logo-loader

Today's Oil & Gas Update - Union Jack Oil, Curzon Energy, Jersey Oil & Gas and more...

Oil & Gas Daily Flow Non-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer below Market Update: Wedesday 18 March 2020 

Jersey Oil and Gas PLC - Today's Oil & Gas Update - Union Jack Oil, Curzon Energy, Jersey Oil & Gas and more...

Oil & Gas Daily Flow

Non-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer below

Market Update: Wedesday 18 March 2020 

 

Jersey Oil & Gas (LON:JOG): Shares currently trading at net cash

Union Jack Oil* (LON:UJO): Wressle is cash flow positive down to US$17.62/bbl oil

Curzon Energy* (LON:CZN): Potential RTO of Curzon by SSSIG

 

Energy Prices         

Brent Oil US$28.3/bbl vs US$32.6/bbl yesterday

WTI Oil US$26.2bbl vs US$30.3bbl yesterday

Natural Gas US$1.67/mmbtu vs US$1.90/mmbtu yesterday

Oil Price News

Brent oil has broken through the US$30/bbl resistance today to be down 17% so far this week, as the outlook for fuel demand further weakened amid travel and social lockdowns triggered by the Coronavirus epidemic

A drop in US inventories of crude, gasoline and distillates has provided some support to prices, but the demand outlook remains subdued amid the Saudi/Russia price war

The impact on oil demand is starting to show in official statistics with Japan’s trade bureau saying on Wednesday that crude imports into the world’s third-biggest economy fell 9% from a year earlier in February

Elsewhere, Iraq’s oil minister pleaded for an emergency meeting between members of OPEC+ to discuss immediate action to help balance the oil market

Gas Price News

Natural gas prices fell nearly 5% yesterday as warmer than normal weather is expected to cover most of the US for the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration

Additionally, the dollar moved higher on Tuesday putting downward pressure on the commodity complex

Since natural gas prices are quoted in dollars a stronger dollar makes commodities less valuable in other currencies

The drilling rig count in natural gas fell one rig in the latest week

Net withdrawals of stockpiles are expected to continue to ease less than normal which could generate headwinds for prices

 

Company News

Jersey Oil & Gas (LON:JOG): Shares currently trading at net cash

Share price: 48.5p, Market Cap: £12.3m

In light of the outbreak of the Covid-19 virus and its effect on the global market, Jersey has taken the opportunity to update the market on the current health of its business.

Jersey has confirmed the Company remains fully funded to deliver the concept select work and are progressing on its Greater Buchan Area (GBA) development.

The Company is debt free and has sufficient working capital (FY19 cash of £12.3m) through to the end of 2021, prior to any proceeds from its planned sale of a part interest in the GBA project, the process for which is expected to be launched later this year. 

The Company’s core GBA asset base is estimated to hold more than 140MMboe of discovered and recoverable oil volumes and more than 230MMboe of exploration upside net. 

Our take: Whilst the global economy continues to be disrupted by recent extraordinary developments, Jersey remains in an enviable liquidity position relative to many of its peers in our view. Nevertheless, the value of GBA will have deteriorated following the recent crash in commodity prices, and therefore the Company will likely delay any near-term partial sale.

 

Union Jack Oil* (LON:UJO): Wressle is cash flow positive down to US$17.62/bbl oil

Share price: 0.08p, Market Cap: £13.9m

Following the long-awaited planning approval granted in January 2020 for the Wressle oil development, Union Jack (UJO27.5% working interest) and the Operator (Egdon Resources) have announced an update in respect of the development plan.

On the planned constrained production rate of 500bopd, the work demonstrates that the project is economically robust in the current oil price environment with a cash break-even oil price estimated at US$17.62/bbl.

Progress to date has concentrated on the enabling works.  The initial work on site will be the installation of the groundwater monitoring boreholes with the main site operations occurring in the last months of the work stream.  On current plans, first oil is envisaged during H2 2020.

Following the protracted legal proceedings dating back to 2014, the Planning Inspector has allowed an application for costs against North Lincolnshire Council, which have been submitted to NLC.

Our take: The updated economic model demonstrates the profitability potential of the high margin barrels to be produced at Wressle. At US$30/bbl oil, Union Jack would recognise top line annualised revenues in excess of US$1.5m and a 41% cash margin. Elsewhere, the Company remains focussed on the ongoing works at the West Newton EWT and planning for further appraisal drilling at this flagship asset. With over £6.2m cash and no debt on the balance sheet, Union Jack is funded for all testing and drilling commitments for 2020.

*SP Angel acts Nominated Advisor and Broker to Union Jack Oil

 

Curzon Energy* (LON:CZN): Potential RTO of Curzon by SSSIG

Share price: 0.55p, Market Cap: £457k

Curzon has executed a letter of intent with the Sun Seven Stars Investment Group (SSSIG) to potentially acquire a 100% interest in London Critical Metals Market (LCMM), the first unified global metals trading exchange  for critical metals that have few or no direct investment or trading options elsewhere in the world.

The Company will now enter an initial period of exclusivity with SSSIG during which each party will conduct due diligence on the other. 

The parties have agreed that during this period they will work towards the execution and delivery of a definitive purchase agreement contemplating an RTO of Curzon and is expected to last approximately 1 month.

For providing SSSIG with an initial period of exclusivity lasting through to 30 June 2020, SSSIG will lend the Company an initial amount of £125k in the form of a one-year loan note carrying an annual interest rate of 10%, convertible at the price of any subsequent share issue in the contemplated RTO transaction.

After 30 April 2020, further loan funds may be made available by SSSIG to the Company if the envisaged transaction continues to progress, or in order to extend the initial period of exclusivity beyond 30 June 2020.

Our take: Given the recent difficulties in the global E&P space, Curzon will now look to diversify away from the sector to participate in the growth of a critical metals trading platform including global settlement and supply chain financing.

 

*SP Angel acts Nominated Advisor and Broker to Curzon Energy

Research – Oil & Gas

Sam Wahab - 0203 470 0473

[email protected]

Sales

Richard Parlons – 020 3470 0472

Abigail Wayne – 020 3470 0534

Rob Rees – 020 3470 0535  

 

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

 

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

 

Sources of commodity prices

 

Oil Brent, WTI

ICE

Natural Gas

NYMEX

 

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of Jersey Oil and Gas PLC named herein, including the promotion by the Company of Jersey Oil and Gas PLC in any Content on the Site, the Company...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Bango PLC's Ray Anderson details expanded strategic partnership with NHN Corp

Bango PLC's (LON:BGO) Ray Anderson speaks to Proactive London's Andrew Scott after announcing they've expanded its global data partnership as well as receiving a strategic investment from NHN Corp - a South Korean big data business. NHN will invest £6.5mln into the Audiens data platform,...

2 days, 10 hours ago

6 min read