Daily Oil & Gas Monitor
Argos Resources (LON:ARG): Today’s announcement that the Company has commissioned a new CPR, while in itself is not newsworthy, but hopefully an indicator of things that are to come. We believe that this news should presage the start of the Company’s drive to start progressing the prospects in to drill ready targets, that are subsequently then drilled. With ~$5mm on the balance sheet, the Company will either have to do a fundraising, or start to look for farmin partners if it is to progress things significantly from these levels.
GeoPark Holdings (LON:GPK) – Balance Sheet Strengthened: Todays news that GeoPark has secured $300mm of debt funding underlines how much its business has grown, and the extent to which its core businesses have begun to generate excess cash (over and above what is needed to support production). While this is almost certainly good news, as it paves the way for the Company to continue its upward trend, our continued wariness of Argentina means that it has also increased the inherent risk on the balance sheet. While we make the point here, as there is a window in which the burden of the debt could be difficult to manage if Argentina nationalises the oil industry, it rapidly becomes a moot point, as this investment will drive the Company’s country diversification, which can only benefit the risk profile. All in all, we believe that the management have managed the Company’s portfolio well, and we see no reason, overall, why this will not continue.
In this news:
• Successful placing of 144A $300mm notes
• Priced at 99.332%
• Coupon of 7.50%
• Final maturity of the notes will be 11 February 2020
• Proceeds will be used to:
o Investment in Latin American assets
o Repay existing debt of approximately $170mm (due 2015)
JKX Oil & Gas (LON:JKX) – Rig Mobilised: The Company’s infill drilling programme is going to restart on its Novo-Nikolaevskoye asset in March. This will positively impact production, which in turn should produce healthier cash for the Company, which it is in desperate need of.
Ithaca Energy (LON:IAE) – Acquisition Complete: Ithica has completed the acquisition of an additional ~12.9% interest in the Cook field, the deal it previously announced in October 2012, taking its interest to ~41.3%. the field is located in the UK North Sea and will result in a ~3.4mm bbl increase in 2P reserves.