Sound, Coro, Echo, Wentworth, Eco, Longboat, Talon, + Africa Oil Week 2019 videos…

Wednesday, 13th November 2019 12:18 - by Malcy

WTI $56.80 -6c, Brent $62.06 -12c, Diff -$5.26 -6c, NG $2.62 -2c

Sound Energy

Sound announced yesterday two board changes, Mohammed Seghri takes over from James Parsons as interim CEO although he stays as a consultant until next May to lead the deal behind the scenes. Also Marco Fumagalli replaces Simon Davies who leaves on unexpected health grounds, I wish him a speedy recovery.

Given how Sound is now looking, it is great to see Mohammed taking over as the company reinvents itself as a well financed non operator in Morocco. I am certain that the market has yet to comprehend the deal that has been done at Sound and assuming it goes through gives an interesting, potentially very rewarding royalty play with substantial possible upside.

Coro Energy/Empyrean Energy

Coro has announced a Tambak-1 update, the well has intersected the intra-Muda reservoir of the Mako field and data established indicates a successful appraisal of the field and confirms the large, aerially extensive single tank model for the field.

These very thick sands were a surprise and it bodes well for volumes and confirms the model with ‘nice clean gas-water contact in the main reservoir which is very helpful for field definition and is also a fantastic correlation to the seismic’. Coro CEO James Menzies appears delighted as I am sure Empyrean Management are also. I republish my recent interview with James Menzies as its pretty pertinent.

Core Finance CEO interview: James Menzies of Coro Energy

Echo Energy

Echo has announced it has completed the acquisition of the Santa Cruz Sur asset package which fits well into the portfolio, with Tapi Aike imminent times are exciting for Echo.

Eco (Atlantic) Oil & Gas

Tullow, In its awful profits warning this morning has also updated on the Jethro and Joe wells drilled with Eco offshore Guyana. In what seems like a massive overreaction (albeit not untypical of Aim stocks) Eco shares have almost halved when I last looked. Whilst the crudes are deemed to be heavy they are moveable, have good porosity and permeability and are eminently saleable and all is not lost. Also to be considered is that the crude for Hammerhead is of a similar nature and that hasn’t stopped Exxon from buying two FPSO’s…

The reaction in the shares does not take this into account nor does it account for the 9 different production scenarios all of which are positive and currently profitable. So, with the company taking the view that they are commercial it should also be borne in mind that for Eco this is just the beginning, two from two from a large portfolio of excellent assets looks good to me. With the updated CPR due shortly and the Carapaca well drilling as we speak this looks like a major buying opportunity to me, there is a lot more to come from one of the most prospective blocks in the world right now…

Wentworth Resources

Wentworth has announced that CEO Eskil Jersing is ‘stepping down from the board and leaving with immediate effect’. No need for any translation of management speak there then as the man who was due to bring acquisitions and growth to the company has not delivered and has paid the price.

So, is it two wasted years for Wentworth or are there good things to come of it? Firstly Katherine Roe is a highly respected industry executive and whilst in an interim position will run the company perfectly well going forward. After all there have been a number of good things going on in the last two years such as a good cleaning up of the finances, debt almost eliminated, receivables sorted ensuring that the company has come a long way, most of it in her department.

Indeed now WEN pays a dividend and still has a very good asset in Tanzania from which to payout from so all is not lost. Indeed although no deals have been done by the deal-maker, and I am assured that a couple got close, it appears shareholders are happy with the status quo. Better not to do deals than be NAV destructive is clearly the mantra and it doesn’t get much more risk averse than that. If there are to be any deals my guess would be that they would stay in Tanzania thus keeping the beta roughly the same, stick to the knitting as they say…

Longboat Energy

Put him in a Longboat ’til he’s sober goes the song and today comes an opportunity to re-invest in the old Faroe management who have formed up, to a man from the old firm. The promised £10m raise is only the beginning and will pay for the pens and paper needed for assessing and bidding for assets in the North Sea of which the company sees plenty, soon the balance of buyers to sellers will swing the other way. It also means that investors should expect this raise to be the tip of the iceberg as there will be subsequent demands for funds as deals formulate.

Messrs Stewart, Hammer and Cooper, along with many more sailors formerly of Faroe have a good track record and will surely be worth following and investing in, after all who’s to say that they might not buy back former Faroe assets not working for their new owners…? A bit more flesh on all this after I have spoken to the team later today.

Talon Petroleum

Talon is an up and coming, albeit Aussie quoted, E&P company who are also looking to increase their asset base in the North Sea, crowded isnt it? Having already bought some assets and having a first class management team they announce today that they have submitted multiple applications for new exploration licences in the OGA’s 32nd Seaward Licencing round.

Africa Oil Week

I was in Cape Town last week and teamed up with a few industry players to chat about all things Africa, and sometimes more. Below are a number of interviews done by myself or Andrew Monk CEO of VSA Capital which I hope you find interesting.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.