Daily Oil & Gas Monitor
Providence Resources (LON:PVR) – 2013 to be Better: Today’s 2012 results announcement officially closes what has been a solid year of progress for the Company, and one which started its transition from, an explorer to a developer. 2013 will be a year of continued transition, and promises it to continue to progress towards being a producer, and hence providing it with added flexibility to manage its forward programme, and on its terms. While there will inevitably be a funding round to get the assets into development (~€17M in cash at yearend 2012), we believe that the Barryroe development, coupled with the further prospectivity in its exploration and appraisal acreage are fast becoming a compelling valuation story.
In this news:
CELTIC SEA BASIN - BARRYROE OIL FIELD
• Drilling and testing of 48/24-10z well with flow rates of 3,514 BOPD and 2.93 MMSCFGD (c. 4,000 BOEPD), which materially exceeded pre-drill expectations. (March 2012)
• Additional gas interval also successfully tested
• Competent Person's Report (CPR) on Basal Wealden Sands issued by leading international audit firm Netherland Sewell & Associates Inc (NSAI) (April 2013)
• Audited figures validate the significant volumetric and recoverable resources. Total on block audited figures (April 2013)
o 2C STOIIP of 1.048 billion barrels
o 2C Recoverable Resources of 311 MMBO
• Farm out process has now commenced
SOUTH PORCUPINE BASIN - DUNQUIN OIL/GAS PROSPECT
• Commencement of drilling operations (April 2013) with results expected later this summer
• Forward Plan - Await drilling results
PORCUPINE BASIN - SPANISH POINT GAS CONDENSATE FIELD
• Pre-drill site survey completed (August 2012)
• Farm in by Cairn Energy in to FEL's 2/04 and 4/08, and LO 11/2 (May 2013)
o Revised Equity levels - Cairn 38.0%, Providence 32.0% , Chrysaor 26%, and Sosina 4.0%
• Farm in calls for up to 2 wells to be drilled & 3D seismic on LO 11/2
o Cairn to become Operator.
San Leon Energy* (LON:SLE) – Ingredients in Place: Today’s announcement that Talisman is refocusing on core assets will undoubtedly be interpreted negatively. However, what has been overlooked is the fact that the Company has continued to make progress on its polish assets. We continue to believe that the technical questions relating to the fraccing of the tighter horizons will be resolved, and the recent partnership with Haliburton and today’s with United Oilfield Services is the more salient joint agreements. With further support added by the liquids prospectivity in the interspersed conventional reservoirs, the commerciality barrier is becoming for obtainable. While Poland is an important part of the Company’s exploration portfolio there are other assets. In fact, of our 25p Target Price, which we reiterate today, we are carrying 7p for Albania, 3p for the appraisal assets, and 4p for the exploration potential. SLE as a multi-nodal exploration company, with a well balanced portfolio of geologic risk types. Following this news, we are reiterating our BUY Recommendation and 25p Target Price.
In this news:
• Acquires Talisman interests in Poland's Baltic Basin
• San Leon retains assets in Talisman Energy Polska Sp. z o.o. ("Talisman Polska") valued at an estimated US$10M
• San Leon regains operatorship of Baltic Basin concessions
• Two-staged vertical well fracture in the Lewino-1G2 well planned on the Gdansk W concession in Q2 2013.
Trinity Exploration & Production (LON:TRIN) – Outlook & Delivery Key: Today’s maiden results announcement for the enlarged Trinity group are largely irrelevant as a lot of what is contained within it has been well flagged, highlighted or discussed. What is more important now is the delivery against the plan outlined in the recent merger and fund raising. Production is currently at ~5m bpd, and on an improving trajectory, but what is key is the fact that to attain sustainability, the Company needs to accelerate its programmes. With a strong management team and available funds, theoretically all is in place that needs to be in place; we will keenly await the news of delivery.
In this news:
• Bayfield Energy Holdings plc ("Bayfield") announced that it was to be acquired by Trinity Exploration & Production Limited ("TEPL") on 15 October 2012
• The transaction was completed on 14 February 2013 and Bayfield was renamed Trinity Exploration & Production plc (the "Enlarged Group")
• The Enlarged Group successfully completed a placing of new shares in February 2013 raising £57M (before expenses) to accelerate delivery of a combination of development and high impact exploration drilling
• The Enlarged Group is the largest independent exploration and production company in Trinidad & Tobago with net current production of c. 3,900 bopd and 36 mmbbl in net 2P reserves at the end of 2012 (includes an un-audited upgrade to onshore reserves of over 4 mmbbl)
• The Enlarged Group is targeting a 2013 exit rate production of 5,000 bopd
• Revenue of US$36.2M (2011: US$22M)
• Loss before tax of US$23.9M (2011: US$17.2M) after write off for unsuccessful exploration costs of US$21.9M
• Loss after tax of US$13.0M (2011: US$14.3M)
• Capital expenditure for the year was US$69.8M (2011: US$41.3M) comprising Trintes field development costs (US$22.9M) and exploration costs (US$46.9M)
• Cash and cash equivalents at year end were US$9.7M (2011: US$59.4M)
• Average gross production from the Trintes field increased by 43% to 1,715 bopd (2011: 1,202 bopd)
• Net 2P reserves at Trintes increased by 25% from 19.3mmbbl at December 31, 2010 to 24.1mmbbl at June 30, 2012 (audited by Gaffney Cline Associates)
• EG-8 exploration well suspended as an oil and gas discovery in March 2012 with estimated gross recoverable resources of 32 mmbbl and 69 Bcf of gas
Post period-end highlights
• Six onshore development wells drilled to date. Four wells have been brought onstream with average initial production rates of 150 bopd per well (versus budget of 50 bopd)
• New operating team installed at Trintes and infill drilling programme commenced
• The exploration campaign on the Galeota Block is expected to commence in Q3 2013 using the Rowan Gorilla III (RG III) drilling rig. A Rig Sharing Agreement has been signed by Trinity, Repsol, EOG and Centrica with Trinity committing to take one rig slot using the RG III after EOG's 2013 drilling campaign is completed
• Discussions underway with holders of the adjacent block on appraisal plans for the EG-8 discovery. These discussions should result in an Unitisation Agreement across the discovery with the expectation that an appraisal well will be drilled in the near future.