Headlines
• In Brief:
o Aminex (LON:AEX– 6p) – Solid Bedrock
o Northern Petroleum (LON:NOP– 5p) – Consolidating its Position
o Providence (LON:PVR– 17p) – A Nice Amuse-Bouche
o Sound Energy (LON:SOU– 89p) – ...And Now, the Moment You've Been Waiting For...
In Brief
• Aminex (LON:AEX– 6p) – Solid Bedrock: Today's update is a solid statement about Ntorya wider potential, and given the design on the gas plant, the only issue to our mind is if the market can take the volumes and how soon do they either upgrade or twin the facility. Make no issue, the strength of the news (well pressure and subsequent control asserted), whatever the outcome of the drilling result the increase in value will be significant. What the Company can legitimately do now is undertake a wider fundraising, but specifically not the selective fundraising that it undertook last year. That way, the Company will have enough resources to select the best option for the Company, not just the ones that are open to it given the limited resources at its disposal.
• Northern Petroleum (LON:NOP– 5p) – Consolidating its Position: News that the Company has acquired more wells in its existing acreage provides a solid indication of the new found confidence within the business, and after what has been a difficult few years, to our mind is the start of the transition period in which the Company re-establishes continuous production in the Rainbow assets and progresses towards the critical point of being self-sustaining. We believe that investors should be pleased with today’s news, not only for the additional control it brings over its asset base, but the fact that it also signals that management is intent on growing the Company whilst maintaining adequate control over the risks.
• Providence (LON:PVR– 17p) – A Nice Amuse-Bouche: Today's news of a farmin to the licence containing the Druid and Drombeg prospects (FEL 2/14), continues to underline the esteem in which the Company's technical team are held, not to mention its knack for picking choice targets with significant prospectivity. That drilled is slated to commence in June this year is a clear indication that the Company and its partners don't intend to hang around, all of which is good for news flow, and creates "opportunities for revaluation." As positive as today's news is, however, it is still somewhat overshadowed by the need for meaningful progress on Barryroe, which to our mind will not be too far away given the increasingly stable outlook for the oil price. Still, this is not to detract from today's news on Druid and Drombeg, which serves up as a tasty amuse-bouche to the Barryroe main course.
• Sound Energy (LON:SOU– 89p) – ...And Now, the Moment You've Been Waiting For...: For those that have followed Sound Energy since before James Parson's arrival will know that the one asset that has captured the imagination of investors and allowed the current management team to reshape the Company has been Badile. As the Company's history has shown since Parsons took over, while the key asset has been Badile, it has been surpassed by other activity, and quite rightly too. However, today's news will be welcomed by all, and although its outcome has been significantly de-emphasised by subsequent events, a successful drilling campaign will go a long way to improving value yet further. That said, for investors, we believe that even a drilling failure will be an opportunity as although Badile has been the pivot on which Sound changed direction, its value has not really been reflected in the market cap, hence we believe any weakness in share price following Badile will offer an in point. This is one of those rare moments where the term often applied to drilling, that it is "better to travel than to arrive," actually isn't true, as the journey has been impressive and the destination (Badile's result) will (ultimately) be positive for investors for the aforementioned reasons, no matter what.