Today's Oil and Gas Update - Union Jack Oil, Independent Oil & Gas and Mayan Energy


• Union Jack Oil*** (LON:UJO) – $72.9mm (0.64p) – Quell Surprise: Having read the transcripts as provided during the public consultation (if they are a true reflection of the spoken word as it happened), is an abject lesson in the fact that “a lie is halfway around the world before the truth has got its shoes on.” Again, the focus on the British Steel boreholes, which we have said previously is a red herring, is at repetition a facile argument, and directly contradicts the opinions of their retained experts. Still, this is to be expected, when you have a council that has no respect for the planning approval process and is only concerned with their respective careers and grandstanding. This will be disappointing for all involved, especially UJO, but we are confident that planning permission will ultimately be granted, albeit by the Secretary of State. As a result, we are reiterating our belief that Wressle will come onstream 2020, and as such, we are reiterating our $72.9mm (0.64p) valuation.

• Independent Oil & Gas (LON:IOG– 25p) – Decision to Wait Underlines Confidence: Today’s announcement that management intends to delay the financing of its Core development is a bold statement, but one that is ultimately understandable. While this is likely to disappoint shareholders, we can’t help but think that as long as the delay isn’t too long, that this will be positive for the Company. The management team can use the time to refine the data room and scenario modelling to address the downside scenarios that are likely to be considered, thereby increasing the chances of achieving development financing on more advantageous terms.

Mayan Energy (LON:MYN) – Chocolate Teapot: Today’s news is a combination of good and bad. The good on the one hand is the arrival of Sarah Cope, while the bad is the belated disclosure of Southern Coastal Operating’s engagement during Gonzalez’ tenure as CEO. The arrival of Cope will provide much needed corporate governance rigour to a company that has been beleaguered by a management team that has not placed the creation of shareholder value high on its list of priorities. Such has been the litany of failure that any management team containing Wood is so damaged that even the arrival of a person with Cope’s credentials will have all the impact of a chocolate teapot unless the poison at the heart of this company is excised. If ever this needed confirming, the fact that Eddie Gonzales during his tenure as CEO may also have benefitted from his ownership of Southern Coastal Operating, which had a contract with Mayan to provide services. This raises the important questions of: (i) why this wasn't disclosed at the time of his appointment; (ii) why wasn't it disclosed that one of his companies was engaged to provide services to Mayan Energy; (iii) how much was paid during his tenure as CEO; and (iv) any monies that were paid, can it be considered a fair exchange for the goods and services that were received aas a result? Given all of this, the next board movement needs to be the removal of Woods and appointment of a person with suitable technical expertise to address the issue of the asset base fully and finally. At that time, Cope can review all contracts and arrangements and highlight any that need to be highlighted, demanding any returns if needed. If there is anything left to save after that, the replacement of the chairman for somebody also unconnected with Connally, Gonzales & Wood (the unholy trinity), leaving the Company free of the disasters of the past and putting it in the best possible position for the future, if it has one at this point.

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