Headlines
• In Brief:
Amerisur Resources (LON:AMER – 29p) – Emerging Stronger
Frontera Resources (LON:FRR – 0.48p) – Drillbits, Not Bytes
Victoria Oil and Gas (LON:VOG – 41p) – Hopper Recharged
Independent Resources (LON:IRG – 0.16p) – Ksar Hadada Permit Update
Europa Oil and Gas (LON:EOG – 6p) – Dangerous Territory
In Brief
• Amerisur Resources (LON:AMER – 29p) – Emerging Stronger: Today's results, while backward looking, are more important for the commentary and tone of the text than anything else in the announcement, other than the cash balance number. We believe that investors should be pleased with the progress that the Company has made, but more pleased with the outlook for the remainder of 2016. With the cash resources available to the Company, in the shape of the ~$42mm of year end balances and cash generated from operations, coupled with the low services cost environment, Amerisur is well positioned to achieve is plan of accelerating the 2016 programme, and looks set to be one of those companies that emerges from the current low oil price environment stronger and better able to accelerate its growth once the oil price outlook strengthens.
• Frontera Resources (LON:FRR – 0.48p) – Drillbits, Not Bytes: Today's news is all well and good, but quite frankly, after so long in the doldrums, the disclosure of the results of a desktop study following a small light frac doesn't really cut the mustard. What would have been worthy of the investors is the news that this study had been proven to be an accurate reflection of what's in the field, correctly predicting the well productivity after the implementation of the full scale frac design. While these studies have to be done, but against the backdrop of past performance, results and cash generation are the only things that now matter.
• Victoria Oil and Gas (LON:VOG – 41p) – Hopper Recharged: Today's news that the Company has secured a 75% working interest in Matanda, while not immediately impacting its existing business, puts it in a position to be able to recharge is portfolio and continue to grow its regional business. While studies and a successful drilling campaign will be required before the Company can claim to have made any progress, today’s news achieves two things: (i) initiates the first step of the journey to recharge the hopper and continue to grow its business; and (ii) demonstrates a clear intent to continue to expand the asset base. All in all, while there are issues still left to address with the business, such as its legacy asset base in Russia, it is not detracting from the continued expansion of the Company's key asset and business that it has established in Came roon.
• Independent Resources (LON:IRG – 0.16p) – Ksar Hadada Permit Update: While news that the Tunisian authorities have approved the Company's 100% position in the permit, the more important consideration will be the one year extension to the licence terms, which will better enable them to farmout the asset.
• Europa Oil and Gas (LON:EOG – 6p) – Dangerous Territory: There is lots for the investors in the Company to be happy about, but none of those things generate value in the short term. What today's results underline is that no matter what the jam may look like tomorrow, in the shape of the Irish prospectivity, there is now a sense of urgency surrounding it addressing its producing portfolio to ensure that the Company can maintain itself until such times as the exploration market returns. As such, we believe that the Company is entering dangerous territory, where it starts to allocate funds for the advancement of projects for the future and funds for immediate projects. We have always believed that cash is king, and as such, given the paucity of resources currently available to the Company, investing for returns that are measured in months will always beat inv estments where returns are measured in years.