Headlines
Petroceltic International (LON:PCI – 8pS) – Curiouser and Curioser: In light of this latest turn of events, we believe that there now needs to be a consolidation amongst the remaining shareholders to apply pressure to worldview fully disclose its plans, and if it won’t, to form its own action committee to either get behind the current management, or propose an alternative.
In Brief:
Cairn Energy PLC (LON:CNE – 182p) – Senegal Update Poses more Questions – But All Good Questions
Solo Oil (LON:SOLO – 0.38p) – Upper’s Looking Up
Falcon Oil and Gas (LON:FOG– 4.75p/C$0.09) – Cash in Pocket, Something to Spend It On
Andes Energia (LON:AEN – 17p) – Becoming a Solid Company, Shame about its Argentinian Asset Base
LGO Energy (LON:LGO – 0.35p) – Termination of Offer Period and Goudron Update
News Items
Petroceltic International (LON:PCI – 8pS) – Curiouser and Curioser
Now that the Company have been successful in defending Worldview’s petition for Examinership, by appointing an Interim Examiner instead, which simplistically is one step short of Chapter 11 bankruptcy (to use US terminology) and Administration (UK).
Of course the need for this has only arisen due to Worldview’s petition for Examinership in the first place, and seeing as the management team have been close to completing all the necessary negotiations to refinance the Company, there is now a real question as to what it is that Worldview actually want, especially as it comes in hot on the heels of its 3p offer.
We are all for underperforming management teams being highlighted and questioned on their approach and understanding if they don’t/haven’t performed, like Messers Reed and Wolcott from Ruspetro, but Worldview, in interfering in such a direct way while the Company has largely completed the refinancing of their debt portfolio, is now beginning to look like something significantly less wholesome, and may be now a touch personal.
To our mind, the Worldview group have not effectively set out their case, or properly articulated what its management group would do differently, and with its association with Don Wolcott, who still has not disclosed what went wrong with Rusptro, and more specifically what he learned from the experience, how they will be able to deliver the plan they articulate better than the existing management team.
Unfortunately, the request for the appointment of an Examiner at such a delicate point in the Company’s refinancing plans, now looks like a calculated move to undermine the efforts that are currently underway and could be perceived as being a “beater” to drive the share price towards Worldview’s 3p offer – which represented a 83% discount to the prevailing share price at the time of the offer.
While investors in Petroceltic are currently underwater, we now believe that they would be less so were it not for the actions of Worldview. Furthermore, we now believe that Worldview is acting in a manner that is not conducive to the future of the Company, and in subpoenaing the appointment of an Examiner so soon after its 3p offer, it would now appear to suggest that it will be happy to crash the Company on the rocks to pick up its assets.
In light of this latest turn of events, we believe that there now needs to be a consolidation amongst the remaining shareholders to apply pressure to worldview fully disclose its plans, and if it won’t, to form its own action committee to either get behind the current management, or propose an alternative.
In Brief
Cairn Energy PLC (LON:CNE – 182p) – Senegal Update Poses more Questions - But All Good Questions: Today’s news is a solid step forwards for the Company’s Senegal asset, and all the information appears to point towards that all three wells are in the same series. The work now needs to focus around what this can tell the Company about whether they that series is homogenous or heterogeneous (like Chinguetti), which has a direct implication on the Reserves. Of course, if three such diverse wells are also found to be in some form of communication, not only would that bode well for the Reserves, but also the producibility of the series itself, as this would not only result in an increase in the series’ potential productivity, but could also result in a lower development cost than expected, due to a reduction in the number of wells required to drain the same area. All in al l, we believe that investors should be pleased with the way the Company has progressed since is ceased it wildcatting in Greenland, and the only dark cloud on its horizon, as far as we are concerned, is the spurious and questionable retrospective tax claim from the Indian government.
Solo Oil (LON:SOLO – 0.38p) – Upper’s Looking Up: Today’s Horse Hill news is the latest in a series of updates from the Company regarding the accumulation, and we believe that the fact that the Upper Portland flows ~168bpd naturally is a positive. All that is needed now is the tests to be completed and the accumulation assessed for commerciality, especially with respect to the recoverable reserves and optimal development scenario. While there is more work required, this is a positive step forwards.
Falcon Oil and Gas (LON:FOG – 4.75p/C$0.09) – Cash in Pocket, Something to Spend It On: Today’s update reminds the market of the position that the Company is in, especially with respect to the next steps in the Beetaloo. However, also in this update we are reminded of the Company’s participation in South Africa, which we believe is a basket case and fast becoming the new Zimbabwe, and as such, at this stage is only a liability. Still, net/net, we believe that the Company is in a strong position and 2016 promises to be not only active, but potentially transformational.
Andes Energia (LON:AEN – 17p) – Becoming a Solid Company, Shame about its Argentinian Asset Base: News on the Company’s assets today underlines the strong progress it has made in developing its asset base. However, the biggest concern we have doesn’t relate to the Company per se, it is the fact that it is primarily located in Argentina, where the risks all relate to the government. While we have been buoyed by the removal of the destructive Kirchner administration, we have a lingering suspicion that the incumbent, while promising a move in the right direction, actually won’t be able to achieve much. In short, management’s quality is beginning to overcome our reluctance to do business in Argentina.
LGO Energy (LGO LN – 0.35p) – Termination of Offer Period and Goudron Update: We take today’s news that the strategic review is coming to a close as a positive, and that the change of tack means that an alternative has started to present itself. While the Company remains in a tricky situation, we believe that there is now sufficient confidence in this “alternative” (whatever it is) should mean that investors aren’t so diluted, or that it is not as value destructive to the Company overall. Time will of course tell, but we believe that the technical excellence of the team will be leveraged to ensure that whatever the solution is selected in the final analysis, it will be the best for shareholders.