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Arrow Exploration (AXL LN/CN)C; Target price of £0.45 per share: Positive drilling results at RCS-1 could add further reserves - The RCS-1 well (the second well drilled by Arrow in Colombia this year) has encountered >55 feet of total net pay across six separate oil-bearing reservoirs in the C7, the Gacheta and the Ubaque, between 7,077 feet and 8,105 feet. No reserves were allocated to the Ubaque, C7 and one of the Gacheta sands. Thes
Companies: UKOG SQZ SOU CASP SOU SAVE REP REP JSE GTE EQNR EQNR ENI ENI COP COP TLW CNE CNE CNE ALV ALV SDX LBE HHR EGY AXL
• The South Tchibala 1HB-ST well has encountered 18 m net hydrocarbons in the Dentale D1 sand and 15 m in the Dentale D9 sand.
• The characteristics of the D1 sand are similar to the Deep Dentale reservoir’s at the producing field in North Tchibala.
• The North Tchibala 1-H and 2-H wells were brought on stream in 2H15 with respective stabilized production of 1,500 bbl/d (D9 formation) and 500 bbl/d (D18/19 formation). The Tchibala 1-H well was flowed at an initial sustained rate of 3,000 bbl/d
Companies: VAALCO Energy, Inc.
Imperial Helium (IHC CN)C; Under review: Merger with Royal Helium to build a material player with discovered resources and huge upside - Imperial Helium is merging with Royal Helium with Imperial Helium shareholders set to hold ~30% of the combined entity. The share exchange ratio suggests a 10% premium to the Imperial Helium share price on the day prior to the announcement. Shareholders will vote on the transaction in June with completion expected in the 2nd half of June. Management, insiders a
Companies: XOM XOM TRIN SHEL RBD OEX NOG MATD ALV ALV IOG GTE FEC EQNR EQNR ENOG BP/ IHC PEN PEN SDX EGY
• 1Q21 WI production was 9,254 bbl/d, broadly in line with our expectations. WI 1Q22 production was impacted by operational issues. Production at the end of March was ~10.9 mbbl/d.
• 2Q22 WI production guidance has been set at 12.3-13.0 mbbl/d, also in line with our expectations. This reflects the recent successful drilling of two development wells.
• The FY22 production and capex guidances have been re-iterated. However, we note that the first two wells of the 2021/2022 drilling programme have
ADX Energy (ADX AU)C; Target price of A$0.060 per share: Flow rate at the top end of expectations at important appraisal well - The Anshof-3 well flowed ~75 bbl/d of light oil (and no water) on test from the Eocene reservoir. This has positive implications for production, reserves and the upside case. The flow rate was at the upper end of expectations (40-80 bbl/d). The well has not been acidized yet which could boost production rate b
Companies: TAL SNM XOM XOM TTE SEPL SHEL REP REP PAT OMV OMV HUR FAR ENI ENI EME EDR DELT DEC CEG AKRBP AKERBP ADX CE1 PEN PEN TETY TETY EGY VLE
• The Avouma 3H-ST development well flowed at 3.1 mbbl/d (gross) on test. The flow rate is above the company’s expectations. The well targeted the Gamba reservoir at the top of the structure in an area that had not been produced by prior wells.
