Headlines
In Brief:
Tower Resources (LON:TRP – 0.08p) – Diversification a Wise Move
President Energy (LON:PPC – 7p) – Trading Update Underlines Sharpness of the Pencil
Trinity Exploration and Production (LON:TRIN – 3.13p) – Loan Update
Northcote Energy (LON:NCT – 0.07p) – Step in the Right Direction
In Brief
• Tower Resources (LON:TRP – 0.08p) – Diversification a Wise Move: for an exploration company, results are only really about one element, cash, or more specifically, how much you have and how quickly you’ll use it, and that is no different for Tower today. There is a healthy enough balance currently, a fundraising in the offing, but with further diversification away from its historic frontier basin (Namibia) continuing, while it is a is a wise move, especially given the mixed results that there have been to date, there needs to be a measure of near to medium term cash generation thrown in to the mix. We believe that the management team have proven themselves adroit at managing the Company’s risk profile and we see the same approach for the Company going forwards.
• President Energy (LON:PPC – 7p) – Trading Update Underlines Sharpness of the Pencil: the focus on cost control continues to add to the sense that management is as focused as a company short of cash flow on costs, despite a comfortable funding arrangement with the Levine group of companies. However, the departure of Ben Wilkinson may cause some concerns that the checks and balances are in place and that the chairman doesn’t exert control over and above that which is appropriate over the Company. That said, we think that he results of the arrangement, whatever it is, have started to differentiate president from its peers, especially as it has felt confident enough to state that it does not need any equity market funding, and that it is currently operating well within its headroom. We believe that the Company’s investors will be happy with today’s update, and we believe that the Company is one of those that will emerge from the current oil price environment is a stronger position that it went in to it.
• Trinity Exploration and Production (LON:TRIN – 3.13p) – Loan Update: While the loan note’s extension itself isn’t the real news here, what’s really happening is that the buyer of TRIN’s assets is either looking to withdraw or reduce the transaction price, which effectively means that what’s left after repaying the loan will not be enough to have a business that will survive.
• Northcote Energy (LON:NCT – 0.07p) – Step in the Right Direction: Today’s from the Company regarding the latest flow test on Shoats Creek’s development/appraisal wells (the Lutcher Moore #20) sounds positive, and would suggest that there is a longer term development, that could also provide an engine to further growth outside the Company. As such, this is also the first step in building an understanding of the value of Shoats Creek to the Company’s portfolio, with the CPR providing the next, and most substantial, independent verification of the scale of the opportunity, but we will still require the assistance of the management team in order to put it in to context. This is to come pending the publication of the CPR, but we believe this announcement is promising.