Headlines
In Brief:
Union Jack Oil* (LON:UJO – 0.16p) (BUY – 0.67p) – Broughton North Added
Independent Oil and Gas (LON:IOG – 18p) – What a Difference a Year Makes
Trinity Exploration and Production (LON:TRIN – 2.63p) – Tax is a Blessing and a Curse
In Brief
Union Jack Oil* (LON:UJO – 0.16p) (BUY – 0.67p) – Broughton North Added: Today's news that the Company has taken a 8.33% interest in the Wressle adjacent Broughton North prospect is a positive step, and a logical move given the drilling success in Wressle and the geological similarities between the two. We believe that this continues to support management's mantra of gaining exposure to interesting assets without excessive risk exposure to the Company's owners. While we are not provided with sufficient information to assess the valuation impact, we are reiterating our 0.67p target price and BUY Recommendation.
Independent Oil and Gas (LON:IOG – 18p) – What a Difference a Year Makes: Today's news is interesting in a number of ways, not least for the fact that it wasn't that long ago we were talking and wondering whether the Company might disappear. Today's news that they have secured further working interests, in return for shares and deferred considerations, is the start to gain critical mass. In taking the tough decisions last year, the Company have been able to start to see the fruit of those choices are starting to materialise. While there is a significant amount of work still to be done, and there is by no means any guarantee that they will be successful, such is the nature of the tasks ahead, what we can be sure of is the fact that the Company will maintain the same focus and discipline.
Trinity Exploration and Production (LON:TRIN – 2.63p) – Tax is a Blessing and a Curse: In the grand scheme of things, the Company is in dire straits, and although the cost structure has been pared down, there is still a long way to go. While the restructuring process is ongoing, we are becoming concerned that one of the key issues, unpaid but due tax (Dec 2015 – ~$23mm), has not been raised. We would like to understand better the nature of the discussions with the tax authorities, and what steps, if any, the Company has been forced to put in place to pay them. In the scheme of creditors, the tax man comes before anybody, and if suitably irritated, we would say that failure to meet the financial obligation to the host government when lifting the oil would be grounds to terminate the licence with prejudice. On that basis, to our mind, this is starting to become a more prominent is sue, and potentially one of the reasons why the creditors are seeking a solution that leaves the company intact. In this respect, the tax issue is both a burden and a blessing, as if there isn’t enough to pay the debt, then there certainly won’t be enough to pay the tax due, which will get priority in any winding up.