Hummingbird Resources CEO Interview

Great interview today from Dan Betts, CEO of Hummingbird Resources. The potential cash generation from this company is incredible considering the current market cap. If Gold stays firm, Hummingbird has every chance of being £1+ a share in 2018. Historic first Gold pour is set for Dec 2017. Just under 3 months to go! Should Gold get a jog-on in 2018 to $1500oz (and there are a bucket load of global risks out there) the cash flows are mind blowing. Great hedge play for every investor against volatile market or global events. That said, Gold does not always strengthen or react to risk events as many expect, regardless of the ‘flight to safety theory’ – hence no guarantees of course! Usual Risks apply.

Hummingbird Resources is part of TheShareHub top ten picks for 2017.

https://www.ig.com/uk/market-insight-videos?bctid=5597597035001&bclid=3671160850001

Premier Oil – The penny will drop.

It wasn’t that long ago that the market would price in a decent £500m cap ahead of a speculative and low CoS exploration well. Remember Chariot Oil and Falkland Island plays? Success was priced in weeks ahead of the drill bit even turning. Over the last year or so the opposite has been happening. Companies with proven resource / billions of barrels are priced at levels that suggests the resources will never make their way to commercial markets. That said there are a handful of companies out there whereby the market seems to be more willing to listen. Sound Energy is a good example. Not a bubble of gas or condensate produced, in a risky MENA region and Sales still some way off. Market cap £535m+. Another is SOLG, a miner drilling for resources in Ecuador. No sales and very much early stages – Market Cap £550m. The list goes on.

So what’s the problem with Premier Oil? When will the penny drop? Lets take a quick look at what’s under the bonnet.

1.  As at 31 December 2016 PMO had total 2P reserves and 2C resources of 835 mmboe (excludes ZAMA-1). The 700 mmboe represents our discovered but undeveloped 2P reserves and 2C resources (ie excludes reserves associated with producing assets) and relates to projects such as Catcher and Tolmount in the UK, Tuna in Indonesia and Sea Lion in the Falkland Islands.

2. In July, the company discovered the 5th biggest discovery anywhere in the world in the last five years… ZAMA-1. Tony Durrant, Premier Oil’s chief executive, said the discovery, which suggests the presence of more than one billion barrels of oil, “adds materially to Premier’s portfolio of assets worldwide”. Mark Wilson, an analyst at Jefferies, said the announcement about the discovery “appears about as material as we could possibly imagine at this early stage”. Stephane Foucaud, at GMP FirstEnergy, said the size of discovery was well ahead of estimates and there were several “very encouraging” signs, including that it is light oil and the reservoir is of good quality. Light oil is considered preferable to denser heavy oil as it is easier to process. However Mr Foucaud added: “There is no question that one needs to be cautious until the well has been tested.”

3. Production of circa 75,000 to 80,000 boepd.

4. After spending billions on Catcher, first oil is expected by year end boosting production further with numbers in 2018 expected to top 100kboepd.

5. Wytch Farm Sale circa £200m for PMO’s 15mmboe Reserves. (At last a valuation marker! … Take note and then look at the remaining 1 Billion+ in resources).

6. Net Debt of circa £2.5bln (after recent asset sales).

7. Convertible bond (circa 260million shares) set at 74.71p

8. Current share price 66.25p. Market cap of £340m.

They say if you drop a penny from a very tall building it can kill someone. Not a pleasant thought but the point is when the penny finally drops on investors, PMO will be in demand. A rerating is inevitable assuming PoO sustains levels of $55pb to $65pb range. The production and cash flows are vital to ensure debt is repaid but as proven by PMO of late, they are willing to sell off ageing assets to chop off wedges of debt in a faster and more accretive manner. There are many other assets in folio that can be sold off or farmed out. Sealion is one and of course, the recent ZAMA-1 success is another although a couple or more wells on that world class licence will be required to get a decent price. That’s planned for 2018. Exciting stuff.

