Share Name Share Symbol Market Type Share ISIN Share Description
Oilexco LSE:OIL London Ordinary Share CA6779091033 COM SHS NPV (CDI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 6.90p 0.00p 0.00p - - - 0.00 05:00:10
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 174.0 59.2 -18.1 - 15.44

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chart trader2000: By Sarah Kent and Kevin Baxter LONDON -- The prospect of rising oil prices has the global energy industry considering a strategy that has been unthinkable for much of a two-year-long market slump: Making new investments. Big oil companies are moving ahead with new spending again, says BP PLC Chief Executive Bob Dudley on the sidelines of the Oil and Money conference here. The British oil company he heads has taken final investment decisions on a handful of projects this year and is expected to approve more in 2017, he said. "Investments are back," Mr. Dudley said. "But it's only going to be the very best." Mr. Dudley's comments highlight a pervasive sentiment among oil-industry executives and government officials that there is light at the end of the tunnel, as they grope through one of the industry's darkest moments. For the past two years, the industry has been roiled by oil prices that collapsed to less than $50 a barrel from 2014 highs of $114 a barrel, and never recovering to those previous highs. Now, with the Organization of the Petroleum Exporting Countries promising a modest output cut and prices generally on the rise, executives and industry leaders say they have a sense of guarded hope as oil prices hover around $50 to $52 a barrel. Mr. Dudley predicted an oil price of between $50 and $60 a barrel in 2017, compared with prices that have ranged between $28 a barrel and $53 this year. Ali Moshiri, president of African and Latin America Exploration and Production at Chevron Corp., said U.S. shale producers would invest again if prices rise to $60 a barrel. "The phenomenon of shale oil is real and when prices rise to $60 a barrel you will see the level of active rigs rise. This is inevitable," Mr. Moshiri said during a panel discussion. A rising oil price would allow the energy industry to make needed investments, restore some of the tens of thousands of jobs cut in the past two years and stem some of the economic pain rippling through oil-dependent economies from Venezuela to Saudi Arabia. Cuts by OPEC, the 14-nation cartel that controls more than a third of the world's crude production, would amount to about 1% to 2% of its 33.2 million barrels a day of production and help draw down the vast oversupply of oil that has flooded world markets. But OPEC and other oil producers must be careful, said Fatih Birol, the executive director of the International Energy Agency, in an interview here. Pushing prices too high would boost U.S. oil output, stop rapid declines in production in countries like China and Colombia and put a brake on fragile oil demand, he said. Oil-industry investment declined in 2015 and 2016 and is likely to fall again in 2017 unless there is a sea change -- the first time in recorded history that energy investment would decline for three straight years, Mr. Birol said. John B. Hess, chief executive of the New York-based oil company Hess Corp., warned that without new investments, the world's balance of supply and demand would turn quickly from a glut of oil today to a shortage of petroleum in the future. "We're not investing enough ensure that oil supply keeps up with demand, 2018, 2019, 2020," he said. ConocoPhillips Chief Executive Ryan Lance said the recent rise in prices wouldn't be enough for companies to start spending money again on massive long-term projects. "Prices are still pretty low to justify significant investments," Mr. Lance said. Ian Taylor, the chief executive of the world's largest independent oil trader, Switzerland-based Vitol Group, said the oil-market's supply and demand balance would remain out of whack for the next year. His price prediction for October 2017? $54.99, compared with about $52 in recent days. --Sarah McFarlane contributed to this article.
