Headlines
• In Brief:
Baron Oil* (LON:BOIL – 0.40p) – Peru Back on the Map
Union Jack Oil* (LON:UJO – 0.16p) – $4.9mm – $33.6mm (0.11p – 0.74p) – Wressle Revisited
Hurricane Energy (LON:HUR – 51p) – When Your Hot...
Nostra Terra Oil and Gas (LON:NTOG – 2.55p) – Its Beginning to Look a Lot like an Oil Company
Rockhopper Exploration (LON:RKH – 27p) – Operational and Corporate Update
In Brief
• Baron Oil* (LON:BOIL – 0.40p) – Peru Back on the Map: Following the publication of yesterday’s First Oil, Baron Oil was able to announce the Peruvian government’s approval of Cuy-Z34-13-1X’s drilling location. This has followed what has seemed to be an extended hiatus, due principally to the delays in approving the farmin of Union Oil and Gas Group in 2013. In this instance, however, the delays have actually brought benefits, as drilling costs for the kind of equipment required to drill ~13,000ft wells in ~6,000ft water have declined substantially from those in 2013, sometimes by as much as 60%. Yesterday’s news should help to buoy the stock, not only because its Peruvian exploration programme is moving again, but also because the approval will precipitate the start of the mechanism through which the Company will receive ~$2mm, which can be deployed in to other value e nhancing ventures.
• Union Jack Oil* (LON:UJO – 0.16p) – $4.9mm – $33.6mm (0.11p – 0.74p) – Wressle Revisited: Today's news, while not unexpected, is a quick follow up to what has been a curious series of events. The Company and its JV partner, Egdon, have worked with the Planning Officers are North Lincolnshire Council to ensure that the development satisfied both the planning rules and regulations and was sensitive to the local inhabitants. Such was the level of cooperation that the planning authority’s own case officers approved the project earlier in the year (3rd January 2017). Consequently, for the North Lincolnshire Council’s planning committee to reject the approval to make a point about the Environment Agency raised questions and brands their own officers as incompetent. There are two possibilities here, that: (i) they lack the spine and intellectual horsepower to make such a decision, or (ii) it was an abuse of power to make a political statement point about a public body. Either way, it was an abuse of position and makes the planning committee petty and guilty of over stepping of its authority. If the have the spine and intellectual horsepower to discharge their duties, they are incompetent and not up to the task, but if they do have the spine and intellectual horsepower, they are compromised in that they don’t represent the people of North Lincolnshire, either way, we can’t see how their positions are tenable. Today's disclosure by the Company will mark the start of a successful application, and one in which we hope that the counsellors are rebuked and the case officers in the planning department are given back the respect that their committee saw fit to take away from them. We will await the update from the council until we revisit our estimates. Our valuation remains $4.9mm – $33.6mm (0.11p – 0.74p).
• Hurricane Energy (LON:HUR – 51p) – When Your Hot...: Today's update should not only please its investors, but also excite the geologists, as we believe that this news confirm the fractured basement play in the North Sea; those with long memories will remember Soco's ventures in Yemen and Vietnam which had the same characteristics, and look where that has gone. To do this in a mature basin, however, while not wishing to overshadow what is also a technical achievement, is an impressive feat of belief, as I am sure there were no small number of detractors. What this news has also done, is make the Company more attractive to a potential farminee or acquirer, vindicating management's decision to suspend the farmin process ahead of the well. All in all, we believe that investors should be pleased with not only the result, but the Management’s performance in taking a calculated risk on the dri lling and not pushing for dilution ahead of the well results.
• Nostra Terra Oil and Gas (LON:NTOG – 2.55p) – Its Beginning to Look a Lot like an Oil Company: Today's announcement detailing the appointment of John Stafford to the Board, provides a significant fillip for NTOG, and investors alike, as it is starting to resemble the type of board that would be associated with an oil company. To date, the Company has grown principally as a result of the time and energy of Matt Lofgran, and it is no small credit to him that after all his hard work, that he is loosening the reigns. In doing so, he has made the Company better prepared to face the future, and made its outlook brighter because of it.
• Rockhopper Exploration (LON:RKH – 27p) – Operational and Corporate Update: Today's update provides a sound bedrock for the Company, and one in which the steps taken by management to provide an alternate revenue stream are starting to gain real traction. The one fly in the ointment, however, is the development of Sea Lion, which through no fault of their own, now makes them beholden to Premier Oil, or rather Premier Oil’s creditors. While there is also opportunity in the turbulence, we get the sense that RKH would far rather a stable partner committed to developing the field. Still, we believe that the Management is doing a good job of making the most of the opportunities before it and preserving its cash balances.