21.6p target13 Feb 2020 14:34
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VSA
VSA Morning Flow Test
This Morning’s News
Columbus Energy Resources (CERP LN)
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Columbus Energy Resources (CERP LN) has announced that flow testing of
the Lower Cruse is underway with results expected in due course.
Furthermore, at the last update logging of the Middle Cruse was still
underway, however, now that it has been completed the company believe
that it presents a valid commercial secondary target to the Lower Cruse and
could produce at commercial rates. This is very positive, in our view,
providing CERP with a clear development option for the initial
commercialisation of the deeper South West Peninsular (SWP) targets.
The Trinidad oil and gas regulation indicates that CERP must complete
testing at the deeper Lower Cruse before shallower targets are tested.
Results of the initial flow test on the Lower Cruse are likely to be available in
the coming weeks with Middle Cruse testing following immediately.
As previously announced in January, CERP successfully injected the first tank
of CO2 into well AT5X in the Inniss-Trinity field. CERP and its partner,
Predator Oil and Gas (PRD LN), now hope to begin continuous injection in
March 2020. Predator have full funding responsibility for the CO2 project
and until 30 September 2020 have the option to purchase Inniss-Trinity
from CERP for US$4.2m.
In Suriname, CERP has a limited minimum work obligation at the Weg naar
Zee block which covers geological and geophysical studies in order to inform
a decision on an extended well test in H2 2020. CERP reported a cash
position of US$3.1m at end of January 2020 and the Suriname MWO is likely
to cost around US$0.5m indicating that although an important part of the
strategy the impact on cash has been minimised through the agreement
with the Suriname authorities. Additionally, we note that certain members
of the executive management team have converted options into ordinary
shares, however, have reaffirmed their long term commitment to their
equity positions which align their interests with shareholders.
CERP continues to make progress in relation to its three strand strategy on
the SWP, CO2 project and in Suriname. The announcement in relation to the
Middle Cruse is a positive step in this regard and we look forward to
upcoming flow test results.
We reiterate our Buy recommendation and target price of 21.6p/sh.
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