Petrofac – Predators circling

News late out last night on predators circling Petrofac. It’s not surprising as the company has been halved in price due to an SFO investigation that is yet to show any proof of wrong doing.

Petrofac is a big player with plenty of rolling contracts and some projects worth billions. Any predator will know the industry well and know the real value of those contracts. The only thing the potential buyer is unsure about is of course the outcome of the SFO enquiry. That said, if previous industry reports and fines are to be understood, then any fine is likely to be minor when compared to the hefty slice already incurred on the companies market cap.

PFC was trading at 490p prior to the commodity bounce which occurred several weeks ago. PoO has since increased by over 25%. Yet PFC’s sp is some 70p below those previous highs.

Not for the faint hearted. There is significant risk here. But after the market cap being sliced in two, it’s certaily offering decent risk vs rewards odds with or without a potential bidding war.

US oilfield services giants Schlumberger and Halliburton are understood to be among the firms circling scandal-hit Petrofac and are bolstering their attack teams to capitalise on the FTSE 250 firm’s vulnerable share price.

Just days after The Sunday Telegraph revealed that Petrofac has beefed up its defences in preparation of a takeover siege from some of the biggest names in the oilfield services industry, City sources have confirmed that the two US firms and an undisclosed Middle Eastern bidder have parachuted in advisors to look at an opportunistic bid for the company.

Petrofac has been left vulnerable to a swoop after its share price fell by half following a Serious Fraud Office probe into the firm’s alleged involvement in the Unaoil corruption scandal.

The Daily Telegraph understands that no party is ready to pull the trigger imminently but City chatter has suggested a bid of around 600p per share is being considered by the interested bidders.

That would represent a hefty premium on its current 406.9p share price but a bargain compared to the 946p-per-share valuation it peaked at earlier this year before the SFO investigation.

It is thought that top shareholder and chief executive Ayman Asfari will be resistant to a takeover but a spate of consolidation deals in the oil services sector – including Wood Group’s merger with Amec Foster Wheeler – has upped the pressure on firms languishing with lowly valuations.

Premier Oil – Trading Update

Premier Oil issued a trading update this morning. Key points below. Nothing nasty in there and all on track. That said, there’s nothing stunningly great in there either! One thing is clear. Without the EoN deal which brought in 13kboepd+ (approx) the numbers would not look so pretty. Progress is steady and as per expectations. Symptomatic of a business that has come back from near death. Investors will raise an eyebrow at the silence on Sealion. Premier have given this project some lip service in the past but on this occasion it doesn’t even get a mention. Not surprising really. Premier have enough on their plate with Catcher and sustaining current production and there is no way on this earth that they will be allowed to stretch the capex to Sealion anytime soon. The positive notes in the update come from Catcher which is on track and below budget. First oil is cited for Dec but as Enquest investors will know all too well by now, first oil is a big event yet small commercial milestone in real terms. Getting Catcher up to full speed is the key calendar date for PMO investors. The cash flows are much needed. Looking at the numbers, slippage can be seen across some divisions of the business and natural production declines are to be expected. Solan is still knocking out sub commercial rates which will barely cover the interest payments on the £1.2bln+ debt incurred. Had Solan never happened, PMO would be in fine shape today. Hindsight is a wonderful thing! It’s now vital that Catcher delivers and delivers fast. Any issues like that of Solan and it would potentially be the end of PMO. Catcher must deliver – end of.

Premier Oil is part of TheShareHub top ten picks for 2017.

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PREMIER OIL PLC
Trading and Operations Update
16 November 2017

Premier provides a Trading and Operations Update for the period 1 January to 31 October 2017.

Highlights

·   Production averaged 76.6 kboepd year-to-date with planned 3Q maintenance completed; on track to meet previously increased full year guidance of 75-80 kboepd

·    Catcher on schedule for first oil during December; FPSO swivel and buoy successfully mated with the final rotation test imminent and final topsides system commissioning proceeding well

·     Heads of Terms signed for FPSO lease extension on Huntington field, extending the life of the field

·     Government agreement signed for the sale of Tuna field gas in Indonesia to Vietnam

·   Zama appraisal: pre-unitisation discussions with Pemex underway; likely 4 well appraisal programme commencing late 2018

·     Disposal programme ongoing including sale of Wytch Farm field for $200 million; shareholder circular to be issued imminently

