Headlines
News Items
Trinity Exploration and Production (LON:TRIN) – LGO Tie-up Would Be A Good Step Forwards: We believe that there would be benefits for both sets of shareholders to a TRIN/LGO merger, LGO's would gain an offshore portfolio of assets and financing, Trinity's would gain access to the guidance of the excellent Ritson team. Failing that, Trinity's shareholders face an unencumbered outlook while LGO's face a sticky patch, but ultimately we believe the difference is in the long term outlook, where LGO has the management to be able to deliver.
In Brief
LGO Energy (LON:LGO) – Funding Review Now Strategic
Volga Gas (LON:VGAS) – Exploration Well Drilling
Independent Oil and Gas (LON:IOG) – Funding and Drilling
RusPetro (LON:RPO) – Two Positives
JKX Oil and Gas (LON:JKX) – Operations Positive, Still Overshadowed
News Items
Trinity Exploration and Production – LGO Tie-up Would Be A Good Step Forwards
LGO's cancellation of its Tabique SPA is the latest in a line of issues that have plagued the company as its loan get extended pending the completion of the sale process associated with the disposal of its onshore portfolio for ~$20mm.
We have said previously that:
- LGO is in a fortunate position in that ninths the technical expertise to be able to leverage further funding, but behind it is still the fact that the operational excellence of the LGO team is not matched on the finance side, and this needs to be addressed.
and despite the difficulties that LGO is facing, which has precipitated the current strategic review (see below), technically and operationally, we see nothing to dissuade us that the LGO team to be technically and operationally more competent
We believe that the combination of financial resources in Trinity (post the sale process and debt pay down) and LGO's management team would create a well-funded Trinidadian focused company capable of growing significantly beyond the combined footprint of each of the companies individually and achieving sustainability, even at these oil prices.
We believe that there would be benefits for both sets of shareholders to a TRIN/LGO merger, LGO's would gain an offshore portfolio of assets and financing, Trinity's would gain access to the guidance of the excellent Ritson team. Failing that, Trinity's shareholders face an unencumbered outlook while LGO's face a sticky patch, but ultimately we believe the difference is in the long term outlook, where LGO has the management to be able to deliver.
In Brief
LGO Energy – Funding Review Now Strategic: The Company has today disclosed that what was previously a funding review is now a strategic review. While we don’t doubt that it will be successful, due to the underlying quality of the management team and assert base, the question will be whether the new owners allow Neil Ritson and his team to spread their time as thinly as it is currently. Perversely, this is more worrying news for Solo (SOLO LN) and UK Oil & Gas (UKOG LN).
Volga Gas – Exploration Well Drilling: It is pleasing to see the Volga team back with the drillbit. We believe that Volga, along with the Urals team, are two of the standout Russian operating teams in the market. While the impact on the shares is likely to be negligible, due to the quietness of the management team and general environment in and around Russia, we believe that the company is well managed.
Independent Oil and Gas – Funding and Drilling: In what has been a difficult period to get to this point, the company now seemed to have resolved the outstanding near term funding issues. While there is likely to be further funding requirements, we believe that it should be from a higher base and with a brighter outlook.
RusPetro – Two Positives: The licence extension and arbitration win against Schlumberger are both positive, the first obvious, the second provides much needed liquid resources, provided that Schlumberger pays quickly. The only thing required to complete the trifecta is a strategy to rehabilitate production and tackle the debt repayment/renegotiation that looms over the company thanks to the disastrous management of Wolcott et al.
JKX Oil and Gas – Operations Positive, Still Overshadowed: the Management team continue to look after the business, and in the face of fiscal terms that have been regressive and a political situation that can be best described as volatile. It is often said that if management look after the business that the share price will look after itself, and in this respect, this is all they can do, as the geopolitical events are the only thing checking the progress of the company currently.