Proactive Oil & Gas weekly oil & gas highlights: Ophir Energy, Faroe Petroleum, Amerisur Resources ...

For a short trading week, it was fairly busy for investors in small cap oil and gas.

Oil rig
Takeover talk was centre stage in the oil & gas sector this week

The main talking point in the oil and gas sector on the first, fore-shortened trading week of 2019 came from takeover situations.

Ophir Energy Plc (LON:OPHR) saw its shares soar higher on Wednesday after the small-cap oil and gas explorer confirmed it has received a takeover offer from the Indonesian energy company, PT Medco Energi Internasional.

In a brief statement, Ophir – which had a market cap of £252mln at the close on December 31 - said that it and Medco were currently in discussions about a cash offer, but added that there could be "no certainty" that a firm bid will be made. Jakarta-listed Medco has until January 28 to make a firm offer for Ophir.

Meanwhile on Thursday, the battle over Faroe Petroleum plc’s (LON:FPM) future took another turn as bidder Norwegian bidder DNO was forced to move to a mandatory offer after its 152p cash tilt failed to land sufficient number of acceptances – its stake in the company increased to 30%.

DNO was robust in its rebuttal of an independent report that suggested Faroe was worth up to 48% more than the 152p that’s been offered, citing the murky outlook for the capital markets and the oil sector as major risk factors.

The window has been left open to January 16 in order to allow investors hamstrung during Christmas break to back or bin the deal.

If DNO, which already has 29.9% of its target, doesn’t win shareholder support for its bid it must walk away for a year. But Mossavar-Rahmani issued this warning: “Even if DNO's offer lapses or is allowed to lapse, DNO is not going away.” He said for too long shareholders had given the Faroe board of directors a “free pass”.

Away from bid moves, explorer Amerisur Resources PLC (LON:AMER) also jumped on Wednesday on good news for investors from Colombia where its latest well flowed at 4,530 barrels a day during a short-term test.

The oil brought to the surface was a light crude. At almost 36 degrees API it wasn’t quite as light as West Texas Intermediate or Brent, but lighter than the black stuff unearthed from Saudi Arabia’s main fields. Intercepted during the drilling of Indico-1, which began in November, was a net 209-foot oil column.

Significantly, there is no indication from the drilling of oil-water contact, which would signify the vertical extent of the oil bearing zone. 

Amerisur was targeting the same play as the successful Mariposa-1 well, which in May 2017 flowed at a stabilised rate of 4,601 barrels per day of 40.8 degree API oil in a natural flow from a limited perforation interval. The long-term test of Mariposa has seen the well plateau at 3,200 barrels.

Meanwhile, Victoria Oil & Gas PLC (LON:VOG) confirmed this week that it has now formally secured its 75% ownership stake in the Matanda PSC, which lies adjacent to the company’s flagship Logbaba concession.

It said, in a statement, that its Gaz du Cameroun subsidiary received a decree signed by Cameroon President Paul Biya on 17 December which authorised the transfer of interest which was assigned via the company’s agreement with Glencore.

Matanda spans some 1,235 square kilometres, more than 60 times larger than Logbaba. It covers both onshore and offshore areas (with the North Matanda offshore believed to host some 150bn cubic feet of gas resources, with upside potential seen at around 1 trillion cubic feet).

Onshore, the project area hosts prospects close to the Logbaba gas pipeline network and these areas will be the priority. Here, the company sees a total of 23 prospects and leads, with a total resource potential of around 1.3 trillion cubic feet. It is anticipated that any new discoveries can be developed “efficiently and promptly”.

Elsewhere, Reabold Resources PLC (LON:RBD) told investors that the VG-4 well has been drilled successfully at the West Brentwood field.

The field is located in California and the new well has been drilled down to a depth of 4,700 feet, encountering significant oil and gas shows. Subsequent logging analysis confirmed the presence of the net pay.

It is now planned that the well will be completed and brought into production. Reabold holds a 50% interest in the well which is now set to generate revenue.

Finally, on Friday, Independent Oil and Gas PLC (LON:IOG) issued a statement regarding its loan facilities and its financing partner London Oil & Gas PLC (LOG) as UK regulator the Financial Conduct Authority conducts an investigation into the affairs of London Capital and Finance PLC (LCF).

The FCA has ordered that LCF may not deal in any way with its assets and must cease conducting all regulated activity, without prior consent from the FCA.

In a stock market statement, IOG said it wished to clarify that it had no direct relationship between LCF and IOG. The North Sea hydrocarbons firm said that LCF is not a shareholder in LOG, but, it is a lender to LOG which is, in turn, a lender to IOG.

IOG added that the £38.55m loan facility (under which some £30.7mln has been drawn) doesn’t allow LOG any mechanism to demand early repayment and it is only repayable within 36 months of drawdown. Some £3.05mln is due to be repaid to LOG in the next six months, the IOG noted.

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