·     Forecast 2017 operating costs of c$16/bbl and gross G&A of $150 million, below budget and in line with previous guidance

·    Forecast 2017 development, exploration and abandonment expenditure expected to be $300-310 million, down from previous guidance of $325 million

·    Net debt of $2.8 billion at 30 September; debt reduction forecast at year end, including effects of ongoing planned disposals

Tony Durrant, Chief Executive, commented:

“Through strong production, cost control and disposal activity, cash generation is ahead of plan. The excellent progress on the Catcher project, combined with the recovering oil price, will accelerate debt reduction through 2018. The agreement to export Tuna gas to Vietnam, signed last week, adds to Premier’s significant backlog of future growth opportunities.”

Pantheon Resources – Commencement of First Gas Production

Historical moment for PANR investors as the company confirms that first gas has started to flow direct into the sales gas pipeline. Today’s date will go down as the moment PANR moved from being an explorer to being a producer. There’s still plenty for the company to do to prove up the licences and the CEO has made no secret about his intention to flog the lot when the time comes, but for now, gas is flowing and assuming the rates are stable, cash flows could/should see the company cash flow positive and self funded. I’m a little cautious on the latter statement and it could take 30 to 40 days from now before PANR are ready to inform the market on how much gas is flowing. That’s the only negative in this mornings RNS. An initial flow rate would have been welcome but I suspect it is low to begin with and will build over the next few weeks. Meanwhile drilling continues on the all important VOBM#4, in Tyler County. A decent result here and it really will feel like christmas has come early for Pantheon investors. It’s been a tough year to date so good news is a long time coming and richly deserved. I would expect news on VOBM#4 around first week in Dec although testing operations could require different equipement/rigs and take several days/weeks thereafter.

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15 November 2017
Pantheon Resources plc

Commencement of First Gas Production

Pantheon Resources plc (“Pantheon” or “the Company”), the AIM-quoted oil and gas exploration company with a working interest in several conventional projects in Tyler and Polk Counties, onshore East Texas, is pleased to provide the following update:

Commissioning of gas processing facilities, Polk County

The gas processing facility operated by Kinder Morgan in Polk County was successfully commissioned yesterday, 14 November 2017, with the VOBM#1, VOBM#2H and VOBM#3 (the Polk County wells) all having been tied-in to the facility. First gas sales have already commenced.

The facility will now be optimized and production will be ramped up progressively over the next few weeks in line with standard commissioning practice and best practice reservoir management. A further update will be provided over the next 30-40 days, once operations have bedded in and production volumes have been optimized. A photograph of the fully commissioned gas processing facilities has been posted to the image gallery at www.pantheonresources.com

The Company expects to receive first production revenues in late December 2017/early January 2018.

VOBM#4, Tyler County

Operations in Tyler County on the VOBM#4 sidetrack continue on schedule. Results will be reported at the conclusion of testing.

Jay Cheatham, CEO, said:

“I am extremely pleased that the Polk County gas plant has started production. This really is a significant moment in our Company’s development as we move from an exploration company to an exploration and production company. It is the first in a series of anticipated hook-ups to production infrastructure as we continue to drill out and exploit our acreage position. The recent strengthening of both oil and natural gas prices come at a beneficial time for all shareholders.”

ShareHub Hotlist 2017 – Week 45

Not long to go before the year end if upon us. Due to Bank Holiday’s, the last week or so of December is virtually all non trading days. Thus, whilst there are 7 calendar weeks to go (approx), it’s actually more like 6 trading weeks left.

