Headlines
• Union Jack Oil* (LON:UJO) – Moving up the Development Curve: Today’s news is positive for the Company as it brings production as well as additional prospectivity at Louth and North Somercotes. Ahead of undertaking the analysis of the acquisition, we are reiterating our BUY recommendation and 0.70p Target Price.
• Range Resources (LON:RRL/ASX:RRS) – Progress, but Not Want Needed at this Time: We have repeatedly stated that a strategic plan from the Company is required to understand where it is going, and, more importantly, how it will get there. Time is approaching where without that understanding, the management team look to be part of the problem, not the solution.
News Items
Union Jack Oil* (LON:UJO) – Moving up the Development Curve
Today's news detailing the acquisition of an interest in PEDL005(R) in Lincolnshire is a watershed for the Company as it not only brings additionally prospectivity in to the hopper, but migrates it from being an explorer in to being a producer.
While the cash flow is minimal at this stage, it must be remembered that the Company's overheads are also low, so the net resulting cash flow will offset the G&A spend.
We believe that this is positive news not just for the Company, but it's shareholders too, as the acquisition cost is being sunk in to the ground, which is significantly more efficient use of the funds.
Today’s news is positive for the Company as it brings production as well as additional prospectivity at Louth and North Somercotes. Ahead of undertaking the analysis of the acquisition, we are reiterating our BUY recommendation and 0.70p Target Price.
Range Resources (LON:RRL/ASX:RRS) – Progress, but Not Want Needed at this Time
Today's news that the Company is close to spudding its Canari North Exploration Well is good news in that it does not mention anything about further financing, but isn't what is needed. The Company is struggling under an increasing mountain of debt, and what is needed at this juncture isn't additional demands on its resources for exploration, but investment in wells which increase production, and therefore all important cash flow.
It is often said that a 1,000 mile March begins with a single step, but one automatically assumes that it’s in the right direction. Today's news is a step of sorts, but cash flow is more important than at any time in its past, and all focus needs to be on strengthening its balance sheet such that when it comes time to negotiate with creditors, the Company is in as strong a position as possible.
We have repeatedly stated that a strategic plan from the Company is required to understand where it is going, and, more importantly, how it will get there. Time is approaching where without that understanding, the management team look to be part of the problem, not the solution.