chart trader2000: Hello Share Swiggers. If you have shares in producing oil firms you might want to consider hanging onto them. And if you have spare cash you might research a few likely companies with a view to a bit more investment. The reason is that the price of Brent crude oil is going up again. It is tickling $50 a barrel as I write. It was there a few months ago when the price level caused some excitement. Quite a few oil companies nudged up on the news, including Shell (RDSA) and BP (BP.). A lot of rejoicing went on then in the Stacey household as I hold far too many shares in both companies. But then the oil price fell nearer to $40 dollars again - and Shell, BP and a lot of other big oilers began to suffer once more. But now oil share prices have been easing forward again. And in my view, this time the value of Brent crude will continue to put on weight. I am indebted to ADVFN for a few facts about Brent crude oil. Brent is a special kind of light oil used to make petrol, marine gas and diesel. Crude oil supplies 40% of the world’s needs. The biggest customer is the USA which gobbles up 20 million barrels a day. China is the second largest consumer of crude oil only taking 8 million barrels a day. And I bet you’ve always wanted to know this - a barrel of crude contains 42 gallons of the amber nectar. Oil shares have let us all down in the last few years. But they have been a big profit maker for share shifters like us before that. The big companies tend to pay juicy dividends too. And it looks to me as though the price of oil will go on rising now, as world surpluses begin to be mopped up. So I'm not selling any oil shares any time now. But you must make your own decision. Oil prices are never stable for long. - See more at: hxxp://
o1lman: Chairman´s Statement We are pleased to announce the Company's Results for the year ended 31 December 2015. 2015 was another busy year for the Company with significant cost reductions delivered early to help preserve the Company's cash position, a broadening of the Company's asset base through opportunistic low cost acquisitions, a focus on executing the OBA pipeline, a strategically important regional asset and ongoing capital discipline. Particular progress was made in 2015 with the OBA pipeline which is expected to be operational shortly. Early in 2015, in the face of the rapidly falling oil price, the Company revised its operating activity plan to fit the lower oil price environment and to ensure its healthy balance sheet and track record of excellent capital discipline was maintained. The Board took a conservative view (at the time) of oil prices, assuming WTI oil prices of $48 per barrel for the year. In that context the Board conducted a review of the 2015 plan, with the aim of minimising the use of high cost transportation until such time as the OBA pipeline to Ecuador was operational, and / or a return to a higher oil price, thus protecting the Company's balance sheet and highly valuable reserve base. In short, production from higher cost pads in the Platanillo field was stopped and more volume was sent through the lower cost Orito pipeline, with trucking to Rio Loro halted. Strategy The Company's strategy is to ensure the lowest cost profitable production from the Platanillo field, to increase 1P and 2P reserves and to diversify the Company's production base through both continuing exploration on current assets and pursuing opportunistic and attractive, low cost acquisitions. The objective is to broaden its drilling opportunities from solely Platanillo, leading to production from more than one oil field while creating attractive and extensive running room in a balanced and diversified portfolio. In line with this strategy, in June 2015 Petro Dorado South America SA ("PDSA"), a subsidiary of Petro Dorado Energy Ltd ("PDEL") was acquired. We paid a total of $8.4 million, compromising of $6 million of Amerisur stock and the replacement of $2.4 million of deposits to support cash guarantees. Post period end, the Company acquired Platino Energy (Barbados) Ltd ("Platino"), a private company, from COG Energy ("COG") for a total consideration of $7 million satisfied in shares. These recent acquisitions will help deliver a diversified production base and in turn allow us to reach our goal faster than we would have been able to without the oil price fall and associated consequential difficulties felt by over indebted oil companies operating in the Putumayo. In both cases much work has been done to de-risk the journey to diversified production. The OBA pipeline, now in the final stages of construction, will allow us to operate and produce oil at a vastly lower cost to rivals and is no doubt the key to unlocking the potential from the Putumayo. Whilst Amerisur produces solely from one oil field the Board is unlikely to recommend payment of a dividend and for the year ended 31st December 2015 no dividend payment will be made. Returns to shareholders however are discussed regularly by the Board and firmly remain a goal. I was pleased to note that despite the constraints of the Company's work programme in 2015 in the interests of capital discipline, the executive managed to increase reserves slightly during the period, a testament to their exceptional abilities and their knowledge of the Platanillo field. Board, Corporate Governance and People During the year all our staff, the vast majority of which are located in