Headlines
TomCo Energy*** (LON:TOM – 0.10p) – (BUY – 0.40p) – Further Information Needed: Following yesterday’s news, we believe that further information is needed before the Company can sanction the development of its Holiday Block in Utah. In this respect, it is not tied to the eco-shale process and has available to it and number of options to valorise its interest. In assessing the potential impact of the delays that could occur, offset to some extent by the net impact of the increased capsule size, it drives our Target Price to 0.40p. However, further information will be required before a full valuation can be undertaken.
In Brief:
JKX Oil and Gas (LON:JKX – 20p) – Importance of Friends in Country
Frontera Resources (LON:FRR – 0.16p) – What’s Next?
News Items
TomCo Energy*** (LON:TOM – 0.10p) – (BUY – 0.40p) – Further Information Needed
Yesterday, Tomco released an update in which further information was provided on Red Leaf’s design and engineering process for its Ecoshale capsule. What was promising was the confirmation that capsule sizes are indeed increasing, which reduces the per barrel expenditure.
The positive impact of this news is offset to some extent by the growing uncertainty as to when the commercialisation trials for the process will be undertaken. We believe that the commercialisation trials will be a significant catalyst to the revaluation of the Company, and as such its delay pushes back our estimate for first commercialisation.
Of further interest, however, was the indication that the gas plant of such complexity would need to be built. We do not agree with this assessment, and believe that the original engineering and design negates the need for a complex gas plant of this scale. If indeed a gas plant on this scale is required, we believe that management should look towards alternative technologies such as retorting, pooling resources with other licence holders to reduce the cost. We believe that
Following yesterday’s news, we believe that further information is needed before the Company can sanction the development of its Holiday Block in Utah. In this respect, it is not tied to the eco-shale process and has available to it and number of options to valorise its interest. In assessing the potential impact of the delays that could occur, offset to some extent by the net impact of the increased capsule size, it drives our Target Price to 0.40p. However, further information will be required before a full valuation can be undertaken.
In Brief
• JKX Oil and Gas (LON:JKX – 20p) – Importance of Friends in Country: Today’s news that police have raided the Company doesn’t come entirely as a shock given the blood he knows that the management team gave local oligarchs recently. What this does prove, however, is that it is important to have a Kyrsha, a so-called “roof” to protect your interests. We can’t also help think that this is a tit-for-tat response to the Company taking the tax authorities to court. While we are certain that the Company has acted appropriately, what today’s news does do is prove the importance of having friends in country, and now it might be wise to start to look for such friends.
• Frontera Resources (LON:FRR – 0.16p) – What’s Next?: Just when we thought that the Company would take a more measured approach to its existing investors, it undertakes a dilutive fundraising. It isn’t so much that it is a fundraising conducted in this manner, it is more the fact that yet again the management team have not disclosed their future plans, or provided us with milestones against which we can measure that progress. On this basis, we have to ask, what’s next for the Company?