• The total new production from the first two wells of the current drilling programme is already adding close to 7-8 mbbl/d, which was the total additional volume targeted by the entire four well programme. With two further wells to be drilled, the FY22 p
VAALCO Energy (EGY LN/US)C; Target price of £8.00 per share: Encouraging development well results - The Avouma 3H-ST development well encountered 268 metres of high-quality Gamba sands at the top of the structure with 28% porosity and one Darcy of permeability. This confirms the extension of the Avouma reservoir and is forecasted to increase the overall recovery from the field, potentially allowing for additional wells at Avouma. This could allow the firm to convert some 2P reserves into 1P rese
Companies: NOG EOG AKRBP AKERBP OEX 88E HUR I3E EGY GPRK GPRK
Looking at E&P Free Cash Flow - While companies still carry hedges contracted at lower prices, we estimate our producer universe will generate ~25% FCF yield (defined as FCF/EV) in 2022 at ~US$100/bbl. At just US$70/bbl, the overall FCF yield is estimated at 15% for 2023 and >20% for 2024. Assuming US$110/bbl, this increases further to ~40% for each of 2023 and 2024. At YE24, balance sheet net cash, after paying shareholder distributio
Companies: SOU OMV OMV VOG TGL SNM CASP BLOK SHEL REP REP IGAS ENI ENI ECHO I3E CNE ALV ALV SDX GPRK GPRK LBE ADX AXL CE1 PEN PEN TAL PHAR TETY TETY EGY WEN
The outlook for the Oil and Gas sector in early 2022 could not be more different than two years ago. At that time, oil prices had turned negative for the first time and many companies were focused on cutting costs and negotiating with their lenders to ensure survival. The very limited support from investors on the back of an exodus from the sector towards green energy complicated further the situation. Fast forward two years and the situation could not be more different. With the current Brent p
Companies: GPRK GPRK AXL ADX CE1 PEN PEN PHAR TAL SDX EGY WEN TETY TETY
• We are increasing our target price from £5.60 per share to £8.00 per share on our newer higher oil price assumptions.
• We forecast the company will produce ~9.4 mbbl/d (WI) of light oil in 1Q22 increasing to ~11-12 mbbl/d in 2023. With regular drilling, the existing 2P reserves could support production at this level for a further 2-3 years.
• The Etame Marine field is mature and higher oil prices have a material positive impact on cashflow.
• VAALCO is already paying a quarterly dividend of
GeoPark (GPRK US)C; Target price of US$27.00 per share: Reiterating guidance. Doubling dividend. ~US$270 mm free cash flow in 2022 at US$90/bbl – While the YE21 cash and 4Q21 production had previously been reported, 4Q21 operating cashflow of US$88 mm (US$82 mm excluding working capital movement) was higher than we expected (US$72 mm). While this was offset by higher capex than we carried, we view the strong cash flow as a good indicat
Companies: TXP TLW TGL SDX LUPE FEC ENI ENI CNE CNE CNE ALV ALV GPRK GPRK IHC LBE EGY
• FY21 production and YE21 cash had been reported previously (the company has no debt).
• YE21 WI 2P reserves were 19.5 mmboe, implying that 2.3 mmboe WI 2P reserves were added during the period, almost replacing the 2.6 mmboe produced.
• The FY22 WI production guidance has been set at 10.9-12.1 mbbl/d, in line with our expectations. The FY22 capex programme of US$90 110 mm includes US$65-75 mm for drilling, with four new development wells at Etame, and the balance for the FSO conversion. The r
Market update - 10/03/2022
Vaalco Energy (EGY LN/CN)C; Target price increased from £4.80 per share to £5.30 per share: Very large reserves increase – YE21 SEC proved reserves were 11.2 mmbbl, up 250% compared to YE20 (3.2 mmbbl). This large increase reflects (1) a 5 mmbbl addition associated with improved well performance, field-life extension related to cost savings from the replacement Floating, Storage and Offloading vessel, and the addition of proved undevel
Companies: SEPL KOS SOU PGR MAHAA FEC PXT I3E IGAS EOG ENI ENI SQZ TTE SHEL SAVE AOI XOM XOM OMV OMV TAL CHAR BP/ EGY CE1
• YE21 SEC proved reserves were 11.2 mmbbl, up 250% compared to YE20 (3.2 mmbbl).
• This large increase reflects (1) a 5 mmbbl addition associated with improved well performance, field-life extension related to cost savings from the replacement Floating, Storage and Offloading vessel, and the addition of proved undeveloped reserves associated with future drilling locations and (2) an additional 3 mmbbl associated with improved oil pricing at YE21.
• The reserves increase also incorporates the a
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Companies: Savannah Energy Plc
Forecast and valuation update
Companies: IOG PLC
We are increasing our fair value estimate for Pantheon Resources to 208p, from under review (previously 184p). The change reflects what we believe was an unambiguously positive winter drilling campaign. This full note details the background analysis to the change in estimate of fair value, which includes a valuation table and an assessment of the forthcoming Alkaid#2 well.
