Headlines
• Empyrean Energy (LON:EME – 7p) – Growth at the Drillbit: While bears might point towards the fact that Empyrean has only a small interest, and it therefore dragged along with the operator, it must also be recognised that the management team took the decision to maintain its position all the way along, which to our mind should elicit the support of old and new shareholders alike.
• Trinity Exploration & Production (LON:TRIN – 6p) – There But For the Grace of the Creditor: We believe that the company will be provided with a lifeline, at the expense of equity holders, but the approach the Company needs to take has to change, or it will be a second chance it doesn't deserve.
• Amerisur Resources (LON:AMER – 29p) – Play the Loto!: While further testing will be required (including flow tests) before any decision can be made as to the potential contribution the discovery could make to the Company, it is still a solid step forwards.
• Circle Oil (LON:COP – 5p) – 2015 Drilling Campaign a Success: Despite the headwinds of the oil price environment, the Company has continued to solidify its foundations, such that it can now look forward to 2016 with increasing confidence. We will be keen to see the programme and strategy for the coming 3-year period, as we believe that with the foundation that it has, coupled with the current oil price environment, that it now has all the options open to it.
News Items
Empyrean Energy (LON:EME – 7p) – Growth at the Drillbit
The Company has today released an update on the reserves and resources associated with its Sugarloaf AMI. While drilling can always increase resources, what deserves recognition here is the fact that against the backdrop of a decline in oil prices in the period December 2014 to June 2015, the 2P reserves have increased by ~11.6%.
What this clearly demonstrates is not only the quality of the opportunity that is presenting itself at sugarloaf, but that even in a weakening oil price backdrop, the drillbit is still the most potent tool for growing value.
While bears might point towards the fact that Empyrean has only a small interest, and it therefore dragged along with the operator, it must also be recognised that the management team took the decision to maintain its position all the way along, which to our mind should elicit the support of old and new shareholders alike.
Trinity Exploration & Production (LON:TRIN – 6p) – There But For the Grace of the Creditor
Today the Company has announced an extension from its creditor to the 16th of October. Making a fanfare of such a short period of time means one, or both, of two things, that: (I) they are in such deep trouble that even small amounts breathing space are important; and/or (ii) there is a solution in the wings.
Either way trinity has fallen foul to the most basic of tenets, that you must secure the cash flow today before you think of tomorrow. We have previously said that:
The coming weeks and months will be a tense time for the Company and its owners and the outcome not altogether certain. We believe that there is a solid operating core at Trinity, and if the management are provided with additional time, we believe that they would be able to turn around the existing situation. Until then, we believe that the best that the Company can hope for is to tread water.
and this respect, given the resources at its disposal, and it's once preeminent position in Trinidad, the Company has singularly failed to capitalise on this position.
We believe that the Company will be provided with a lifeline, at the expense of equity holders, but the approach the Company needs to take has to change, or it will be a second chance it doesn't deserve.
Amerisur Resources (LON:AMER – 29p) – Play the Loto!
Today's announcement details that the Company has had a successful conclusion to the first well in its appraisal programme. Scant details have been provided as to the potential size of the Loto discovery, let alone opining on its commerciality, it is still a solid step forwards.
While further testing will be required (including flow tests) before any decision can be made as to the potential contribution the discovery could make to the Company, it is still a solid step forwards.
Circle Oil (LON:COP – 5p) – 2015 Drilling Campaign a Success
Today's news that the Ksiri West-A exploration well on the Sebou Permit has reported a discovery, and is awaiting testing before being connected to the existing production infrastructure, is good news for the Company and marks the penultimate well in what has been a successful 2015 campaign, even if the last well in the campaign, Caid El Gaddari-13, isn't as successful as prognosed.
This successful programme is also a fitting conclusion to Prof Green's time at the helm, under whose stewardship and guidance this programme was shaped and developed; next year's programme will be the first without his full time guidance.
Despite the headwinds of the oil price environment, the Company has continued to solidify its foundations, such that it can now look forward to 2016 with increasing confidence. We will be keen to see the programme and strategy for the coming 3-year period, as we believe that with the foundation that it has, coupled with the current oil price environment, that it now has all the options open to it.
We may provide a further update on one, or all, of the stories above later today. However, if there is anything that you would like to discuss, please feel free to contact us.