ShareHub Hotlist 2017 – Week 49

Week 49 is best summed up as another sideways trading week as the markets await the Fed Reserve Interest Rate decision later this week. All the headlines of late are all about BitCoin. It’s astonishing how the ‘establishment’ seem to be left behind on this one. It’s not like the market to be wrong footed and BitCoin has done precisely that. Now with access to futures trading, BitCoin has joined the big boys. It’s not going away anytime soon and it’s going to take a while before the usual vampires like Goldman Sachs and co get their teeth into it. It’s an ‘animal’ of many forms at present and the normal market manipulators (big trading banks, you know the types, the ones that fiddle Libor, Forex and well… just about anything) are struggling to decide which part to grab onto. The tail? The head or just a paw or ear? Everyone wants a slice and like anything that is ‘virtual’ or ‘digital’ it’s anyones guess where it is headed. My guess is that there will be a period of trading whereby some individuals find their BitCoins have chocolate in them. One thing is sure, money is flowing in and out and it’s not currently being washed through the normal large US Banks controlling hands. It’s trading via many exchanges via many people across the globe with many being untraceable. Even HMRC are behind in terms of how to class the profits/gains.  With the Bots and Algo’s in a spin it could be a while before some boffin finds a new way to calibrated them.

In the meantime, GOLD which has been around longer than man and traded for centuries and centuries is apparently under pressure due to this new cryptocurrency. Don’t believe a word of it! Utter nonsense. If there is one thing certain in this world, it’s the precious metal that is Gold. At $1250oz, it’s trading significantly lower due to Fed Rate rise fears and also lack of volatility in markets. When the main markets top off (and they will) and volatility returns, GOLD should edge higher. BitCoin has a future, but after such a good run, would you sell equities and put money into Gold at a low entry level or put it into BitCoin at all time unknown highs? Ponder that for all of a second.

December is usually a month to get news out before year end. Companies generally want to get ‘bang for the buck’ with good news releases hence better to announce these when Markets are still sober and not too punch drunk from the festive period. With the calendar showing week 52 as virtually a non starter due to holidays, companies would be wise to get good news out either this week or early next week. Any later, and it could be forgotten or missed. Thus far, some companies are getting news out there now with Hurricane Energy getting their CPR out early doors. Other stocks covered by TheShareHub such as WRES and SOLG have issued news worthy updates which should see the share prices progress higher in 2018. Other news has yet to arrive with CERP and HUM due to update the market on production levels and first Gold pour respectively. Finally, AMER is certainly a puzzle. PoO has doubled in price from lows. AMER’s production has doubled from lows. And the share price has halved from highs down 17p to 17p (previous highs 34p). Crazy stuff but that’s what happens when you have a large investor who seems intent on offloading stock in a very poor volume market. When the selling stops, AMER should move higher with ease as the business progress in 2017 is worth 34p a share and not 17p. That’s a huge valuation gap to fill but when it happens, I suspect it will happen fast. No guarantees of course.

Week 49:

Daily Mail and Telegraph continue to go toe to toe and it’s going to the wire. TheShareHub picks will do well to finish with minor blushes circa 10% down but anything near 20% down is more than a bloody nose. No matter how good the 130% increase was last year, it’s not nice to see a fall at anytime. PoO’s done its part yet Equities have lagged considerably and that has to change at some point in the future as it makes no sense at all. A few quarters of decent earnings and debt reductions will see many of the mid cap sector bellwethers like Tullow, Premier Oil and Enquest do well.

Note: The data on the Telegraph is incorrect but the percentage increase is fine. Since LSE change over to various currency and decimal points, data feeds have been all over the place and some providers like Interactive Investors are still struggling to get data feeds to work properly after 3 to 4 weeks of LSE changes. Not acceptable and clients should seek some kind of compensation from ii and others for not supplying the service that they advertised. If you don’t ask, you don’t get! And if you don’t get… move your business to another provider.

Amerisur Resources – Monthly Production Update

Go back 6 months and you would find Amerisur pumping out 5000bopd. Mariposa-1 LTT months away from first oil and PoO trading at $42pb. AMER Share price at the time… 27p.

