21 February 2019
Summary
In Brief
Union Jack Oil*** (LON:UJO) – 0.10p – $62.3m (0.58p)
Biscathorpe Not as Prognosed
Nu-Oil and Gas (LON:NUOG) – 0.79p
Curiouser and Curiouser
United Oil & Gas (LON:UOG) – 4.55p
Colibri Upgraded
News In Brief
Union Jack Oil***
(LON:UJO) – 0.10p
$62.3m (0.58p)
Biscathorpe Not as Prognosed
The news that the Company's appraisal well has failed to intersect the target horizons at the predrill burial depth will be puzzling and will require further investigation. What the operator group will need to do now is integrate the data from this well with the existing data set to assess the next stages of the appraisal programme.
While disappointing, we believe that the results require further analysis before the next steps are taken, if there are any to take. There is no doubt, however, that the structure is more complicated than initially believed and potentially gas bearing, which we are reflecting in our reduced interim assessment of the asset's valuation.
We assume a 50% chance of the asset being gas bearing and a smaller closure all of which have the combined impact of lower our Biscathorpe valuation to $9.8mm (0.09p).
As a result, our overall valuation falls to $62.3m (0.58p).
Nu-Oil and Gas
(LON:NUOG) – 0.79p
Curiouser and Curiouser
The exclusive agreement with Royal Eagle Capital Partner USA to provide the Company with access to potential developments in Mexico and Colombia is, on the face of it, a positive.
What is curious, however, is why the company hasn't leveraged off of its relationship with Arup, whose excellent energy team is based in Houston, the key jump off point to perhaps the most liquid and vibrant offshore areas outside of the North Sea.
What is curiouser still, is the fact that the Company still somewhat misses the point in that there is no shortage of potential clients, they need that missing ingredient to be able to get the concept launched, which still hasn't been mentioned.
While this remains absent, the MFDevCo concept will remain just that, a concept. When they have that missing ingredient in place, the Company will wonder what took them so long, and there will be no shortage of clients.
United Oil & Gas
(LON:UOG) – 4.55p
Colibri Upgraded
The disclosure that Colibri, one of the Company's key Jamaican prospects, has been upgraded to 229mm boe underlines the extent of the work that the Company is doing to derisk its portfolio.
While we believe that further derisking will be required before Colibri is drill ready, at 20% geological chance of success, there is limited further work to complete before the well is targeted and the well is sanctioned.
We may provide a further update on one, or all, of the stories above later today. However, if there is anything that you would like to discuss, please feel free to contact us.
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