Headlines
• In Brief:
o Ascent Resources (LON:AST – 2.25p) – Time for Slovenia to do its Part
o Eland Oil and Gas (LON:ELA – 48p) – What a Difference a Year Makes
o Nu-Oil and Gas (LON:NUOG – 0.46p) – Improvements Needed
In Brief
• Ascent Resources (LON:AST – 2.25p) – Time for Slovenia to do its Part: News of yet another appeal being dismissed without claim starts you wondering whether now is the time for the Company to apply for court protection from form of abuse of the legal process, especially as it has been dismissed without cause. It is our contention that the Company is well positioned and given the outcome of the latest attempts to impede the Petisovci development, we believe that its valorisation can now start in earnest.
• Eland Oil and Gas (LON:ELA – 48p) – What a Difference a Year Makes: following on from last year’s issues, today's update regarding the export routes and securing multiple crude evacuation options, is a solid statement and points towards the operational strength within the business, for which the team, and Pieter van der Groen in particular, must take responsibility for. This is further added to by the latest news on Gbetiokun, which suggests that the field could deliver up to 50m bpd. We believe that investors should be happy with the way in which the Company is progressing, especially after such a difficult year last year.
• Nu-Oil and Gas (LON:NUOG – 0.46p) – Improvements Needed: today's announcement is impressively full of jargon, but manages to say very little but remind everybody of the size of the potential prize, which was probably intended. We have long since stated that the Company needs to coherent joined up plan when discussing its assets, and today's announcement really leaves us feeling that management have lost their way and no longer know how to unlock value in their assets. To our mind, it's not that there won't be any value unlocked from the Company's assets base, it’s now just in the hands of so many third parties, and there are so many projects to keep track of, that they just don't have the resources to stay on top of it all. One phrase, however, caught our eye regarding the PL2002‐01(A) asset, namely "reservoir productivity is linked to hydrothermal alteration." We take this to mea n that the oil is heavy and requires steaming to extract it, with the application of either SAGD techniques, or radial steam injection. Either way, is unlikely to be economic for a significant proportion of the technically recoverable volumes, potentially acting as a barrier to development in a serious and meaningful way for a public company. Again, what is required is a clear disclosure of the programme, its costs and risks, such that an assessment of the volumes can be undertaken. As it is, we believe that the obfuscation belies the fact that they comprehend that it is unlikely to be significantly economic at current prices, but we (along with their shareholders), would welcome adequate disclosure to be proven wrong.