Today, AMER updated the market on production levels topping 7200bopd. Almost 50% higher than back in June. Mariposa-1 LTT is underway and quickly rising to 3000bopd (approx 1000bopd net to AMER). PoO trading at $58pb, 40% higher than 6 months ago. With Mariposa-1 expected to continue rising to levels near 4500bopd, AMER should be adding a further 500bopd to totals in January subject to well performance and social issues of course. Share Price today… 18.5p. Yep, you heard that right. AMER would need to rise 50%+ just to get back to levels at 27p last seen when the company was doing 50% less production and with PoO almost 40% lower. The mind boggles. It’s certainly a puzzle. Sooner or later the disconnect between AMER’s share price performance and the business performance should close. I suspect when the market has evidence of increased cash flows it may well rerate back to 27p levels within a couple a days. The market has a habit of trading irrationally for months and months only to correct its poor valuations in a matter of days. 2018 looks a great year ahead for AMER as the company heads towards 10kbopd assuming future well successes. Mariposa-1 and the CPO-5 licence really is a game changer for the company.

At 18.5p, it looks a gift.

AMER is not part of the sharehub top ten for 2017 but has been covered via the ‘heads up’ category designed to alert investors to value/growth opportunities in stocks. Usual Risks apply. See the risk section for more information.

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Amerisur Resources PLC Monthly Production, OBA and Operational Update
04/12/2017 7:00am / UK Regulatory (RNS & others)

Monthly Production, OBA Throughput and Operational Update

Amerisur Resources Plc, the oil and gas producer and explorer focused on South America, is pleased to provide unaudited production from the Company’s two producing fields, the Platanillo Field, and the Mariposa-1 Long Term Test (LTT), and provide OBA throughput data for the month of November 2017 (the “Period”). Mariposa-1 commenced production on 17 November 2017, with stable production post a Pressure Build Up Test commencing 24 November 2017.

Production

— Total production was 181,537 barrels of oil (“BO”) during the Period.

— Average production per calendar day was 6,051 barrels of oil per day (“bopd”) during the Period.

— Average production per operational day was 7,037 bopd since the initiation of the Mariposa-1 LTT.

— Peak daily production was 7,217 bopd during the Period.

— Mariposa-1 LTT production has increased from a controlled rate of 1,487 bopd to a controlled rate of approximately 3,100 bopd.

— Company expects further increases in production from Mariposa-1 LTT.
— Current Amerisur production before royalties is approximately 7,051 bopd.

OBA Export

— Total export volume was 173,055 BO during the Period.
— Average throughput per calendar day was 5,768 BO during the Period.
— Average throughput per operational day was 6,310 BO.
— Peak daily throughput was 7,066 BO during the Period.

The company is expecting a sustainable year end exit rate of production in excess of 7,000 bopd and average production for 2017 of slightly below 5,000 bopd on a calendar day basis due to peace process related social issues, and above 5,000 bopd on an operational basis.

Platanillo-25 has been produced at a controlled rate since early November and has stabilised at 180 bopd with low water cut.

John Wardle, CEO commented:

“I am pleased current production is over 7,000 bopd. Platanillo production was affected due to a short period of regional social issues in the early part of November which have now been resolved by central Government. Platanillo-27 on Pad 2N is drilling ahead on time and budget and we expect results from this well in December. I was pleased to report the commencement of the Mariposa-1 LTT, which is adding further material production to Amerisur, with, we believe, more to come from this well as the LTT process develops.”

Hummingbird Resources – Tipped in Financial Mail

Not surprising to see Hummingbird beginning to hit the newswires. It can’t be long before first gold pour commences and the cash starts rolling in.

Please view the article at source via the safe link below to give Joanne Hart the clicks she deserves.

http://www.dailymail.co.uk/money/investing/article-5139621/MIDAS-SHARE-TIPS-UPDATE-Gold-producer-aims-coin-in.html

MIDAS SHARE TIPS UPDATE: Gold producer that survived near meltdown now aims to coin it in

History: Dan Betts’ family has nine generations in gold

Gold is in the Betts family blood. Betts Metals is the oldest independent gold refinery in the country, founded in 1760 and now run by Charlie Betts, the ninth generation member of the business clan.

