According to EY, 55% of companies in the AIM oil and gas universe recorded share price gains in Q2, with upgrades to reserves estimated and exploration success the main drivers.
Rose Petroleum’s share price increased 199%. In May, it published results of an analysis prepared by Ryder Scott of the resource potential on its leases for the Mancos and Paradox formations in Utah, and results of an economic analysis of the assets, which highlighted the project’s potential size.
In April, Mosman Oil & Gas said it has signed agreements with Landcorp and a local farmer to access land in preparation for drilling of the Crossroads-1 and Crestal-1 wells in New Zealand. In June, it said it has made an oil discovery at its Cross Roads-1 well at the Petroleum Creek Project and said it had raised £ 3 million through a placing. Funds raised will be used to increase the exploration programme at the Petroleum Creek Project, with the addition of a potential fourth and fifth exploration well and acquiring seismic in 2014. Mosman’s share price ended Q2 up 190%.
Range Resource’s share price rose 165%. In June, it announced an independently audited increase in reserves attributed to its onshore Beach Marcelle, Morne Diablo and South Quarry licenses in Trinidad. It also said it has entered into an agreement with Landocean Energy Services Co. to act as its preferred oilfield services contractor. LandOcean will also provide Range with an option to take up to US$ 50 million of financing. This is mainly to pay for LandOcean’s services, but can be used for other things if the two companies agree.
Sound Oil reached an agreement with Niche Group for a farm down of its onshore Carita license in Northern Italy’s Po Valley. Niche will acquire a 27.5% interest in the license in exchange for paying 100% of the costs of a second well. In June, Sound Oil reported a 31% increase in its internal proven reserve estimates at the onshore Rapagnano gas field in Italy. Its share price ended Q2 up 79%.
Bowleven announced that it has delivered on its strategic intent to sell part of its interest in the Etinde permit offshore Cameroon by entering into a farm-out agreement with LUKOIL and NewAge. Under the agreement, Bowleven will reduce its interest in the permit from 75% to 25%, and receive aggregate consideration of approximately US$ 250 million. Bowleven’s share price ended Q2 up 34%.
45% of AIM oil and gas companies registered a fall in share price in Q2, reflecting disappointing exploratory drilling results and the need to preserve cash as they search for funding partners.
Tower Resources’ share price fell 79%. In June, it had announced that the Welwitschia-1A well offshore Namibia had not found hydrocarbons and will be plugged and abandoned. Drilling had been behind schedule owing to late rig-delivery and operational issues. Current expectations from the operator are that cost will now be approximately 10% over budget. Tower has a 30% working interest in the license. The partners have agreed not to drill further and will wait for a full analysis of the current well and its implications for the block.
In May, Magnolia Petroleum said it has commissioned a detailed reserves report, including the company’s 2P and 3P reserves, which the directors expect will show a reduction on 2013 figures due to a downgrade throughout the industry in net reserves assigned to the Mississippi Lime formation, Oklahoma. Magnolia said this is down to an improved understanding of the geology of the play among operators. It’s share price fell 48% over Q2.
In June, Petro Matad said that, although several companies have shown an interest in farming-in to its license area in Mongolia, no agreements have been reached. It added that finalizing a farm-out agreement could take time, and as a result it has agreed a number of measures to reserve cash resources and maximise funds for operational and farm-out activities. It’s non-Executive Directors will forgo their usual fees for six months and receive conditional share awards in lieu. Petro Matad’s share price ended Q2 down 42%.
In May, Fastnet Oil & Gas said the FA-1 well in the Foum Assaka block offshore Morocco would be plugged and abandoned after failing to find commercial hydrocarbons. This was the first exploration well in the Foum Assaka license area, in which Fastnet holds a 9.375% interest. Fastnet’s share price fell 42% over the quarter.
San Leon Energy’s share price fell 41%. In April, it said it has decided not to proceed with the acquisition of 75% of Alpay Enerji in Turkey, originally announced in September 2013. It said it had decided its capital will be better spent in Poland, where its Lewino-1G2 well shows great promise for shale gas production in the northern Baltic Basin, adding that, following a new round of successful deals in Poland, it was on the verge of production and cash flow in its core operating area.
Adapted from a report by Emma McAleavey.
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