Bogota in Colombia, worked tirelessly to reduce costs, increase the efficiency of our existing assets, grow our asset base and deliver the OBA pipeline, a transformational project for the Company providing significantly improved economics. I would personally like to thank them for their hard work and dedication in challenging market conditions. The Company recognises the importance of good corporate governance and the Company's direction of travel in that regard is positive. In January 2015, Stephen Foss was appointed Senior Independent Non-Executive Director. Mr Foss has over 30 years of experience in the capital markets industry, having spent his career in Australia, Canada and the UK. He previously led the Royal Bank of Canada's International Equities business for Europe and Australasia, prior to joining its global investment banking division in February 2011 to concentrate on senior client coverage, Sovereign Wealth Funds and origination in the natural resources sector. After graduating with a Bachelor of Arts with Honours from the University of Western Ontario, Mr Foss began his career at the Sydney Stock Exchange and subsequently held a number of senior management positions with another global investment bank. Mr Foss chairs the Remuneration Committee and sits as a member of the Audit Committee. In addition, there have been a number of remuneration changes during the year. The Remuneration Committee is now fully independent. Following consultation with shareholders on its remuneration during the first half of 2015, the Committee appointed h2glenfern Remuneration Advisory to carry out a review of its board remuneration policies. This was followed, at the beginning of 2016, by further consultation with shareholders after which the Remuneration Committee made a number of changes to its remuneration policy. The key area where changes are to be made is in relation to long-term incentives and given the low oil price environment, executive pay levels have been largely frozen. During the year, Dr. Douglas Ellenor, Non-Executive Director of the Company, renounced all of his 300,000 options over new ordinary shares at 0.1p each which he held under the Company's 2013 LTIP scheme. As of 31 December 2015, Dr. Ellenor had zero LTIP share options in the Company. In addition, on 10 December 2015 Jade Oil & Gas Consulting, which Dr. Ellenor is a shareholder and a Director, terminated its Technical Consulting Services agreement with Amerisur Resources. As a result Dr. Ellenor is deemed an independent Director under the UK Corporate Governance Code of the Financial Reporting Council which sets out the best practice and as a result Amerisur Resources has a total of three independent Non-Executive Directors. The Company's achievements were recognized last year when Amerisur won "Best Oil & Gas PLC" at the 2015 UK Stock Market Awards. The awards, which celebrate the best of UK PLC and recognize companies which have created shareholder value, were held on Thursday 26 March 2015. The other nominees for the category of "Best Oil & Gas PLC" included; BP, Shell, Sound Oil and Premier Oil. Governments The Governments of both Colombia and Ecuador have shown great foresight in agreeing to the building and commissioning of the OBA pipeline. Bi-lateral infrastructure projects between two countries are extremely complicated as the building of the Channel Tunnel between the UK and France demonstrated. Both President Correa and President Santos have shown visionary leadership, and both governments have worked closely to create this major project. Amerisur is proud to play its part. Post balance sheet Post balance sheet, the Company raised $35 million of new equity capital following a roadshow to inform shareholders where the Company was with the OBA pipeline. It was clear from both shareholders and prospective investors that there was support for an acceleration of the 2016 activity programme to take advantage of lower drilling costs to increase reserves, and production to increase flows through the OBA pipeline which is expected to reduce cash opex per barrel from approximately $27 to $15. Due to the support from institutional investors, the Company was able to raise the capital we wanted to expand more rapidly. Outlook With the OBA pipeline now in the final stages of construction and due to be operating in May, the economics of the Company's production improve dramatically, with cash operating costs per barrel anticipated to reduce significantly over a period of time as production gradually ramps up. The lower opex costs will enable us to increase production from the Platanillo field despite the low oil price environment, which, following the advice received from Schlumberger in a report commissioned by Amerisur, will be done carefully and responsibly so as to preserve the long term integrity of the reservoir. The new capital raised in March has enabled us to accelerate the 2016 activity plan to increase reserves and production. We are proceeding with: social consultations and environmental licensing for a Long Term Test ("LTT") and further wells in Coati together with a 3D seismic programme on the Coati license to optimise drilling locations and further define the potential of the field; two step out wells drilled from Platanillo Pad 2N; a well on Put-8 from the Platanillo West pad; a development well on Coati; a Put-8 South N sand anomaly well and two further Platanillo infill wells.