This genetic predisposition to gold has no doubt stood brother Dan Betts in good stead at Hummingbird Resources, the exploration firm that he founded in 2005.

Hummingbird floated on Aim in 2010 at 167p, when operations were based in the middle of the Liberian jungle, with an estimated 800,000 ounces of gold to its name. Estimates rose steadily but the gold price fell and with it Hummingbird’s share price.

Midas recommended the stock in March 2011, when it was 143½p. By September 2016, the price was just 22½p, following a tumultuous five years, during which the group almost collapsed and Betts shifted the focus from Liberia to Mali.

The performance was hugely disappointing, even though it primarily reflected difficult market conditions. Midas suggested that existing investors should stick with the business and that 22½p could turn out to be a bargain price for new investors. Today, Hummingbird shares are 38¾p and the group is just days away from pouring its first gold at Yanfolila in southern Mali.

Ore has been mined for three months, stocks are building up, the processing plant is undergoing final tests and activity should kick off in earnest next week. The Mali site is expected to produce 130,000 ounces of gold annually from next year so Hummingbird will finally become a commercial producer, seven years after listing and nearly 12 years after it was founded.

Coining it in: The company also intends to produce a collection of decorative, one-ounce Hummingbird gold coins

Coining it in: The company also intends to produce a collection of decorative, one-ounce Hummingbird gold coins

Brokers expect revenues of around $120 million (£90 million) for 2018, rising to $157 million in 2019. No revenue is forecast for this year and there will be losses of around $6.5 million but in 2018, the group is forecast to make almost $16 million of profit, rising to over $60 million the year after.

The company also intends to produce a collection of decorative, one-ounce Hummingbird gold coins, available to shareholders, using gold mined at Yanfolila and refined by Betts Metals in Birmingham.

Midas verdict: Shareholders saw their investments dwindle almost to nothing before Hummingbird staged the beginnings of a recovery over the past year. But the company has survived, testimony to Betts’ perseverance. The future should be smoother – and the group still has a vast asset in Liberia, which could yet deliver value in the years to come. At 38¾p, the shares are a strong hold and new investors could benefit from snapping up a few – and even purchasing a commemorative coin.

Tullow, Premier and Enquest – Things beginning to look up again

You wouldn’t know it looking at the respective share prices of TLW, PMO and ENQ but all companies have thus far managed their debt piles, completed or part completed, large development projects, grown production levels and are now on the verge of reducing sizable chunks of debt. Tullow have already begun lowering debt and Premier (via asset sales) are following closely behind. These 3 companies are all trading at levels last seen when PoO was in the $30’s. Today, PoO has virtually doubled.

Today’s news from Enquest confirms that covenants have been relaxed which is another sign that debt holders believe recovery is around the corner. Earlier in the week, Tullow secured a new RBL further endorsing confidence in the business. It’s been a tough 2 to 3 years, but it looks like all 3 companies will survive and should indeed begin to flourish again with PoO in the $60’s. The latter is of course unpredictable but all companies hedge portions of production to ensure downside risks are protected – to some degree. PoO will always be unpredictable but with Saudi’s seeking an Aramco IPO next year, it’s highly likely that PoO will be higher in 2018 than it was in 2017.

News emerged yesterday that OPEC and NON OPEC (Russian’s) are expected to agree a further 9 month extension to the production levels set this time last year. That’s positive for PoO but still requires a decent level of compliance. Wild cards like Iraq and Iran recently said that they agreed to the 9 month extension but figures show that neither are keeping to their agreed quotas. Iraq should hang their heads in shame. They have systematically gone about raising production higher and higher and their compliance levels were at just 52% according to some sources. The recent spate with the KRG has seen production fall over the last couple of months which is ironically the only reason why their compliance has risen.  I would expect today’s OPEC meeting to focus firmly on ‘compliance’ as without it, the production deal is weak.