The last 2 or 3 weeks of trading across the bulk of sectors/markets feels a bit tentative if anything a little disinterested. Advances have been strong in 2017 so it’s no surprise to see the market easing up. With the bonus season looking very much in the bag there might not be too much of an incentive for the usual santa rally this year. I guess we’ll have to wait and see. For Oil focused investments, OPEC’s Nov 30th meeting is the key event this month so perhaps a little ‘wait-and-see’ trading going on between now and then. PoO has had a good month or two and a period of consolidation or trading sideways within the $60pb levels (Brent) would be beneficial and support a decent launch pad for further rises should OPEC push the current output quota past March 18 and onto Dec 18. An extension of an extra 3 or 6 or 9 months has not been priced in by the market and there is still some doubt about which it will be or whether it will be extended at all. It’s not a shoe-in despite the encourageing noises from Saudi’s and Russians. The Saudi’s have been making quite a few noises across the MENA region with Iran, Lebanon, Yemen, Syria,  Iraq and Qatar all being targeted in some form or another. It’s not unusual to see the Saudi’s throwing their weight around. But recently, the noises seem to be getting louder and louder. Oil investors will need to keep a close eye on the MENA region as any negative developments (such as recent pipeline explosions) can send Crude sharply higher. Considering the potential woes from North korea, the globe is far from ‘settled’ and uncertainty is rife. In situations like these, you would normally see GOLD showing significant strength. Signs of the precious metal in demand were seen last week as prices rose some $20oz before mysteriously getting spiked down on what looks like a huge paper deal late on Friday. These kind of volatile swings suggest that some meddling in GOLD prices is underway and it’s unclear why or whom would want GOLD prices suppressed right now. Fingers have been pointed at the usual manipulators as US banks such as JPM and Goldman Sachs have been ticked off in the past for using heavy handed tactics to suppress prices. The next few weeks will be interesting to watch as I expect GOLD demand to keep building into 2018. Will the mysterious ‘seller’ appear again to keep prices in check?

Week 45 saw the top picks swing around again for 1st position. This time it was the Telegraph that put in a good shift with the Daily Mail showing signs of being puffed out after a very good 3 week run. TheShareHub picks continue to bob along with little movement eitherway which is odd considering the bulk of the picks are sensitive to PoO. The latter has performed well so it’s about time equities began following suit.

The heads up picks/stocks of note of late such as AMER, CERP, SOLG and PANR all had quiet weeks. The majority consolidating and awaiting news. All have exploration / development work underway and all should have good news flows coming soon on key events. PANR is widely expected to announce first gas sales this week which will be a huge and highly significant event for the company.

Also, keep an eye out for an update from Hummingbird Resources. The company are presenting at the Proactive Investors forum on Nov 16th and investors will be keen to know how advanced the company is regarding Yanfolila Gold Mine. First Gold pour is currently cited for before year end. It’s not long now. A very exciting period ahead for the company and investors awaits.

Breaking News: Saudi Arabia tells its citizens to leave Lebanon immediately

Obvious implications for Crude prices as no one wants another Middle Eastern war. The Saudi’s are already at War with Yemen with the UK Government more than happy to supply them with bombs and arms to get the job done. See Independent article here

Messing around with Lebanon would without a doubt concern the Israeli’s as well as the Iranians. With Saudi Arabia clearly undergoing some changes in ‘management style’, things are very unpredictable.

Certainly a development to keep a close eye on if you are invested in energy stocks.

Any full on Middle Eastern war could see the price of oil back into the $100’s. I’m not sure the global recovery (which is still weak) could deal with that.

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Via Reuters/AP News today.

Saudi Arabia has ordered its citizens out of Lebanon amid skyrocketing tensions between their two governments.

A brief statement carried by the state-run Saudi Press Agency called on all Saudis living in or visiting Lebanon to depart, and warned against travel to the country.

“Due to the circumstances in the Lebanese Republic, the kingdom asks its citizens who are visiting or residing” in the country to leave it as soon as possible, a Saudi Foreign Ministry source quoted by the agency said.

Lebanese Prime Minister Saad Hariri shocked his country Saturday when he announced in a televised statement out of Saudi Arabia that he was resigning. He has not been seen in Lebanon since.

He said his country had been taken hostage by the militant group Hezbollah, a partner in his coalition government and a major foe of Saudi Arabia. Saudi Arabia says it considers Hezbollah’s participation in the Lebanese government an “act of war” against the kingdom.

Lebanese President Michel Aoun has said he will not consider the premier’s resignation until the two meet in person.

Also on Thursday, Mr Hariri’s political party called for his immediate return to Lebanon.

Following a meeting of his Saudi-aligned Future Party in Beirut on Thursday, the party issued a statement saying it was “necessary” for Hariri to return “to restore Lebanon’s dignity and respect.”

The statement read by former Prime Minister Fuad Saniora seemed to indicate that Mr Hariri is being held in Saudi Arabia against his will.

Mr Hariri resigned his post abruptly on Saturday in a strange, pre-recorded speech.

In his absence, Lebanon has been awash with speculation the 47-year old prime minister may be held against his will in Saudi Arabia. Saudi officials have denied Mr Hariri is under house arrest.

AP and Reuters.