Headlines
• Mosman Oil & Gas*** (LON:MSMN – 1.15p) – STEP Away: In our valuation of the Company, we had only considered the assets currently in its portfolio; we had not consolidated any value for the STEP transaction. Consequently, our Target Price remains 3p, some 160% above the current price; our Recommendation remains BUY.
• Nighthawk Energy (HAWK LN – 1.15p) – Production Update Curious: We are becoming concerned that since the Company relocated itself back to the US, it has started to loose, focus and vision, or may be just the ability to effectively communicate the same outwards. Either way, we believe that the Company needs to engage with the market and be clear about its strategy, where it is going from here, and what levers it can pull in this market to get there. Currently, we believe that this company is now in a grey area, one in which the Company's owners could face dilution from these levels.
• Aminex (AEX LN – 1.38p) – So Close You Can Almost Taste It...: While we believe that these commissioning checks could have been completed ahead of this date, especially the flow assurance tests, this is good news, and the first revenues will bring to a close what has been a long and often painful saga for the Company's owners. However, the Company has to actually deliver this time, or risk being the company that cries wolf.
News Items
Mosman Oil & Gas*** (LON:MSMN – 1.15p) – STEP Away
Today the Company announces that it is withdrawing from the South Taranaki Energy Project ("STEP") due to the adverse price environment. We believe that this is the right thing to do, especially given the onerous decommissioning conditions that the New Zealand government was due to apply in order to secure its approval. It's a shame as the facility will now most likely close and the employees will lose their jobs.
Furthermore, given that this asset acquisition would have made the Company a fully fledged producing operator in New Zealand, we believe that it shows no little discipline to walk away from the transaction at this stage.
Given that the Company has raised funds in anticipation of completing this transaction, we believe that the next steps have to be clear and focused on value creation, and not just permitting the Company to tread water.
In our valuation of the Company, we had only considered the assets currently in its portfolio; we had not consolidated any value for the STEP transaction. Consequently, our Target Price remains 3p, some 160% above the current price; our Recommendation remains BUY.
Nighthawk Energy (LON:HAWK – 1.15p) – Production Update Curious
We are not sure what to make of the Company's short announcement today, simply because it makes no mention of the failed drilling, or rather, specifically, what programme the failed drilling was part of.
That it is down only 7% is good news, but we are not sure if this is a fall of 7% in the period, but stabilised and rising, or a 7% decline over the period and falling. Although we would not have expected the Company's portfolio to reflect such a decline over the year had the sole focus been workovers and accessing behind pipe reserves, so we would be curious to know.
Nevertheless, we believe that today's news has been incompletely presented. We would have liked to have seen the entry and exit rates, as the average is a measure of the decline in existing production offset by new production and how long it has been online in the year.
We are becoming concerned that since the Company relocated itself back to the US it has started to lose focus and vision, or maybe just the ability to effectively communicate the same outwards. Either way, we believe that the Company needs to engage with the market and be clear about its strategy, where it is going from here, and what levers it can pull in this market to get there. Currently, we believe that the Company is now in a grey area, one in which could see the Company's owners face dilution from these levels.
Aminex (LON:AEX – 1.38p) – So Close You Can Almost Taste It...
The Company has today provided further indications that testing and final commissioning checks will enable it to deliver first gas from Kiliwani in the middle of February. Of more interest to us is the reasoning behind cancellation of the Bowleven deal, which we believe was a win/win for all concerned.
While we believe that these commissioning checks could have been completed ahead of this date, especially the flow assurance tests, this is good news, and the first revenues will bring to a close what has been a long and often painful saga for the Company's owners. However, the Company has to actually deliver this time, or risk being the company that cries wolf.