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Today’s Oil & Gas Update – Eco (Atlantic) Oil & Gas, Bahamas Petroleum, IGAS Energy and more…

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Market Update: Wednesday 20 November 2019

Eco (Atlantic) Oil & Gas (LON:ECO): Financially stable ahead of 2020 drilling programme

Bahamas Petroleum (LON:BPC) – MSA signed with Baker Hughes ahead of 2020 drilling campaign

President Energy (LON:PPC) – Completion of Angostura Acquisition

IGas Energy (LON:IGAS) – Refinancing saves c.£1m per annum

Energy Prices

Brent Oil US$59.8/bbl vs US$62.5/bbl yesterday

WTI Oil US$55.2/bbl vs US$56.8bbl yesterday

Natural Gas US$2.6/mmbtu vs US$2.6/mmbtu yesterday

Oil Price News

  • Oil prices are coming under pressure during after comments from Russias energy minister cast doubt on curbing oil production further with OPEC next month
  • The price of crude has breached a key technical level and could continue to slide amid lingering US-China trade talk uncertainty
  • US crude futures were down 0.9% at $60.6/bbl on the New York Mercantile Exchange

Gas Price News

  • Natural gas prices moved lower today as warmer than normal weather is expected to cover most of the US for the next 6-10 and 8-14 days.
  • Prices declined 4.5% on Monday after dropping nearly 4% in the prior week.
  • There is one tropical disturbance in the lower Atlantic that NOAA projects 10% chance of turning into a tropical cyclone over the next 48-hours

M&A activity builds momentum across the sector

  • The past 12 months has seen the acquisition of Faroe Petroleum (FPM.L) by DNO (DNO ASA); a £380m bid for Eland Oil & Gas (ELA.L) by Seplat Petroleum (SEPL.L); and Amerisur Resources (AMER.L) currently engaged in a competitive bid.
  • Aramcos proposed IPO is another good barometer for sector sentiment in our view. Days before a widely expected official approval for what would be the worlds largest IPO ever, Saudi Arabia has yet again delayed the much-hyped listing by at least several weeks, with international investors seemingly not buying the Saudi insistence that the biggest oil company in the world is worth US$2tn.

UK Sector Backdrop

  • AIM Oil & Gas indices were flat YTD despite some volatility, yet stabilising 2018s 13% decline
  • These indices have largely tracked the oil price, and with the futures market also remaining steady
  • The small/mid cap constituents of the sector are due to engage in an active year of operational activity in 2020, with a number of high impact drilling catalysts

Company News

Eco (Atlantic) Oil & Gas (LON:ECO): Financially stable ahead of 2020 drilling programme

Share price: 50.25p, Market Cap: £99.6m

  • As at 30 September 2019, the company had cash and cash equivalents of CAD$30.7m.
  • Eco therefore remains well funded and currently has CAD$27.9m of cash and cash equivalents on the balance sheet.
  • During the first quarter of the financial year, Eco completed its previously announced private placement raising gross proceeds of CAD$22.6m underlining shareholder support.
  • Operationally, following two successful discoveries alongside Tullow and Total in Guyana, results suggest that the samples recovered to date from Jethro-1 and Joe-1 wells are mobile heavy crudes with high sulphur content.
  • The Joint Venture partners on the block have engaged a third-party consultant with heavy oil development expertise to help conduct preliminary evaluations related to production and commercialisation.
  • In terms of wells slated for 2020, multiple prospects currently being reviewed with high graded candidates under consideration for a drilling programme next year.
  • The operator, Tullow, is preparing a budget for long lead items including wellheads and casing.
  • Once the final well fluid reports and related testing data for the two discoveries as well as results from other regional exploration activities, including drilling of the neighbouring Carapa well have been analysed and evaluated, an updated CPR will be published.

Conclusion: Eco remains in a very comfortable financial position ahead of an active drilling programme next year. There are several development scenarios for Eco and its partners in Guyana, particularly given significant technical advances in extracting heavy crude. Heavy and high sulphur oil has been developed and produced in the North Sea, Gulf of Mexico, the Campos Basin in Brazil, Venezuela and Angola and therefore we believe the partners will have no shortage of opportunities to develop these large discoveries.

Bahamas Petroleum (LON:BPC) – MSA signed with Baker Hughes ahead of 2020 drilling campaign

Share price: 1.9p, Market Cap: £40.6m

  • In August 2019, following extensive technical discussions and mutual due diligence, BPC received proposals (including pricing) for a range of well-related equipment, including wellheads and tubulars, for the intended drilling 2020 campaign.
  • At that time, and as previously announced, BPC issued a notice of award to Baker Hughes for provision of that equipment, as a precursor step to a detailed contract as is customary in the industry.
  • Following a further period of negotiation and collaborative work, BPC has now entered into a Master Services Agreement ("MSA") with Baker Hughes for the provision of specified equipment.
  • Further to the MSA entered into, BPC has now also placed a first purchase order with Baker Hughes , for a wellhead set, a contingency well head set, and 36" conductor casing.
  • The wellhead set is being manufactured to order for BPC's intended well, and delivery is expected in a timeframe consistent with the current drilling schedule.

Conclusion: In ordering these high value, long-lead items, along with the other multiple work streams ongoing, management is taking demonstrative steps to ensure the company remains on track for drilling to commence as per its previously announced drilling schedule.

President Energy (LON:PPC) – Completion of Angostura Acquisition

Share price: 4.2p, Market Cap: £47.3m

  • Following its October announcement, President has confirmed that its acquisitiRead More – Source

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