Headlines
• Union Jack Oil* (LON:UJO) – BUY (0.68p) – Increase in Biscathorpe Underlines Strategy: Today’s news underlines the extent to which management discipline is providing the Company with adequate fiscal flexibility to pursue additional asset interests. The Company has long committed to identifying me a term assets at a variety of points along the exploration/development cycle. We believe that today’s news is a positive for shareholders, and as such we are upgrading our Target Price rises to 0.70p and reiterating our BUY Recommendation.
• Clontarf Energy (LON:CLON) – Union Acquisition Takes Peruvian Block Forwards: While operationally today’s news doesn’t make a significant difference to the Company’s immediate outlook, we do believe that it should provide some positive impetus to the stock, if only to offset some of the headwinds.
• Lansdowne Oil and Gas (LON:LOGP) – Spud Date Soon?: Junior oil and gas companies only grow at the drillbit, and to this end, we see the signing of the drilling contract as crystallising a potential point of revaluation. We believe that investors should be pleased with today’s news.
• Sirius Petroleum (LON:SRSP) – Asset Interest Retained, But Will it Matter to Shareholders?: Today’s news is a significant positive and should, under ordinary circumstances, have lifted the shares. However, the accompanying statement regarding cost and financing more than offset any positive impact that this may have had. From this point, we cannot see how existing shareholders can recover the value that has been lost.
• Independent Oil & Gas PLC (LON:IOG) – Out of the Fire, but Still in the Frying Pan: We have no doubt that the current difficulties that the Company is facing will be addressed given the quality of its underlying portfolio. However, we also have no doubt that the uncertainty until that point is reached will continue to weigh heavily on the shares.
• Tullow Oil (LON:TLW) – Tax Settlement Says more About Uganda than Tullow: On Tullow’s account, we believe that it has emerged from this particular spat positively, maintaining an open dialogue with the government, but not acquiescing to its demands – all of which, in our eyes at least, to its credit. There is no doubt that shareholders will be relieved to see this settlement drawn to a close.
News Items
Union Jack Oil* (LON:UJO) – BUY (0.68p) – Increase in Biscathorpe Underlines Strategy
Today the Company announces that is increased it working interest in the Biscathorpe asset from 12% to 20%. The Company originally acquired a 10% economic interest in PEDL253 in March 2013 on a 2 for 1 carry basis; union Jack’s additional interest has been carried out under the same basis.
Biscathorpe was initially discovered by BP in 1987, when the Biscathorpe-1 well penetrated a thin basal sandstone unit which has subsequently been interpreted to have been oil bearing. The sand unit is expected to thicken down-dip from the crest of the structure and there is also potential for stratigraphic trapping to the west which could increase the expected gross prospective resources of 14mm bbl.
Today’s news underlines the extent to which management discipline is providing the Company with adequate fiscal flexibility to pursue additional asset interests. The Company has long committed to identifying me a term assets at a variety of points along the exploration/development cycle. We believe that today’s news is a positive for shareholders, and as such we are upgrading our Target Price rises to 0.70p and reiterating our BUY Recommendation.
Clontarf Energy (LON:CLON) – Union Acquisition Takes Peruvian Block Forwards
News that Union Oil and Gas has acquired the outstanding interest that it didn’t already own in Peru’s Block 183 now makes the Company’s exploration of the block more likely. Whilst the Company’s exposure is limited to $5mm, irrespective of the size, this is still a step forward for the Company.
While operationally today’s news doesn’t make a significant difference to the Company’s immediate outlook, we do believe that it should provide some positive impetus to the stock, if only to offset some of the headwinds.
Lansdowne Oil and Gas (LON:LOGP) – Spud Date Soon?
The Company has today announced that the operating group contracted Diamond Offshore Drilling to drill a well on the Midleton Prospect during August 2015. While further work will be required before a target location and well-designed can be finalised, this is a significant step forward for the group, and Lansdowne in particular, which has recently faced headwinds.
Junior oil and gas companies only grow at the drillbit, and to this end, we see the signing of the drilling contract as crystallising a potential point of revaluation. We believe that investors should be pleased with today’s news.
Sirius Petroleum (LON:SRSP) – Interest Retained, But Will it Matter to Shareholders?
Today’s news that the Company has secured the expertise of John Taylor and Alan Stein is a significant positive, it is offset to some extent by the extent of the dilution that will be experienced by shareholders.
Whilst we can applaud management’s attempts to maintain their working interest in the Ororo asset, there comes a point where the remedy is worse than the cure, which we believe if it hasn’t already been arrived at, is certainly very close.
Today’s news is a significant positive and should, under ordinary circumstances, have lifted the shares. However, the accompanying statement regarding cost and financing more than offset any positive impact that this may have had. From this point, we cannot see how existing shareholders can recover the value that has been lost.
Independent Oil & Gas PLC (LON:IOG) – Out of the Fire, but Still in the Frying Pan
While news that a company has sufficient financing to meet its near-term obligations should be welcomed positively, within this announcement the Company has said that it has sufficient financial resources until 4 September, the date on which its Darwin facility is due to be repaid, which in real terms is no time at all.
We have no doubt that the current difficulties that the Company is facing will be addressed given the quality of its underlying portfolio. However, we also have no doubt that the uncertainty until that point is reached will continue to weigh heavily on the shares.
Tullow Oil (LON:TLW) – Tax Settlement Says more About Uganda than Tullow
Today’s news that Tullow has settled its tax dispute with Ugandan authorities will come as a relief to the Company as well as existing shareholders. While tax disputes with host governments are nothing new, the fact that the oil companies took all of the risk in opening up a new frontier and invested under one regime, which was then subsequently changed once a successful discovery had been made, reflects badly on the host government, and raises the geopolitical risk associated with any future investment.
On Tullow’s account, we believe that it has emerged from this particular spat positively, maintaining an open dialogue with the government, but not acquiescing to its demands – all of which, in our eyes at least, to its credit. There is no doubt that shareholders will be relieved to see this settlement drawn to a close.