o1lman: Range Resources Limited (‘Range’ or ‘the Company’) 22 February 2016 Strategy and 2016 work programme update Range is pleased to provide its strategy and work programme update for 2016. A detailed operations presentation has been published by the Company and is available on the Company's website at: hxxp:// Highlights · Most active onshore work programme in Trinidad for 2016 amongst independents; · Largest scale waterflood projects in recent times in Trinidad commenced; · Five high impact wells to spud this year; · The Company revises its production guidance with stabilised production goal from current work programme of 2,500 barrels of oil per day (bopd) by the end of 2017; · Fully funded work programme; · Strong cash position of US$22 million; and · Range continues to seek suitable value enhancing production and / or development acquisitions. Strategy Despite the current challenging commodity price environment, the Company's strategy remains the growth of its current production opportunities in Trinidad while maintaining maximum operating efficiency. Execution of Range's growth strategy is underpinned by ongoing large scale work programme, combined with substantial reductions in operating, general and administrative costs. Work programme update Given the current volatility in oil prices and slower than anticipated availability of the new drilling rigs, the Company has completed a review of its 2016 work programme, and has selected the most attractive wells based on anticipated production and economic returns. The Company has identified implementation of its waterflood projects as the highest priority, and expediting these will be key for Range's operations. As a result, a minimum of two projects are planned for water injection and production for the year. Waterflood is a more cost efficient way to grow production in the current oil price environment. This method of oil recovery, whilst not new to Trinidad oilfields, has not been practiced by an independent onshore operator in decades. Texaco used this technique successfully in parts of the Beach Marcelle field and the nearby Navette field in the 1950 / 1960s. Range is the first operator to re-introduce this method recently onshore Trinidad. The Company revises its production guidance with a stabilised production goal from the current work programme of 2,500 bopd by the end of 2017. This supersedes the previous production guidance given. The average production year to date in Trinidad is approximately 570 bopd. Waterflood projects 1. Morne Diablo expansion The Morne Diablo expansion is an extension of the existing successful pilot scheme. As previously announced, the government approvals are in place, and water injection of 150 barrels of water per day (bwpd) commenced in December 2015. There are currently approximately 130 wells in the area approved for waterflooding, therefore no new wells will need to be drilled. The initial waterflood plan involves the use of up to 14 injectors and 14 producers, with 3 of these wells converted to injectors so far. More wells will be converted to injectors and producers as the project develops. Range currently uses water from its existing operations as the water source for the project. In addition, the Company plans to use produced water from Petrotrin's existing operations going forward (subject to Petrotrin's approval), which will increase water injection to 3,000 bwpd. This produced water is considered as a waste by-product of the oil and gas industry and has to be treated before being released into the ocean and other waterways. Reinjection of produced water is an environmentally friendly solution, as it significantly reduces the quantities of produced water being discharged into the ocean and waterways, thereby, reducing the risk of pollutants in the environment. The original oil-in-place in the expansion area is estimated at 6.5 million barrels of oil (mmbbls), of which 1.3 mmbbls (20%) has been produced by primary depletion. Waterflooding is estimated by the Company to recover another 0.6 mmbbls over the next 8 years. With injection already underway, first production as a result of waterflooding is expected to commence in 2H 2016. Average production over the 8-year period referred to above is expected to be approximately 200 bopd, with peak production estimated at approximately 250 bopd. 2. Beach Marcelle South East block Beach Marcelle is Range's flagship waterflood project, with 63% (14 mmbbls) of Range's total 2P reserves in Trinidad found in the block. As announced on 13 January 2016, government approvals were received in December 2015, and the project implementation is underway. Beach Marcelle has been split into a number of individual "projects", based on the fault blocks within the field. The South East block is the largest of the projects and will be the first to be waterflooded. The initial limited injection plan