Headlines
• In Brief:
o Volga Gas*** (LON:VGAS – 58p) – $155mm (159p) – Operational Update
o 8 Energy (LON:88E/ASX:88E – 1.85p/A$0.03) – Icewine#2 Operations Update
o Egdon Resources (LON:EDR – 8p) – Incremental Progress
o Saffron Energy (LON:SRON – 5p) – Welcome Production Uplift
o Solo Oil (LON:SOLO – 0.26p) – A Lot Going On
In Brief
• Volga Gas*** (LON:VGAS – 58p) – $155mm (159p) – Operational Update: Today's update marks the conclusion of the commission phase of the new RedOx (reduction/oxidation) gas sweetening process at the Dobrinskoye gas plant. As a result, we expect the Company to build towards the nameplate capacity of ~25mm cfpd. However, we fully expect a similar period of interruption during the commissioning phase of the LPG facility in 4Q'17, which we believe will be fully on line by 1Q'18. We are reiterating our BUY recommendation.
• 8 Energy (LON:88E/ASX:88E – 1.85p/A$0.03) – Icewine#2 Operations Update: Today's news will be disappointing for management and shareholders alike, and underlines the technical challenges that face the development of new shale plays, the so called “first mover disadvantage.” However, the technical issues themselves are not new, and will be addressed, and the right answer arrived at, even if it is unpalatable. The conclusion of the drilling programme will be keenly watched by industry and investors alike.
• Egdon Resources (LON:EDR – 8p) – Incremental Progress: Today's news of the acquisition of Cirque Energy interest in Fiskerton Airfield underlines the opportunism of the Company, seeking incremental progress in whatever guise it manifests itself. The only cloud on the horizon is that once it has been acquired whether they will be allowed to undertake work on the field to unlock the value that is undoubtedly there, given the proximity of Wressle, is. Watch this space.
• Saffron Energy (LON:SRON – 5p) – Welcome Production Uplift: Today's production statement will be a welcome uplift for the Company and shareholders alike. The last time we commented on SRON, we noted that "what we believe is needed is a root and branch review of the asset and forward programme and management fee arrangements such that it is transparent to SRON’s shareholders where the pinch points are and what the current team are going to do differently," and although today’s news is undoubtedly positive and a good start to reversing what has been multi-years of failure, the concerns need to be addressed. We have been chided since publication for pointing out this past poor performance, but we don't believe that a change of name or a lick of paint changes the way a management team operates. For us to take this management team seriously, or its ambition to grow shareholder value se riously, one of the things we will require is transparency of aims, objectives and remuneration, the latter point starting to be more pressing, as directly understanding the compensation arrangements between the directors, management and companies given the overlap between Saffron and its 65% owner Po Valley Resources. That way we will be able to assess how keenly the Company is seeking to build shareholder value, which for so long has been eroded by Po Valley.
• Solo Oil (LON:SOLO – 0.26p) – A Lot Going On: Between Tanzania and Horse Hill, there is a lot going on at Solo, and we believe it is coming at the right time. With Neil Ritson and his team increasing their focus on Solo, at the expense of Columbus, we believe this to be the key vehicle moving forwards. What is required now the focus is increasingly on Solo, is an outline for the future, over the next 12, 24 and 60 months.