In summary (and it is a quick review) PMO have assets in the folio which if in another listed companies hands would enjoy a £500m or £600m market cap per asset and that’s cheap. Perhaps PMO should spin them off? If only! Unfortunately, the debt pile is the cloud that hangs over this company. But assuming Catcher delivers production in late 2017 and ramps up in 2018, PMO’s debt will begin to drop fast with PoO in the mid to late $50’s. Perhaps the markets reluctance to rerate the stock is based on past failures like Solan? Perhaps the market just wants to see Catcher producing and debt reducing before it finally agrees the rerate is warranted? But lets get real here for a moment… the company has production levels higher than Tullow. It has prime assets like Sealion and Zama (not to mention Tolmount). It’s assets are by large in secure regions with no significant threats. The debt is reneg’d.

What’s not to like?

Key event remaining this year is the all important Catcher development. The Floating, Production, Storage and Offloading (FPSO) vessel for the Catcher field (“BW Catcher”) left deep water anchorage off the coast of Singapore and is on route to the North Sea. Expected arrival 14th October 2017. Good news on this development over the next few weeks/months should be greeted with a rise in the sp as key events become derisked.

Premier Oil is part of TheShareHub Top Ten picks for 2017. Current SP = 66.25p. Target price at 100p for 2017. TP of 160p for 2018.

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As with all stocks, please do thorough research and please read the risk warning section here.

Amerisur Resources – Ops and Production Update

Mixed bag of news from AMER this morning (Full RNS below). Whilst the ‘Holy ones’ visit to Colombia was flagged up by the company some weeks ago, the actual production numbers for Sept are on the lower side of expectations. AMER management have created a reputation for blaming their missed targets on anything from weather, to social unrest and now it’s all down to the lord’s messenger. Colombia is a highly populated Catholic region so any ‘event’ which involves the Pope will cause disruption to day to day events. It’s certainly not an excuse I expect AMER BoD’s to roll out again anytime in the future. So lets not dwell too long on this. On a brighter note production (currently) is running at approx 7400bopd. That’s more like it! The stand out news comes from Plat-21 (PAD2N). Roughly 8 weeks ago test production was running at around 400bopd. News of commercial rates at 1000bopd should warrant a headline by itself. It’s impressive and is circa 250% better than pre-drill estimates. This whet’s the appetite ahead of Plat-25 results. Should the latter deliver anywhere near those numbers, then AMER will be in danger of smashing their 7500bopd y/e targets. Add to this the impending test production on Mariposa-1 and the company could be delivering 10kbopd sooner than many thought possible. The latter is trucked via northern routes so cost per barrel is nearer $25pb than $15pb, but that still leaves circa 7500bopd going through the OBA at $15pb all in costs. With PoO looking ready for the $60’s more than the $40’s, the cash generation for AMER looks strong. Considering the company’s current position the share price has some catching up to do. Watch out for Plat 25 news around mid Oct and Mariposa-1 test production news looks ripe for the same period.

With up to 16 wells planned over the next 15 months, AMER looks ready to get those bells ringing again. Praise the lord!

Current sp 19.75p. TheShareHub y/e 2017 target 37p. 2018 target – 50p.

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RNS Number : 3400S
Amerisur Resources PLC
02 October 2017
Amerisur Resources Plc

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 Platanillo Field production and OBA throughput data for the month of September 2017 (the “Period”).

Production

   --     Total production was 120,662 barrels of oil ("BO") during the Period.

— Average production per calendar day was 4,022 barrels of oil per day (“bopd”) during the Period.

   --     Average production per operational day was 6,033 bopd during the Period. 
   --     Peak daily production was 7,397 bopd during the Period. 
   --     Current production is approximately 7,400 bopd.

OBA Export

   --     Total export volume was 122,352 BO during the Period. 
   --     Average throughput per calendar day was 4,078 BO during the Period. 
   --     Average throughput per operational day was 6,117 BO. 
   --     Peak daily throughput was 7,137 BO during the Period.

