Headlines
• TomCo Energy (LON:TOM) – Redleaf’s Commercial Demonstration the Next Step: The Board has moved to reduce costs, but is inevitable that there will be further fundraisings before 2017, and especially once development begins – oil shale development is a high cost capital intensive business, and the fact that the Company has been able to turn down its cost base during these relatively low oil price environments is a significant positive.
• Frontier Resources (LON:FRI) – HOLD (3.00p) – Pressure Relieved… For Now: We are reiterating our HOLD Recommendation and 3.00p Target Price, as we believe that the relief rally that will accompany a successful farmout will be significant. The next 6 to 12 months are now going to be crucial.
• Providence Resources (LON:PRV) – Positive Update, But a More Pressing Issue Exists: Whilst we have commented that Providence Resources doesn’t just revolve around Barryroe, it is still the most significant thought when thinking about the Company. Unfortunately, and until such times as the Company is able to complete a farmout, it will remain at the forefront of investors’ minds – especially as it is awaiting development.
News Items
TomCo Energy (LON:TOM) – Redleaf’s Commercial Demonstration the Next Step
News that TomCo has received its groundwater discharge permit, under ordinary circumstances, would be a positive step forward. However, before the Company can access the resources within its licence boundaries, its technical partner (Redleaf) first have to prove commerciality of their “Ecoshale” technology.
Redleaf disclosed earlier this year that the prototype, which was due to be constructed in 2015/2016, has now been delayed until 2017. Is important to remember that a failure by Redleaf to prove that it’s technology works commercially does not mean the end of the road for TomCo. There are still a range of technologies that can be applied to liberate the encapsulated oil from the shale.
The Board has moved to reduce costs, but is inevitable that there will be further fundraisings before 2017, and especially once development begins – oil shale development is a high cost capital intensive business, and the fact that the Company has been able to turn down its cost base during these relatively low oil price environments is a significant positive.
Frontier Resources (LON:FRI) – HOLD (3.00p) – Pressure Relieved… For Now
News that the Company has been able to raise sufficient funds to meet its working capital requirements has relieved no small amount of pressure. Now that that has been achieved, it is time once again to focus on the farmout of its Omani acreage.
We continue to believe in the inherent value within its Omani acreage, and believe that given time it would be able to secure a strong farmout deal. However, given that time is pressing and financial resources are becoming stretched, we believe that this will be used as leverage against the Company.
We are reiterating our HOLD Recommendation and 3.00p Target Price, as we believe that the relief rally that will accompany a successful farmout will be significant. The next 6 to 12 months are now going to be crucial.
Providence Resources (LON:PRV) – Positive Update, But a More Pressing Issue Exists
Today’s technical update on licence 2/14 is a timely reminder of the fact that the Company doesn’t just revolve around Barryroe. Whilst further work will be required to generate a lead inventory, which can then be high graded into prospects and on into drillable targets, this work confirms the initial prospectivity.
Whilst we have said that Providence Resources doesn’t just revolve around Barryroe, it is still the most significant thought when thinking about the Company. Unfortunately, and until such times as the Company is able to complete a farmout, it will remain at the forefront of investors’ minds – especially as it is awaiting development.