The MENA region has been in conflict for decades now and recent stirring by the Saudi’s is not helping relations. Whether it’s Qatar, UAE, Yemen, Lebanon, Israel or Iran… the Saudi’s seem intent on throwing their weight around. Markets in general have been watching supply and demand closely via US data but have paid little attention to production levels dropping across the globe. Venezuela is in deep trouble. Investment in African producing regions has fallen due to increased or unpredictable tax regimes and corruption. Investors no longer look at Nigeria as an investment in the same way as before. The North Sea is becoming more attractive due to Government tax policies but also due to the stability and quality of the licences. It’s hard to tell where the new supplies are going to come from but a year or two at $60pb or better should certainly allow the industry to test the impact of US shale recovery. Hence, it’s going to require constant monitoring by investors and that includes EV’s and other technologies that seek to move demand away from traditional energy resources.

The next few years will be interesting to watch and assuming PoO settles in the $60’s or better, Tullow, Premier Oil and Enquest should all recover well. Finally, watch out for M&A. Historically, it tends to kick off when the green shoots are past the frosty period and looking stable. Still vulnerable, many ‘recovery’ companies in the sector may get picked off in 2018.

TLW, PMO and ENQ are part of thesharehub top ten picks for 2017.

ShareHub Hotlist 2017 – Week 47

The tussle between Daily Mail picks and Telegraph top ten continues with the pair swapping places again. Nothing between these picks and more girations to come no doubt as we enter the final few weeks of the trading year. As mentioned last week, the markets/indices do look a little punch drunk. Question is… do they have some legs left to deliver a Santa Rally? Some analysts are already pen’ing in double digit growth for the indices in 2018. Anything is doable in this casino market but 10%+ would put the DOW at near 27k levels. That’s more than toppy. The Commodity sector is certainly one to watch as the rebound has been slow compared to the blue chips / major indices. Many equities have lagged commodity rises and this is blatantly clear across a number of heavy debted companies like Tullow, Premier Oil and Enquest. It’s down to these companies to prove the market wrong and deliver the doubters with some figures that blow expectations away. A few quarters of strong cash generation and debt falling should be enough to kick start some rerates. Of course, to do this PoO will need to be stable and supported in the $60’s. We’ll find out the Saudi’s, Russian’s and OPEC’s view on Thursday Nov 30th. News may filter out ahead of then but Thursday is the big event. In the past, the market has tended to ‘sell the news’ but the sell off doesn’t usually last long before prices are bouncing back.

Stocks of note over the last week are AMER, SOLG, HUM, HUR, OPHR and FPM. The first two are via the ‘heads up’ coverage. AMER look on track to deliver some very solid production numbers in Dec with Mariposa-1 now contributing to cash flows. The company really is in the best shape I have seen it in over 2 years and with PoO in the $60’s, it’s going to feel more like PoO in the $70’s based on AMER’s OBA pipeline $10pb (approx) savings.

SOLG has drifted along for a few weeks now as the banks complete the distribution of the £40m bought deal to selected clients. The news should be thick and fast over the next 6 months+ which puts SOLG top of the wish list for the sharehub 2018 picks. All will be revealed on Jan 2nd.

Hummingbird Resources are quietly delivering on all their promises with Gold pour on time and budget for end of Dec 2017. The way progress is going, it would not surprise me to see a Gold pour happen a week or two before then. Thereafter, 2018 looks like a year of rerating for the business.

HUR has been drifting for months now as it loses it’s high impact exploration shine and moves into the boring phase of development. That said, it’s not that long now before first oil in 2019 and I would expect the share price to recover as time ticks on and development milestones are passed. One highlight to watch out for in Dec is HUR’s updated CPR. Dr Trice will be keen to get this out after making several improvements in modelling and subsequently on commercial terms.

Ophir Energy is another ‘drifting’ stock. Like HUR, they too have a large development project (Fortuna) although the difference is they are still looking to get sanctioned and fully financed. News last week hints that an indicaton on financing terms will be outlined to market circa Mid Dec. OPHR is languishing at all time lows so there’s plenty of upside and growth to come should they please the market with Fortuna funding terms.