This data will vary month on month as development, appraisal and exploration operations continue, and also due to the factors involved in operating in the Putumayo region of Colombia. These factors include inclement weather, social issues with drilling and oil transportation and planned and unplanned shut downs for technical works undertaken among others. This data has not yet been approved by the Colombian Agencia Nacional de Hidrocarburos (ANH) or national customs and tax authorities DIAN and may be subject to revision.

Platanillo-21, located on Pad 2N was placed on commercial production at approximately 1,000 BOPD on 29 September. On Platanillo-25, currently being drilled from pad 2N, 9.5/8″ casing has been cemented at 5,682ft. This well, a southerly step out well from Pad 2N, is expected to be logged in mid-October.

The Company has been informed by the Operator that the well Mariposa-1 will be placed on Long Term Test (LTT) in mid-October.

John Wardle, CEO commented: “The disruptions to production caused by social issues and the Papal visit were regrettable but are behind us now and I am pleased that both our production and OBA throughput continue to grow so strongly. Platanillo-21 was a very good result which confirms further the production and reserves potential we have developed at Pad 2N. I look forward to the results of our next well on that pad during October. I also look forward to the commencement of the Mariposa LTT, which I am sure will add further material production to Amerisur. ” ENDS

ShareHub Hotlist 2017 – Week 39

A much better week (up 4%) for the commodity heavy ShareHub top ten picks for 2017. Q3/Q4 is historically strong for Commodities so not unusual to see some bullishness entering the market regarding Oil and Gold. Trafigura and Vitol have both piped up recently with noises that are bullish which can mean one or two things. One… they see a near term pullback in Crude and so in true Goldman Sachs style, are pumping out bullish stories while selling behind the scenes. Or Two… they generally see more money to be made between $55pb to $65pb and would prefer that range. One thing is sure, neither Vitol or Trafigura really know what is around the corner. Will $60pb+ oil simply see Shale producers lock in forward sales and safe guard future production? Will $60pb see OPEC return to normal supply levels in March 2018 once the extended agreement ends? These are the true catalysts and drivers near term. However, it is becoming more clear now that the rebalancing of PoO is here and I would urge all to move attention  away from ‘supply’ and instead focus on ‘demand’. If the latter continues to rise, then there is a genuine threat in late 2018 or 2019 that the supply market will not be able to meet the demand. Oil reserves and development projects are now at there lowest for years due to lack of investment. It could take a year or two before supplies ramp up fast enough to deliver on demand. That’s now a bigger threat and in theory should be sounding warning signs across the market. But in true ‘casino’ style, the market tends to ‘react’ rather than ‘predict’ these days. A sloppy and lazy approach which spanks of complacency and lessons unlearned from 2007/08. For many Oil Guru’s, most know that bull phases come in cycles and that it’s the norm to see volatility in prices when in transition from Bear to Bull. For the time being, the market is ignoring the signals which brings valuation gaps aplenty across the equity sector. Heavy debted players are slow in rerating in periods of uncertainty, but when the picture becomes clearer, I would expect them to move up fast. As mentioned last week, ‘short’ positions have mysteriously dropped over the last few weeks. The dark cloaks retreating into the shadows with no fanfare or media party headlines heralding bull markets, just silence. Sometimes ‘silence’ is a great tool in investing or trading. It can mean many things dependent on the context. If a company that is normally buzzing with news goes quiet, it normally means bad news is on the way. If the hedge funds are ‘short’ on crude, you’ll see the paid media channels issuing bearish headlines and Oil Guru’s wheeled out citing $20pb. Then when the bets are in place, the bullish stories appear. Understanding how ‘news’ headlines appear and ‘why’ is a constant guessing game but it’s becoming more predictable by the day. The market and the main players involved with it cannot help themselves from ’embracing’ the new media world that is out there. Gone are the days of leaving a ticket or tip sheet on the trading floor. Gone are the days when investors read broker notes and believe every word. Gone are the days when anyone actually listens to anything Goldman Sachs says… without a huge dose or pinch of salt. It’s an ever changing market out there and you have to keep on your toes or you’ll be run over… by something… contrived or genuine. I’d like to think investors are smarter today and lessons have been learned from 2008 and commodity bubbles or any bubble for that matter!

