Which AIM OIl Exploration and Production Companies are not barking!

20th Mar '16 by Square Mile Junky

12 comments 17904 reads

There seems to be a lot of AIM companies in the exploration space that are best described as barking, ramped on twitter, and followed by the del and Rodney brigade - this time next year and all that. Which AIM companies in Oil Exploration (I am being a contrarian here) do you think will have longevity and are managed well?

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Square Mile Junky

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12 comments

gus 1065

20th Mar '16

For me Pantheon Resources (LON:PANR), Ithaca Energy Inc (LON:IAE), and Sound Energy (LON:SOU) (assuming you are happy to lump gas in with oil). Up 73, 37 and -2% respectively in the last month.

Sound has missed the boat so far - though still up 21% in the last 3 months and with a lot of potentially positive pending news. Ithaca Energy Inc (LON:IAE) will be around for a while and I rate the management. Pantheon Resources (LON:PANR) is my pick for upside but not necessarily longevity as the management team is looking to develop and sell their potentially massive Texan field in the next couple of years or so prior to retirement. Even after a bit of top slicing, this has now become my largest single portfolio holding (oil, AIM? I must be mad).

If you fancy a nibble of something closer to home, UK Oil & Gas Investments (LON:UKOG) is a classic marmite stock with a significant position in the "Gatwick Gusher". It's either a rampers' paradise or the answer to the UK's balance of payments problems depending on who you listen to. Tom Winnifrith is, to say the least, not a big fan! Still, I can't complain. The SP is up 88% in the last 3 months (up 150% at one point) and I now have a small residual position at nil cost having cashed out on some of the recent rise.

Good luck if you are thinking of investing - AIM oil is even more of a casino than the rest of the market.

Gus.

Square Mile Junky

20th Mar '16

Thanks Gus. Much appreciated. UKOG - I will pass on this one - not a fan of certain management. Ithaca is interesting and keeps coming up on my radar, as is Sound (some good Morocco finds) - so I will delve deeper.

I am also looking at what's happening in Senegal and Mauritania at the moment - some world class oil and gas finds in the last 12 months - and repeated success with the drill bit - feels like the next Angola/Nigeria in terms of oil potential. There are a few AIM'ers in Mauritania and a non-aim small co - FAR ltd from Aus in Senegal - I'll check those out as well.

Thanks!

gus 1065

20th Mar '16

Take your point on UKoG, as I say opinion is divided on that one. I looked at FAR and liked the look of it but don't have a cost effective way of buying Aussie stocks. I know Malcolm Graham Wood rates them.

Square Mile Junky

20th Mar '16

Malcy is a fan of Far as a good way in on Senegalese acreage. He is also keen on Chariot with their Mauritania acreage - which appears to be more oilier than the Kosmos acreage which has found commercial gas - 20tcf I think.It all depends on whether the market believes Chariot will farm out - too many false dawns. Share price seems to be floating upwards gently at the moment. Who knows?

Square Mile Junky

1st Apr '16

An interesting week. Chariot farmed out an elephant sized prospect to ENI for a free carry and some cash back and are now in partnership in Rabat deep with ENI and Woodside. They completed 3d seismic in Brazil this week. They also recently completed 3d seismic in Namibia on a giant prospect. A new significant investor (>3%) popped up. And the jewel in the crown - Mauritania - same fairway as the recent elephant discoveries by Kosmos in Mauritania, and FAR and Cairn in Senegal hold a lot of promise and are likely to be farmed out next imo.

gus 1065

2nd Apr '16

Thanks for the heads up on Chariot. Looks interesting. ENI is a good long term partner with deep pockets that may well pony up on some of the other prospect fields.

The new investor(s), Mr and Mrs Newlands, don't appear to have any previous connection with the company. I believe David Newlands was previously non-exec Chariman of Paypoint prior to that FD at GE and Chairman of Kingfisher and Tomkins. A quick Google identifies them as occasional big ticket investors in resource companies such as Serica Energy (3.3% - still on register) and North River Resources (5.8% - no longer on the register). A 3%/£500k investment is quite a vote of confidence in the company.

