General VPP Discussion Thread

21st Oct '10 by MrT

8 comments 4538 reads

This is a general discussion thread for developments at Valiant Petroleum (LON:VPP).

Valiant Petroleum plc is an independent oil & gas company with a primary focus on exploration and production within the UK Continental Shelf. Valiant’s strategy is concentrated on targeted core areas of the Northern North Sea, West of Shetland and the Central North Sea.Valiant achieved first production from the West Don field in April 2009, followed by first production from the nearby Don Southwest field in August 2009. The Company has a number of production and exploration opportunities to pursue over the next few years.

http://www.valiant-petroleum.com/

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MrT

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8 comments

MrT

10th Aug '09

RNS update today from Valiant - http://www.stockopedia.com/news/announcement/VPP/090810vpp000340.htm

Cut its end 2009 production forecast to around 10,000 barrels of oil per day (bopd) of net production capacity.
West Don (17.3% interest) - Second production began production at the end of last week and that the start-up flow rates had been in line with expectations. 1st production well on West Don has been producing at a gross rate of around 6,000 barrels of oil per day ("bopd") having experienced a steeper decline than was initially expected. Considering a third well.
Don Southwest (40% interest, alongside Petrofac) - "While production potential has been demonstrated to be high from Don Southwest, actual production is currently limited to the Area 5 well which is currently producing at gross rates of around 12,000-14,000 bopd, with actual average production rates constrained by facilities uptime and shuttle tanker offloading schedules".

djpreston

11th Aug '09

Hi Mr T

VPP is a frustrating stock (arent they all?)

It has a lot of attractions and earlier in the year it kept coming up in my system as a prime buy. In the end we bought no more than a toenail's worth (since sold). The reason? Liquidity, or the lack of it. We have great relationship with the company's brokers but there just isnt (or wasnt) any interest in lettng stock go lower down and the spread is brutal considering the mkt cap. As a result theres a large part of the investment community that knows VPP, likes it, but wont be buyers of it.

Shame really.

Rgds

ohisay

26th Oct '10

Viola a duster.

http://www.investegate.co.uk/Article.aspx?id=201010261300030232V

Reaction looks a little overdone - RBC had a duster in at - 80p against their risked nav of 966p.

An initial result from the Viola North exploration well is anticipated during October. The first well on the highly compartmentalised 108-326mmboe Viola structure in the Central North Sea is targeting ~60mmboe, which in itself could add ~300p/share fully unrisked to our 966p/share NAV. On success, the well could be sidetracked to prove-up additional volumes, increasing the total potential upside of the campaign to ~540p/share (~55%).

A dry hole would reduce our NAV by ~80p/share and also reduce the likelihood of a well on the adjacent Viola South prospect that is pencilled-in for 2011.

djpreston

26th Oct '10

FWIW MacQ had 104p risked for th e 100mmbbl target (576p unrisked) in their 870p target.

Also have to wonder the implications for Viola South prospectivity. Will Apache want to take up their option on a second well 1.5x cost ie 75% for 50% interest?

VPP's production profile looks like its flattening so given that there isnt much lse in terms of clear explo "oomph" is VPP that attractive now? Core value 650-700p including Crawford (undeveloped as yet)??

I dont see much to get worked up about wrt VPP now. Maybe a sale to another outfit looking for a matuing production platform? Heck, woudl fit in well with ENQ or evena merger with Ithaca....

Via Lactea

26th Oct '10

Maybe a sale to another outfit looking for a matuing production platform?

Why?

Two recent exploration wells for Valiant - one success (Tybalt) and one failure (North Viola). OK a very small sample, but 1 in 2 is a very good return. Why then write off the company as takeover fodder? Surely Serica and Salamander (to name but two) are more in the category of mature production and failed exploration?

Valiant only came to the market two and a half years ago and at 750p. Would those backers want to sell out now?

There are additional, easy tie-in targets around the Dons (assuming success), and future production from Causeway and Crawford, then Tybalt to come on stream further out. More exploration is planned for 2011 (eg. Handcross - net 70 mmbbls P50).

I think they've budgeted for $65 oil, whereas they're getting around $80 atm and the Dons are perfoming well. I don't see why they shouldn't move on with their plans.

Valiant's got the usual caning for a duster. I agree it would fit well with some others, but I don't think management will be looking for that. If someone else wants a crack at Handcross and Valiant's blocks adjacent to Cladhan, with production to underpin the bid price, then maybe they'll enquire, but I wouldn't expect them to be welcomed.

Success with the appraisal of the Dons' H panel before the year end could swing sentiment back.

djpreston

26th Oct '10

FnF

Not aiming a dig at the company at all. Theres nowt wrong with ti, just as per Ithaca IMO, which we hold.

Id argue that bulking up the company via a merger with say Ithaca would make a decent sized mid tier production based company with lots of cashflow to go and work on new explo options or acquisitions. Indeed, given the cashflow from VPP starts earlier than Ithaca then there is an even more complementary profile to be achieved.

The problem with VPP (as with IAE) is that the explo upside isnt phenomenally attractive on the face of it.

Via Lactea

26th Oct '10

DJP.

No offence taken. It's just that I thought (with the obvious exception of today's result) Valiant were doing well. I've no problem with today's hit either. It's in the nature of this game and I can look further out.

As for explo upside, we're promised an operational update soon and that should clarify prospects.

I don't suppose they'll have difficulty farming out their blocks around Cladhan. There could be a cluster of low net cost exploration wells for Valiant there. We'll see.

ohisay

1st Dec '10

Update including maps of prospective areas.Exploration potential looks quite promising including the Cladhan areas which I've commented on elsewhere.

http://www.energy-pedia.com/article.aspx?articleid=143215&editionid=100552

Worth reflecting on the GS note on VPP last month.

http://www.oilbarrel.com/fileadmin/content/pdfs/Brokers_Notes_Oct_10/50%20E%20and%20Ps%20to%20change%20your%20portfolio.pdf

We initiate coverage of Valiant with a 12-month price target of 809p and a Neutral rating.
Valiant’s activities are focused on the UK North Sea where it has production from the Don fields, undeveloped discoveries (Tybalt,Crawford, Banquo, Helena) and exploration prospects (with further potential upside from Tybalt, longer dated exploration such as Handcross, and the Viola South prospect which we believe still has a chance of being drilled despite the recent disappointment at Viola North and to which we ascribe a 5% likelihood of success).
We believe Valiant is a well balanced company, with the value of its producing assets and discoveries supporting over 120% of the share price and the exploration prospects offering re-rating potential in the event of success.

There is a new presentation on the website today indicating current guidance of c 7,000 boepd .for this year and next rising to 10,000 target 2012 after the Caseway development.All oil as far as I'm aware.

http://www.valiant-petroleum.com/cms/assets/valiant%20operational%20update%2001%20dec%202010.pdf

(And note the southern area of Cladhan slide on p13 which they'd like to drill 2nd half 2011.)

Strikes me as an attractive little company at a £230m market cap The kind of company PMO might be interested in ?

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General VPP Discussion Thread

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MrT

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