Week 39
The newspaper picks lead the way with Telegraph in a comfortable lead. Daily Mail picks hanging in there and ShareHub picks beginning to show signs of a long coming rally. A 4% gain per week for TheShareHub would see the picks in the blue by Mid Nov. Certainly doable if PoO can get through $60pb in coming weeks. After the gigantic 150% rise last year, a moderate result in 2017 would be more than acceptable.

Other stocks to watch which have been given the ‘heads up’ are CERP, AMER and PANR. All three are in transition in terms of production with numbers on the way up. All three are virtually debt free and all three are low cost producers. Cash flows should be pouring in Q4.

Pantheon Resources – Operational Update

A welcome update from Pantheon this morning and much needed after the last update left a few unknowns out there which was not helpful but unavoidable. Hurricane season has been the main reason for delays and the repair of access roads unknown to some degree and this has weighed on investors minds. However today’s update confirms that the roads are repaired and the much awaited flow testing on VOBM#2H is expected to commence immediately after the rig arrives next week. This is a bit of surprise so I would expect some of the more impatient investors (current sitting on the sidelines) to return to the stock with speed.

Previous guidance on Tyler County Sidetrack was for mid October but was reliant on another operator releasing the rig. The date has now been confirmed as circa 24 October which will be music to investors ears. It’s been a long time coming but Pantheon finally look like they are ready to launch higher again. Confirmation on Gas plant progress and projected sales in Nov is inline with previous guidance and as mentioned before on thesharehub, revenue from Gas sales could be as high as £1m per month net to Pantheon in the early stages. That income alone should make them cash flow positive and self funded for the rest of the folio.

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29/09/2017 7:02am
RNS Number : 1780S
Pantheon Resources plc

Operational Update

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, provides the following update:

VOBM#4, Tyler County – wellbore sidetrack

The operator has been notified by the drilling rig company that due to a force majeure event resulting from tropical storm Harvey, the rig is now expected to arrive on location on or about 24 October 2017. Once underway, operations are expected to take around 30 to 40 days on a trouble free basis with testing to occur thereafter. Results will be reported at the conclusion of testing.

VOBM#2H, Polk County – flow testing operations

The Company is pleased to announce that access roads to the VOBM#2H well site have been repaired and are now accessible to the equipment required for testing. A workover rig is now expected to arrive at location early next week ahead of flow testing operations. Results will be reported at the conclusion of testing.

Gas processing facilities, Polk County

The Company is pleased to announce that workers are presently on location and construction of the Kinder Morgan gas processing facility is underway at the previously constructed VOBM#3 pad. Laying of the pipeline from the VOBM#3 pad to the Gulf South trunkline is now also complete. First gas sales remain on track to begin in early November 2017, with receipt of first production revenues to follow in December 2017.

Jay Cheatham, CEO, said:

“I am extremely pleased at the progress of our work following the severity of flooding in East Texas. I am also pleasantly surprised to be in a position to have a rig on location next week on the VOBM#2H well to prepare for flow testing. Operationally, this well has been a difficult one for us following the unsuccessful attempt at horizontal drilling in 2016, which left us with a compromised wellbore which we fracked in an effort to remediate the near wellbore skin damage caused by the horizontal and deviated drilling. The well logs on VOBM#2H compare favourably to the VOBM#1 well and Double A Wells field wells, confirming the presence of potentially significant hydrocarbons in this well. Our job will be to maximise production from a sub optimal wellbore configuration and completion.

“Construction of our gas processing facility is progressing very well and our pipeline is now laid, setting us up for first production in November 2017 in line with guidance provided by the pipeline operator. These are exciting times for our company.” END