Companies: Pantheon Resources plc
With several opportunistic but timely acquisitions in 2021, coupled with the recent surge in the oil price, Zenith Energy has, in our view, completely transformed itself and its value proposition to investors. While for various reasons it has not been easy for the market to fully recognise and reward this transformation, we expect 1) doubling production, 2) further strengthening of its balance sheet and 3) becoming Free Cash Flow (FCF) generative this year, will make it difficult for the market
Companies: Zenith Energy Ltd.
Alternative Resource Capital
Chariot has signed a front-end engineering and design (FEED) agreement with Schlumberger and Subsea 7 (the Subsea Integration Alliance) for the Anchois gas development project. Chariot and the Subsea Integration Alliance will adopt a “one team” integrated and collaborative approach to fast-track first gas from Anchois to maximise the return on investment for all stakeholders. The scope of work covers all the development's offshore elements including well completions and subsea production systems
Companies: Chariot Limited
AfriTin Mining (“ATM”) has announced another record-breaking quarter from Uis Phase 1. Tin production increased 13% QoQ to 152t for the three months to May (Q1 FY’23), supported by record recoveries, which along with cost initiatives drove a 16% improvement in All-In Sustaining Costs. The strong performance continues to support growth projects including incorporation of petalite lithium and tantalum by-products, upon which AfriTin recently announced positive drilling and metallurgical test work
Companies: AfriTin Mining Ltd.
Hannam & Partners
RCS-1 flow testing results
Companies: Arrow Exploration Corp.
EQTEC has reached a key milestone in its Southport energy from waste project with the appointment of Anaergia as EPC and O&M partner. This is a complex project using multiple waste treatment solutions and we see EQTEC’s inclusion as a demonstration that it’s technology can combine with these to create an optimal outcome.
Companies: EQTEC PLC
Trinity has announced the commencement of its highly anticipated onshore drilling campaign. The Company's fully funded, six well drilling programme will target an aggregate 450-1,100mmbbls of reserves at a cost of US$14-17m. In addition to drilling four “conventional” low angle wells, Trinity will also drill one horizontal well and one deeper appraisal well, with both the horizontal and deeper appraisal wells having the potential to deliver substantially higher production and economic returns ve
Companies: Trinity Exploration & Production Plc
Wentworth has announced a positive operational update ahead of its AGM to be held later today. Daily production year-to-date (YTD) has averaged 92.2MMscf/d, a c15% YoY increase (2021: 79.9MMscf/d) and ahead of Wentworth's 2022 guidance of 75-85MMscf/d. As noted previously, the strong performance of the Mnazi Bay asset YTD has allowed Wentworth to increase its total dividend distribution in respect of 2021 to 1.7p per share, a yield of c7.1%. Mnazi Bay continues to supply Tanzania with half of th
Companies: Wentworth Resources PLC
• Section II of the Northern Peruvian Pipeline has been temporary re-opened.
• As a result, 0.72 mmbbl of PetroTal’s Bretana oil has been tendered at the Bayovar port by Petroperu for the July lifting. This oil previously entered the pipeline in late 2020 for which PetroTal was paid just ~US$45/bbl at the time.
• PetroTal will receive the difference between this price and the price at which Petroperu will sell the oil in July (~US$120/bbl), generating over US$60 mm of price adjustment true-up r
Companies: PetroTal Corp.
Wentworth has announced the acquisition of a 25% non-operated working interest in the Ruvuma PSA from Scirocco Energy for an initial consideration of US$3m plus contingent payments of up to US$13m. The consideration is structured to ensure that the majority is only paid in a success case, providing Wentworth with a low-cost entry point into a high growth opportunity. The transaction has the potential to nearly double the Company's production by 2026 and add over 190Bcf of 2P reserves on a Final
• 2022 YTD gross production was 92 mmcf/d, ahead of our expectations of 89 mmcf/d for 1H22.
• The FY22 production guidance remains unchanged at 75-85 mmcf/d. It looks very conservative in our view.
• The company currently holds US$26 mm in cash and no debt. This is in line with our expectations.
• TPDC continues to be current with regards to receivables.
• We re-iterate our target price of £0.45 per share.
Steady growth and dividend
Our Core NAV for the company based on its 2P reserves only i