Last up is FPM. Faroe have been tickling along nicely and with PoO in the $60’s, the cash should be rolling in especially as they are essentially cash rich and debt free. That said, the recent bond deal and move to advancing development projects will turn FPM into a more typical ‘debt’ balanced E&P company. I say ‘balanced’ as the debt is moderate and not excessive.

Overall, plenty of news to come in Dec and with a bit of luck and guidance from OPEC, the PoO sensitive stocks should do well. Of course there is always risk to manage and examples that AIM is not the only hotbed of coals out there can be seen via the likes of Centrica, Mothercare and Carillion to name a few. The blue chips and large mid caps have big risks too and it feels like we are entering a prolonged period of ‘change’ from the ‘old’ to the ‘new’ as technology and the fast developing digital world rewrites the way we do things on a daily basis.

Russia-OPEC Agree on Framework to Extend Oil Cuts – Bloomberg

All eyes and ears turn to next weeks Nov 30th OPEC meeting. An extension through to Dec 2018 really would be bullish for Crude. OPEC do meet twice yearly so one would think an extension to June 30th looks a shoe-in. The current deal expires on March 31st 2018. Hence, an additional 3 months would be welcome, but 6 months would be something the market (quite frankly) is not expecting. Hedge funds increased shorts on WTi last week and are ready and poised for some downside should OPEC disappoint. It’s likely that more news will be drip fed into the markets over the next few days – but lets be clear here, it’s just ‘chatter’. OPEC will decide ‘officially’ what to do on Nov 30th and history shows us that the Saudi’s have not been shy from walking away and leaving things as they are if other members do not maintain their share of cuts. Compliance in late 2017 and early 2018 is key. Thus far it’s been pretty good. Long may it continue.

Bloomberg article below:

Russia-OPEC Agree on Framework to Extend Oil Cuts

  • Kremlin said to be willing to announce end-2018 deal on Nov 30
  • Various options still on the table, says Energy Minister Novak
Photographer: Andrey Rudakov/Bloomberg

OPEC and Russia have crafted the outline of a deal to extend their oil production cuts to the end of next year, although both sides are still hammering out crucial details, according to people involved in the conversations.

The Organisation of Petroleum Exporting Countries and several non-OPEC nations led by Russia will meet next week in Vienna to discuss prolonging their output curbs. Moscow had been hesitating over the need for an extension now because the current deal doesn’t expire until the end of March.

After days of talks, Moscow and Riyadh now agree they should announce an additional period of cuts at the Nov. 30 meeting, the people said, asking not to be named because the conversations are private. Russia wants the extension deal to include new language that would link the size of the curbs to the health of the oil market, they said.

“The goal to re-balance the market hasn’t been met in full yet, so everyone is in favor of extensions to reach final goals, Russia also supports these proposals,” Energy Minister Alexander Novak said in an interview with RBC television on Friday. “Different options are considered now, we will discuss details at the Nov. 30 meeting.”

The deal isn’t finalized as Russia and Saudi Arabia haven’t yet agreed on the new language, the people said. Oil ministers are due to start arriving in Vienna for the talks early next week.

West Texas Intermediate crude, the U.S. benchmark, extended gains to the highest level since July 2015. Futures for January delivery rose as much as 1.6 percent to $58.92 a barrel in New York.

OPEC and non-OPEC countries are discussing several formulas to accommodate the Russian demands, including linking the cuts to the supply-demand balance on the global oil market, or the level of fuel inventories in industrialized countries, the people said. Another option is making a clear reference to the fact that the deal could be reviewed again early next year, including the possibility of calling another meeting.

Russian President Vladimir Putin talked on the phone with Saudi King Salman bin Abdulaziz on Nov. 21, during which they “emphasized importance of further coordination between Russia and Saudi Arabia in the global hydrocarbon markets,” according to a Kremlin statement.

— With assistance by Dina Khrennikova, and Angelina Rascouet