Square Mile Junky

3rd Apr '16

Thanks Gus. You are right on David Newlands. There are other companies as well that they take >3% interests in.

Re 'may well pony up on some of the other prospect fields'. Its an interesting one for sure and I have wondered in the past if Woodside (the other Morocco partner) would farm in to Chariot in Mauritania (Woodside pulled out of Mauritania way back in the day - but are now set on coming back to the Atlantic margin). .The previous chairman of Chariot now works for Woodside,

There are several companies in the other data rooms - Mauritania, Namibia and Brazil at the moment. I am sure the market were thinking Mauritania (because of the Mauritania/Senegal successes of late with Cairn/Far/Conoco in Senegal, and Kosmos in Mauritania) would be farmed out next. It makes it even more interesting now as to when not if on Mauritania. Larry and the technical team have proved again that they know how to get acreage, do the IP work, and farm it out. I bet Larry feels he now has more leverage on Mauritania because a) he can bide his time to an extent, and b) he has just landed a carry in Morocco.

There is an interesting video on the Chariot website that is well worth a watch : http://bc.video.brrmedia.com/services/player/bcpid4810178583001?bckey=AQ~~,AAAAsC7blrk~,X9VcU7f9F9_4FmMCSoAuKLBleJjYrC_D

gus 1065

5th Apr '16

Excellent call on Chariot Oil and Gas (LON:CHAR) SMJ. Took an opening position yesterday having read through the recent releases and reviewed the financials. Even had a look at the chart (heaven forbid!) which looked pretty encouraging. Share price up 21% at today's close.

Thanks for the heads up.

Gus.

Square Mile Junky

5th Apr '16

Thanks Gus. Early days but the contrarian in me tells me sentiment is turning for the upside. Technically - its getting interesting. I am loading up .. and expect another farm out and another free carry on an elephant soon - most likely Mauritania is next. Buy on any retracement will be my mantra....

Square Mile Junky

8th Apr '16

HI Gus, well that was a great week for Chariot. Following on from the Morocco farm-out and drill carry, the news that Tullow has elected to enter the drill phase in Namibia lights a fire under Chariots Namibia acreage as well - and no doubt the recent completion of 3d in Namibia will be studied a bit closer.

The chances of a Namibia farm-out are now high imo, and Mauritania would rate as very high. This is early days and its now in the process of being re-rated. I am now feeling extremely bullish on the stock and will keep loading up on pull backs as we trend upwards. I see no reason for the trend not to keep pushing on for a long time ....

gus 1065

8th Apr '16

Hi SMJ.

Agreed - at one point today the share price had just about doubled in the space of the last week. It sold off a little towards the end of the day but still a fantastic run.

I suspect there will be pull backs and more buying opportunities as the recent sharp increase in price attracts the day traders who will move in and out of the stock quite quickly. There will inevitably be a fair bit of rumour and ramping/de-ramping on the bulletin boards too, especially in the absence of immediate news flow.

My experience with Pantheon Resources (LON:PANR) this year saw the share peak in the 150p's in early January before falling back sharply to an intra day low of about 70p in mid-Feb (on no particularly bad news but a delay due to blockage on their latest well test and a bear raid orchestrated by some misinformation about production costs disseminated a well known prophetic share blogger) before getting back up to today's 146p close. Important to form your own view on what the business is worth, what the risks are and ride the rollercoaster accordingly.

Good luck and enjoy the ride.

Gus.

Square Mile Junky

13th Apr '16

Still going strong. Reading the tape there is clear accumulation happening. Occasional bot drop on the sell side followed by increased accumulation on the buy side. Nice trick. Today's PI conference has left me feeling very bullish on the second farm-out - this time likely to be Mauritania. Looks lie Chariot will soon have multiple free carries on elephant sized drills... as well as more cash...

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Which AIM OIl Exploration and Production Companies are not barking!

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Square Mile Junky

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