Headlines
• 88 Energy (LON:88E/ASX:88E) – Prospectivity Enhanced: Today news on the nearby drilling results, while not specifically related to their acreage, enables the Company to its pencil, and will only improve the chances of success. Now all that is required it to drill it.
• Aminex (LON:AEX) – Creditors Allow Ops to Work Their Magic: The latest incarnation of the management team, led by Messers Bhattacherjee et al, have provided the technical backbone to enable the Company to deliver on its long known promise, and although the latest loans have been a headwind that they have focused on delivery is to their credit.
• Rose Petroleum (LON:ROSE) – Time to Start Testing Shale Prospectivity: Today's news on the shales' prospectivity is a positive and makes the potential size of the prize that much greater, but just how much greater it is will depend on the next suite of tests, primarily those which are aimed at stimulating flow.
News Items
88 Energy (LON:88E/ASX:88E) – Prospectivity Enhanced
There is a saying in oil and gas that the best place to find oil is where it already exists, and in highlighting the news from Repsol's JV, it would certainly indicate that Icewine is in the right area.
While closeology is not an acceptable tool per se, what it does do is allow you to significantly de-emphasise the risk of one particular category. Of the four key risk categories (source, seal, trap, reservoir) it enables the Company to draw some understanding to apply in reducing the risks associated with all four categories. Furthermore, we believe that it also enables the Company to specifically reduce the source and reservoir categories, as the remainder are more localised effects.
Today news on the nearby drilling results, while not specifically related to their acreage, enables the Company to its pencil, and will only improve the chances of success. Now all that is required it to drill it.
Aminex (LON:AEX) – Creditors Allow Ops to Work Their Magic
While there are a number of moving parts to today's news, the main take away from the news is that the Company's creditor has provided it with some latitude in repayment of the outstanding loan. It also contains a clear indication that there is some uncertainty as to when the revenues will start, but even allowing for a conservative approach, we believe that is should be on stream (generating revenues) by 2016.
This breathing room provides the technical team with the space to be able to complete the commissioning phase with sufficient space so as to ensure that everything is addressed appropriately, rather than rushing to complete.
There has been a long road to get to this point, with a number of obstacles, not least the signing numerous loan agreement without the surety of cash flow to meet the repayment. Finally, however, the Company is at a point where it will be generating revenue and free cash flow against which it can borrow, as well as start to look to the future.
The latest incarnation of the management team, led by Messers Bhattacherjee et al, have provided the technical backbone to enable the Company to deliver on its long known promise, and although the latest loans have been a headwind that they have focused on delivery is to their credit.
Rose Petroleum (LON:ROSE) – Time to Start Testing Shale Prospectivity
Today's AGM update provides us with an indication that the shale cores taken during the last drilling campaign have exceeded management expectations, and those of the competent person (RyderScott). While this may lead to a further resources upgrade, the key elements are (i) is it mature; and (ii) will it flow commercially.
The next stage will be the most important, as they will have to target the prospective horizons and induce meaningful flow. In this respect, the Company is ideally placed, geographically, and is commencing the project at the right time in the cycle, as there is a highly liquid rig and services market, which has too much capacity for the current activity levels, meaning cheaper services.
With shales, no matter how prospective they look on paper, the proof of the pudding is always in the eating, and shales require higher investment that their conventional peers to get them to a point at which if they are going to be commercial, they are.
Today's news on the shales' prospectivity is a positive and makes the potential size of the prize that much greater, but just how much greater it is will depend on the next suite of tests, primarily those which are aimed at stimulating flow.