Proactive Investors
Published May 15, 2023 11:45
Updated May 15, 2023 12:10
Today's Oil and Gas Update: Union Jack Oil, Arrow Exploration, and more...
Proactive Investors - Market Update: 15 May 2023
Energy News
Company News
Union Jack Oil PLC 23.0p, Market Cap £25m: FY22 maiden profit
A positive set of FY22 results from Union Jack, though the comprehensive news flow activity means that shareholders already know that the Company has further strengthened its production and cash flows in 1H23. Wressle continues to drive the story, with upgrade works ongoing and a new CPR expected to highlight a material reserve upgrade on the producing Ashover Grit reservoir that may lead to a near-term development well that accesses the additional volumes. In addition, there is the upcoming appraisal well at West Newton anticipated in 2H23, planned drilling to access further resources in the Keddington field and several other exploration and appraisal opportunities currently moving forwards. We expect the Company’s cash generation over the medium term to continue to not only provide potential for further direct return of value to shareholders, via share buybacks or special dividends, but also allow for further investment in its portfolio. As such, the anticipated uptick in drilling and development activity across the portfolio should provide investors with the greatest potential for value creation over the next 12M.
*SP Angel acts as Nominated Advisor and Broker to Union Jack Oil
IOG PLC 6.2p, Market Cap £33m: Blythe well drilling ahead
The stock has performed strongly (+20%) in early trading as the Blythe H2 well is expected to significantly enhance aggregate gas production, reduce water production into the pipeline and minimise associated opex from its flagship Saturn Banks development (50% WI) in the UK Southern North Sea. Underperformance from the existing production base and on the Southwark field development wells has reduced the revenues that were expected to underpin further investment in the portfolio, such that management considered different options to optimise the Company’s cash flow, which led to the advancement of the Blythe H2 well. After a roller-coaster of ups and downs in the last 12M, IOG still has some way to go to rebuild shareholder confidence in both its operational capabilities and the asset base.
Orcadian Energy PLC 5.2p, Market Cap £3.8m: Blakeney licence expires
The stock was marked down rather dramatically in early trading (-20%), surely reflecting growing concerns regarding the Company’s short-term liquidity issues rather than the minimal economic value of the Blakeney project. Orcadian’s management has used the last 24M since listing to work up the characteristics of the 79mb Pilot heavy oil undeveloped discovery through the interpretation of legacy seismic data and dynamic reservoir simulations to establish a new range of technically recoverable resources. In 4Q22, the Company also secured a one-year extension to licence P2244 (100% WI) that contains the Pilot discovery and is now working towards a finding a farm-in partner or a new owner for Pilot and intends to elicit offers during 2Q and 3Q of 2023 so that a new operator can take the project forward.
Arrow Exploration Corp 20p, Market Cap £46m: Carrizales Norte discovery
A positive update from Arrow’s ten-well drilling programme on the Tapir block, which now appears to have confirmed the potential of the CN structure, with each of the wells in the 2023 capex programme anticipated to add c.3-400b/d net to the Company on success. Supported by net cash on its balance sheet and robust operations in Colombia and Canada driving positive cashflows, Arrow remains well positioned to deliver shareholder upside from the 2023 investment programme and achieve its 3kboe/d net production target in 1H23.
Angus Energy PLC (AIM:ANGS) 1.55p, Market Cap £56m: Production update
A positive update that is in line with the CPR forecasts, which had estimated a P90 target of ~10mmcf/d for the plateau rate of flow from all three wells on the Saltfleetby field after clean-up. Following a transformational 2022 for the Company, additional development operations have been funded by a junior debt facility to limit dilution and management remains on-track to deliver sales gas volume growth in 2023.
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Recommendations are based on a 12-month time horizon as follows:
Buy - Expected return >15%
Hold - Expected return range -15% to +15%
Sell - Expected return
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