Summary
In Brief
Nu-Oil and Gas – (LON:NUOG) – 0.81p
New Board Needs to Bring Focus
Premier Oil – (LON:PMO) – 68p
Zama Appraisal Success
Tower Resources – (LON:TRP) – 1.02p
Njonji Appraisal Well Key
News In Brief
Nu-Oil and Gas
(LON:NUOG) – 0.81p
New Board Needs to Bring Focus
The periodic replacement of the board has been a recurring theme with the Company, and with each new iteration we have repeated the same thing, that the Company needs to high-grade its project portfolio and focus on progressing those that present the Company with (i) the most likely chance of achieving net positive cash flow; and (ii) is executable in the near to medium term.
As it was previously, so as it is now, if only with added urgency given the amount of shareholders funds that has been expended thus far in making relatively little progress. We look forward to the new board’s review and update on future plans.
Premier Oil
(LON:PMO) – 68p
Zama Appraisal Success
The update from the Company on its recent Zama appraisal well is a feather in the cap for the technical team, as not only was the well drilled on time and under budget, but that it was able to verify the predrilled expectations.
Whilst at this stage this is largely meaningless, it demonstrates that the Company has a clear understanding of the asset, which is therefore likely to result in a better designed development programme.
Zama’s size and the speed with which PMO has moved to date in appraising the asset, we believe that the successful completion of the appraisal well sidetrack will precipitate the asset’s elevation in the project schedule.
Consequently, there may be a scenario where Sea Lion, it’s licence in the North Falklands Basin that it co-ventures with Rockhopper, is demoted in the project ranking, or the Company exits its participation fully.
Irrespective of that, the Company’s investors should be not only pleased with the performance of their technical team following this news, but also of the impact that this will have on the Company’s outlook.
Tower Resources
(LON:TRP) – 1.02p
Njonji Appraisal Well Key
We are pleased to see that after so long on the backburner, the Company’s only asset not at the exploration stage, is now receiving the attention that it deserves. Given the extent of the uncertainty surrounding the asset currently, the next appraisal well will be key.
We believe this well should be designed to target the resolution of the current risks (Page 19 of the CPR dated November 2018), which have been amply captured in the Company’s recent CPR.
Furthermore, the appraisal well will also allow for the discovery’s maiden flow test, which will be key in initially determining the Technically Recoverable Contingent Resources, and subsequently that proportion of the Technically Recoverable Contingent Resources that can be economically recovered, which will be reclassified as Reserves.
Given the Njonji’s highly complicated structure, we believe that all Andrew Matharu’s astute engineering experience will be required to elucidate the subsurface and formulate a cohesive development plan that maximises those volumes of Technically Recoverable Contingent Resources that can be be booked as Reserves.
We are certain that investors will be keen to see the results of the Njonji appraisal well, and the impact that these results will have on the outlook for the Company.