Northland Capital Partners View on the City - Global Energy Development, Magnolia Petroleum, Pendragon Group


Global Energy Development (LON:GED) – BUY*: Termination of farm-out   

Market Cap: £17.5m; Current Price: 48.5p; Target Price: Under Review


Everest informs Global of decision to terminate farm in due to oil price

The company has been informed that Everest Hill Energy Group's wholly owned subsidiary has exercised its option to terminate the farm out agreement relating to the Bolivar and Bocachico Association Contracts. The decision is owing to the significant decline in the oil price.

Everest is released of all future obligations relating to the contracts and its 50% share in the licences revert to Global.

Magnolia Petroleum (LON:MAGP) – CORP: Q4 Update


Market Cap: £7.2m; Current Price: 0.8p


Q4 Update: Continued strong activity in Oklahoma

Total producing wells at the end of Q414 rose to 176 with 14 added in the fourth quarter and a further 48 wells at various stages of development.

The period saw strong IPR rates from six Devon Energy in-fill wells that added 96 bopd IPR.

Production from the 100%-owned Roger Swartz-1 well more than doubled to 12.2 bopd following a low cost (£79k) stimulation programme and is expected to pay back in less than a year.

Secured permits to drill two vertical well in Oklahoma; Roger Swartz 2 and the Shimanek 2 targeting conventional payzones. Cost of the new wells is estimated at $700k each and Magnolia will have a 94% working interest, 76% net revenue interest.


Sunrise Resources (SRES.L) – CORP: Bay State Silver project update

Market Cap: £2m; Current Price: 0.3p


Initial samples demonstrating high silver grades and presence of zinc

Sample results received from the second round of sampling focused on the Chihuahua Splay Buckeye and Lincoln vein systems.

Two samples that represented an aggregate 3.5m width from the stockwork zone between the two veins averaged 403g/t Ag.

Base metal analysis indicates high zinc contents.

Best chip sample result is 1.5m at 6.3% Zn, 6.6% Pb, 0.3% Cu, 0.16% W and 579g/t Ag


Eland Oil & Gas (LON:ELAL) – BUY: $75m facility 

Market Cap: £99m; Current Price: 68p; Target Price: Under Review


Secures $75m RBL facility

Eland has executed a reserves based lending facility for $75m with Standard Chartered Bank (SCB). The facility has a rate of 7.75% over LIBOR (currently 0.63%) and will be secured against OML40 and has a maturity of 4.5 years and is repayable quarterly from September 2016.

SCB has committed $35m and will lead the syndication arranged of an additional $40m expected to be completed in Q115. The facility will be accessible to Elcrest to continue to develop OML40 and for Eland’s general working capital.

Further reserves growth is expected to be reflected in the increased size of the RBL.

Draw down is subject to a number of conditions that the company expects to satisfy in the next few weeks.


Pendragon PLC (LON:PDG): Trading statement

Market Cap: £473m; Current Price: 33p


FY14 results ahead of expectations

On the back of a strong 3Q trading statement in October, the business this morning released another trading update which shows further progress in the 4Q. The Motor Division is ahead of prior year, used car performance is ahead of expectations, visits to Stratstone.com, Evanshaw.com and Quicks.co.uk is +19% YoY. Furthermore post-Christmas period web visits have increased by 36% with a 65% increase in tablet and mobile activity in the period. 

Management expects the year end debt to EBITDA ratio to be below the target range of 1.0x to 1.5x, which is highly encouraging news from a balance sheet perspective and this provides headroom to further expand the UK footprint.

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