Headlines
• Amerisur Resources (LON:AMER) – Loto a Lotto: There will undoubtedly be pressure on the shares following this news, which provides potential investors with a further opportunity to invest, as we believe that the Company is solid and well managed.
• Pantheon Resources (LON:PANR) – A Luxury Problem to Have, But Focus Must Switch to Cash Flow: All in all, we believe that the Company continues to make progress, and given that the existing business is solid, that there is a strong platform from which the Company can grow. However, to what extent the management can invest its resources to lever the Company to a position of sustainability before they run short of existing cash resources and require a down round is the key question as to whether investors should buy in now, or wait. That said, the need to test additional zones is a luxury problem to have, but the wider programme and future plan is more pressing.
News Items
Amerisur Resources (LON:AMER) – Loto a Lotto
Today's announcement from the Company regarding the Loto-2 well is disappointing, but at least there was some production, albeit accompanied by a significant amount of formation water. While today's news doesn't automatically junk the well, the prognosis given the data available does not look promising. Still, there are a number of other prospects that the Company can look at, which the drilling data from this well may help with.
There will undoubtedly be pressure on the shares following this news, which provides potential investors with a further opportunity to invest, as we believe that the Company is solid and well managed.
Pantheon Resources (LON:PANR) – A Luxury Problem to Have, But Focus Must Switch to Cash Flow
Today's update on the VOS-1 well is not only positive in that it has successfully intersected the target zones on prognosis, but that it has also intersected two further zones of potential pay. While we are given scant information, which is most likely a reflection of the limited information that the Company has at this stage too, we believe that the Company has identified these horizons as worthy of further investigation, especially as the Company is going to the trouble, effort and expense of conducting a side track to test it.
While, as the Company highlights, there is a long way to go before the horizon can be deemed commercial, given that the fact that the target horizons have been intersected successfully means that the barriers are lower than would otherwise be expected, as it will be limited to the costs involved in secondary completions, which is lower than a new well.
All in all, we believe that the Company continues to make progress, and given that the existing business is solid, that there is a strong platform from which the Company can grow. However, to what extent the management can invest its resources to lever the Company to a position of sustainability before they run short of existing cash resources and require a down round is the key question as to whether investors should buy in now, or wait. That said, the need to test additional zones is a luxury problem to have, but the wider programme and future plan is more pressing.