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Malcy's Blog - Oil price, JOG, Aminex, GMS, Getech

Oil price A properly big day yesterday across the board, even natural gas joined in as a return to some sense of, albeit slow, return to normality was seen. Parts of the USA, India, Italy and Spain went back to work increasing demand numbers and even regional traffic data started showing gains.

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Oil price, JOG, Aminex, GMS, Getech

WTI $24.56 +$4.17 (17%), Brent $30.97 +$3.77 (12%), Diff -$6.41 -40c, NG $2.13 +14c

Oil price

A properly big day yesterday across the board, even natural gas joined in as a return to some sense of, albeit slow, return to normality was seen. Parts of the USA, India, Italy and Spain went back to work increasing demand numbers and even regional traffic data started showing gains. Add to that the Saudis made it known to anyone who could listen that the spigots had been set to 6m b/d and the equation starts to look just a little better.

The API stats after the close showed a build in crude oil of 8.4m barrels slightly above the 7.8m consensus but more revealing was the 2.2m draw in gasoline stocks when analysts predicted a small build. This ties in with yesterday’s retail gasoline prices which showed, for the first time recently a slight price increase.

Jersey Oil & Gas (LON:JOG)

Finals from JOG today who show that they have been busy during the last few months, at the GBA they are now in charge of a significant new area with this hub development project in the Central North Sea.

This is partly down to ‘transformational’ awards in the GBA as part of the OGA’s 31st Supplementary Offshore Licensing Round, JOG now have 100% equity in Buchan, J2 and Glenn discoveries in addition to the Verbier discovery.  This leaves a ‘commanding’ position across the GBA with 5 discovered fields, 8 exploration prospects within 4 operated licences.  JOG’s net discovered and recoverable resource estimates now stand at 142m bbls, a 30 fold increase compared to the beginning of 2019.  Accordingly, project lifetime cash flows for the GBA are forecast to be in excess of $3bn, with an estimated project value of approximately US$1.2bn.

JOG has £12.3m of cash and no debt, as such they are fully funded through concept selection and at least until the end of 2021. Accordingly to the above the company has begun work on a new and unique major new North Sea development plan with potential for low carbon emissions at GBA which also has significant exploration upside with 232 mmboe prospective resource estimates net to them.

Concept selection for the area is on track for summer 2020 to define the most prudent and commercially attractive way to deliver first oil from the GBA, after which a sales process is expected to be launched  to attract a new industry partner(s) to join JOG in unlocking the potential significant value that exists within the GBA.

Words like ‘transformational’ and ‘commanding’ are often overused but in the GBA JOG has diligently accumulated a potentially company changing development on our doorstep in the Central North Sea. The team at JOG should be congratulated for putting the hub together and should the ongoing concept development and then farm-out be a success it will come out in a big increase in the share price.

Aminex (LON:AEX)

Aminex has confirmed a loan from ARA to pay the CGT bill of $2.2m to the TRA, to enable completion of the farm-out. The company has, after intense discussions, decided to pay this bill in order to avoid any potential significant delays and will be repaid upon completion.

There is no doubt that the carry to Aminex of up to $35m of its share of costs associated with the development of the Ntorya gas field ‘effectively carries the company through to material gas production in Tanzania’. CEO Robert Ambrose confirmed ‘this Agreement is an important step in what has been a long process towards the Farm-Out with APT and brings first gas from the exciting Ntorya Gas Field ever closer, a milestone to which the Company is fully carried’.

 

Gulf Marine Services (AIM:GMS)

Firstly apologies for a typo in yesterday’s headline, obviously it should be Gulf Marine Services, not Solutions although the name was correct in the tags etc.

I notice that  Seafox has announced that it has bought 9.4m shares in GMS at 10p each which leaves any bid at the 10p or 9c level whichever is the highest. Seafox has also stated that there would be ‘no increase’ in the bid which ties them to these prices under rule 2.7 of the code.

Buying shares, especially when you then tie your hands somewhat, can be a hostage to fortune and I have to admit that I was surprised to see the share purchase and the no increase statement, where it leaves them I am not quite sure.

 

Getech (AIM:GTC)

Late from last week but the message from Getech stays the same ahead of figures now due later in May. The company update re COVID-19 and the oil price but it is clear that their projects remain on schedule in cost and time at the moment. With a strong balance sheet and a continuing attack on costs, (monthly expenses are now down 26%) the outlook seems positive.

The company state that whilst uncertainty exists YTD they have no negative revisions to the Order Book and that 1Q revenue, forward sales and profitability were all ahead of Q1 2019. It is interesting that Getech note that home working customers ‘create a unique opportunity for Getech to reach deeper into their organisations and the company has reshaped marketing and sales activities to capture that benefit’. It seems that Getech have accelerated new business activities using transferable skills and technologies to deliver in new energy and infrastructure settings, proof that the company is handling the current double attack profitably.

 

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