Headlines
• In Brief:
Oilex (LON:OEX/ASX:OEX – 060p/A$0.01) – What Gives?
Genel Energy (LON:GENL – 85p) – A Mixed Bag, But Net Positive
In Brief
Oilex (LON:OEX/ASX:OEX – 060p/A$0.01) – What Gives?: The resignation of Ron Miller has come as a bit of a surprise, as we believed that he, along with his team, had been doing a solid job in an environment which is less than conducive to progressing oil and gas development, and had been a more than capable successor to Bruce McCarthy. Unless his abrupt resignation has been health-related, in which we send him our best for a speedy recovery, we believe that investors are entitled to a little more information. This is especially true if the resignation has been precipitated by a difference in strategy. If this is the case, the investors deserve to hear what that difference is and opine on it themselves. As things stand at the moment, investors are likely to be confused as to the nature of the resignation, and given the current operating environment, and think the worst.
Genel Energy (LON::GENL – 85p) – A Mixed Bag, But Net Positive: Today’s two announcements from Genel are, in our opinion, net positive. On the 1P reserves upgrade, we believe that this is a reflection of the re-categorisation of the recoverable barrels as more is known about the field, and that the 2P “downgrade,” third of which is its production, while the remainder is a technical reclassification due to a lack of a sanctioned development plan; we fully expect that once the funds are committed and the enhanced recovery plan sanctioned, that these barrels will be reclassified from Contingent Resources to Reserves. Genel’s other news, however, is a strong statement of where management believe its balance sheet is currently, i.e. that it has sufficient fiscal liquidity at its core to be able to buy back its bonds. Net net, we believe that the combination of these two announcements is positive, and investors should be happy to be holding the stock.