, the Aussie broker’s analyst Kate Sloan, said: “We don’t believe a farm-out will happen until at least 2020”.
Meanwhile finnCap analyst Dougie Youngson is expecting a less speculative time for Hurricane Energy as he reckons drilling plans are now on the back-burner.
finnCap on Wednesday reduced its target price for Hurricane to 80p from 130p, to account for the dilution created by last week’s equity raise, nonetheless, the broker repeated a ‘buy’ recommendation.
The new target price still represents some 130% upside to Hurricane’s current share price.
Not so Sound this week
Elsewhere, there was some genuinely disappointing news from another sector darling, Sound Energy PLC (LON:SOU) this week after the AIM-quoted firm told investors that the gas discovered at its Badile exploration well in Italy is likely to be “sub-commercial”.
The company quickly dusted itself down, however, and revealed that gas production at its Sidi Moktar project in Morocco is on the horizon after a re-entry into the Koba-1 well was successful.
But even that good news couldn’t arrest the falling share price, with investors put off by the fact that plans to deepen Koba-1 and look for even more gas further down have been put on hold, with the well set to be put into production rapidly.
Sound shares have more than doubled over the past 12 months, but this week they’ve tumbled by a third to 51.5p
Resources boost for SDX
Meanwhile, SDX Energy Inc (LON:SDX, CVE:SDX) this week confirmed the size of the new South Disouq gas discovery in Egypt, in line with its expectations, with an independent consultant assigning just over 47bn cubic feet of contingent resources.
A new resource update was provided by Gaffney, Cline & Associates (GCA), outlining gross contingent resources of 47.1bn cubic feet of gas and 2.29mln barrels of gas condensate, as well as a ‘best case’ prospective gas resource of 180bn cubic feet and 8.73mln barrels.
SDX described the new resource statement as “an important step” towards the validation of the full potential of its 55% owned South Disouq field.
Cantor Fitzgerald analyst Sam Wahab, in a note, repeated a ‘buy’ recommendation for SDX on Friday following the group’s updated resource estimates for the project.
He said: “In our view, the materiality of these numbers are encouraging from an operational standpoint, indicating considerable exploration upside ahead of a near term boost to production by the end of the year.”
Positive move by Nu-Oil and Gas
Elsewhere shares in Nu-Oil and Gas more than doubled at the start of the week on some positive news from its onshore petroleum lease in western Newfoundland, Canada.
The junior oiler told investors on Monday that operations at PL2002-01(A) got underway after it received government approval for the first phase of the work programme.
Resources minnow Empyrean Energy was another flowing higher after it presented investors with not one, but two pieces of good news this week.
On Wednesday Empyrean revealed that testing operations at the Mako South-1 well at its Duyung production sharing contract joint venture had been successfully completed.
It followed that up with an announcement on Thursday in which it revealed that a proposed exploration programme onshore California had been given the green light.
The project operator, Aussie-listed Sacgaso, told Empyrean that it had been granted a drilling permit for the Dempsey 1-15 well, in California’s Sacramento Basin.
More news from Broadford Bridge
UK Oil & Gas Investments (LON:UKOG) was again in the news this week, with the firm appearing to be making fast progress with its Broadford Bridge project in southern England, where it is unearthing a potentially significant discovery.
In a statement, UKOG has announced that the Environmental Agency has now granted a permit for the company to conduct a flow test on the Broadford Bridge well.
Elsewhere, the countdown is on for Jersey oil & Gas PLC’s (LON:JOG) high impact summer exploration programme in the North Sea.
Jersey confirmed that the Transocean Spitsbergen rig has been mobilised for a three well programme under contract with Statoil.
Statoil is the operator of Verbier - Jersey owns 18% - and the drilling of the exploration well is scheduled to start in August.
And Highlands Natural Resources Plc(LON:HNR) told investors on Friday that it has raised £2mln of fresh capital, which will be enough to fund the first well at the East Denver project.
The company launched the equity subscription process, supported by the Primary Bid platform, to issue new shares priced at 12p each.