Headlines
• In Brief:
Union Jack Oil* (LON:UJO – 0.17p) – (BUY – 0.67p) – Holmwood Bound
Andes Energia (LON:AEN – 19p) – Results Underline a Good Year
Lansdowne Oil & Gas (LON:LOGP – SUSP) – Presage to Funding
Petroceltic International (LON:PCI – SUSP) – Ain Tsila Update
In Brief
• Union Jack Oil* (LON:UJO – 0.17p) – (BUY – 0.67p) – Holmwood Bound: Today's news continues management's aim of gaining exposure to high impact wells whilst minimising financial risk; this is most evident in the contingent nature of the past costs secured for this farmin. We believe that this news is more prospective than just the conventional prospectivity as Holmwood is inside the BGS' window deemed mature for oil in all the shale horizons (Corallian, Kimmeridge, Oxford, etc.). While we have not yet accounted for the shale prospectivity, we believe that the farmin to the conventional Holmwood accumulation adds ~$1.8mm to the risk adjusted value (0.04p), which increases our Target Price to 0.67p; we are reiterating our BUY Recommendation.
• Andes Energia (LON:AEN – 19p) – Results Underline a Good Year: We gained a lot from the Company's update few weeks ago, and then we said that we would look at the cash flows before assessing just how good the update was, and today's release supports our initial positivity. What is evident is that the Company has streamlined its operations, which means that any increases in revenue, whether from production or oil price should flow through to the bottom line. Given that we believe that the oil price will continue to rise, albeit in a saw tooth and erratic manner, the Company's owners should be pleased with the progress that their management team have made, especially as it appears to be in a strong position to continue its growth. Again, as we have said previously, the only blemish we see doesn't relate to the management team, but the geopolitical risk associated with Argentina, which a lthough improving in outlook all the time, still has the hangover of the disastrous Kirchner years to work through.
• Lansdowne Oil & Gas (LON:LOGP – SUSP) – Presage to Funding: Today's news, that the Company is seeking a mandate from its shareholders to raise funds, doesn't really come as a surprise as the delays to Barryroe continue to drive the Company to distraction. We believe that the team in the Company will be best suited by seeking out near-term opportunities to bring in to the Portfolio, if only to meet overheads while the main event that is Barryroe unfolds. While there will inevitable be pressure on the shares, we believe that the Company has a strong management team, that with the right tools, could deliver significant shareholder value for the Company's owner, over and above that which has been created by its participation in Barryroe.
• Petroceltic International (LON:PCI – SUSP) – Ain Tsila Update: Today's update from the Company underlines Ain Tsila’s scale, and when compared against the price that Worldview has paid to assert control over the Company, the quality of the deal that has made. Not that existing shareholders have any complaints, as they demonstrated apathy towards the whole saga. We do, however, find it curious that Worldview have not asserted their rights as creditors as yet, diluted the existing shareholders and delisted the shares, which makes us feel that there is something else afoot, mostly likely a involving the equity capital markets to pay for the next round of spending. In that regard, the management team that's brought in to manage the Company on their behalf needs to be strong and balanced, which to our mind does not include Don Wolcott, he who oversaw two operational disasters at Rusp etro and took the Market Cap of that company from $800mm at admission to ~$8mm currently, if indeed that's who is primed to take over. In this regard, it is a case of watch this space.
We may provide a further update on one, or all, of the stories above later today. However, if there is anything that you would like to discuss, please feel free to contact us.