Europa Oil & Gas (LON:EOG) has core producing oil assets in the UK, along with various exploration and appraisal projects in various stages of development in the UK, Romania, France and Western Sahara. The Company currently produces oil from three UK onshore oilfields, with ongoing appraisal work in Romania. The stock has recently been pretty uninspiring, with problems at their Hykeham well in Lincolnshire.
To date, the well has produced only small volumes of liquid and some gas. This result is completely incompatible with both the wireline log and geological data from the well. The well will be shut-in until the analysis is complete and a decision is made on the forward programme.
That has caused something of a selloff, to its current price of 13.5p. However, this sell-off may present an opportunity. Here's why. Seymour Pierce published a note [1] in March, providing a valuation of Europa's assets. Booked reserves are valued at 19p/share - including 8p/share for Hykeham. Clearly there is some doubt about that 8p figure now. However, the jewel in Europa's crown is its 28.7% interest in the Voitinel gas discovery in Romania. The Seymour Pierce report values this at 15p/share, with 36p of possible upside. The 15p/share "core value" for Volitinel (which is additional to the 19p of booked reserves) is based on 2mmboe net to Europa, as opposed to the 15mmbo mentioned in the previously linked RNS.
Now, here's where it gets interesting... Aurelian Oil & Gas Plc (LON:AUL), the operator for Voitinel announced yesterday:
Appraisal of Voitinel/Solca trend in Romania
Results of fracture of 1650 sand available week commencing 17th May with results of flow test from 1400 sand expected in June
So, based on this, we can expect an announcement concerning the 1650 sand next week. I added to my modest holding yesterday. Here's a quick hat tip to Spangle93 who drew this to my attention. Fingers crossed for a positive announcement!
