Headlines
• In Brief:
o Union Jack Oil* (LON:UJO – 0.15p) – $6.4mm – $39.1mm – Wressle Interest Increased
o Victoria Oil and Gas (LON:VOG – 67p) – Starting to Lever its Position
o Zenith Energy (LON:ZEN / CVE:ZEE – 12p/C$0.16) – Programme Starts
In Brief
• Union Jack Oil* (LON:UJO – 0.15p) – $6.4mm – $39.1mm – Wressle Interest Increased: The acquisition of a further interest in Wressle is opportune as it takes advantage of the dislocation created by the planning refusal. Whilst confirmation of the commissioning of Wressle will be required, the higher NPV attributable to UJO's interest, we are adjusting our valuation, which is now $6.4mm (0.16p – Core) to $39.1mm (0.98p – Full); the SPA recommendation remains BUY.
• Victoria Oil and Gas (LON:VOG – 67p) – Starting to Lever its Position: Today's news that VOG and BowLeven have agreed a farmout/farmin over the Bomono permit is positive for both companies, but we believe more so for VOG. This deal provides the Company with not only additional deliverable gas resources at the stroke of a pen, but in diversifying the gas sources away from a single source (Logbaba), increases the resilience of the business model. We have long since believed that the current structure within the Company is unsuitable, and that the midstream business should be a standalone entity, which with this deal it has taken a step towards. The separation of the two businesses would allow both to be independently valued, which we believe would result an increase in overall valuation.
• Zenith Energy (LON:ZEN / CVE:ZEE – 12p/C$0.16) – Programme Starts: The redevelopment programme has begun and the potential remains significant, but we are uncertain as to how far the workovers programme can go, or in fact needs to go before the Company is self-sustaining. What is required is a clear route map allied with attendant milestones that will allow the market to check off progress independently, that way, the management team can start to gain traction for the progress they make.