of the block comprises 6 injector wells, 3 observation wells and 5 water source wells. The Company will need to drill two new injector wells as part of this plan. The other wells for the limited plan are already in place. Rig 2 has been moved to the South East block to commence workover operations on the four injector wells. The additional wells to complete the full scheme for the South East block will be finalised later in 2016. Currently there is very limited production from the reservoir. At the start of the injection, the production wells will remain shut-in to allow re-pressurization of the reservoir. This will be monitored via observation wells which will then be converted to production wells. To minimise capex, existing field infrastructure and wells will be utilised where possible. The Company will initially use water from shallow aquifer wells as its water source, supplemented by produced water as the waterflood progresses. The original oil-in-place in the South East block is estimated by the Company at 37.5 mmbbls, of which 6.2 mmbbls (17%) has been produced by primary depletion. Waterflooding is estimated by the Company to recover another 4.8 mmbbls over the next 8 years. Injection is expected to commence in Q2 2016 with first production anticipated during Q4 2016. Average production over the 8-year period referred to above is expected to be approximately 1,600 bopd, with production estimated over the plateau period of three years of 2,000 bopd. The other blocks on Beach Marcelle project (North East and South West blocks) will be waterflooded from 2017 onwards. 3. Additional Morne Diablo areas The Company has identified additional areas around the previously drilled development wells in Morne Diablo field which could be suitable for waterflooding. Subject to approvals, one of these areas may be waterflooded during 2016. Further details will be published once approvals are in place and plans have been finalised. New drilling Management has reviewed the previous drilling schedule and has prioritised a number of wells based on risk and economic returns. As a result, the following wells are planned for drilling during 2016: Well Location Development / Exploration Depth (feet) MD 51-1 Morne Diablo Development 4,200 LD 3 Morne Diablo Development 3,000 QUN 158R Morne Diablo Development 2,150 GY 218 SE Beach Marcelle Development 4,535 Canari North Guayaguayare Exploration 5,000 The four development wells are designed to explore the potential of out-step drilling and to test deeper horizons of the fields. The QUN 158R well will also be drilled to establish the waterflooding potential. The Canari North well is a committed exploration well on the Guayaguayare licence. The wells will be drilled by RRDSL, a wholly owned subsidiary of LandOcean Energy Services Co., Ltd (LandOcean) using the four new rigs and rig 8, subject to certification of the new rigs by the government and approvals relating to the previously completed mast repairs on rig 8. 2016 capex budget The capex budget for 2016 is estimated at approximately US$26 million, with the majority of the budget allocated to waterflood projects. The major components of the capex spend include the following activities: Activity Capex (US$ m) Morne Diablo waterflood 3.5 Beach Marcelle waterflood 13.5 Drilling 5 new wells (4 development and 1 exploration) 9.2 TOTAL 26.2 Strong financial position Range remains in a strong financial position from which to fund its work programme in Trinidad. As of 31 December 2015 (the date of its latest published results), the Company had a cash position of approximately US$22 million (unaudited). Range and LandOcean continue to progress with finalising the terms for the US$50 million trade financing package with Sinosure and it is expected that this will be completed in the coming months. The delay in finalising the financing has not impacted on any of the Company's plans and Range is pleased to advise that LandOcean has confirmed that pending completion of the Sinosure facility, LandOcean will provide Range with credit terms of 720 days for all work undertaken as part of purchase order 2 of US$50 million (which included the capex detailed above for the waterflood and drilling programme). This is in addition to the existing credit facility with LandOcean for drilling services provided. Range is therefore fully funded for its exploration, development and waterflood programme and has significant financial flexibility to consider any potential acquisition opportunities in accordance with its strategy. Attractive financial returns Despite the low oil price environment, Trinidad operating netbacks continue to be attractive and at a level which justifies further investment. Assuming an average oil price for 2016 of US$ 40 / barrel, the netback (in US$ per barrel) for current and projected production is estimated by the Company as follows: US$ per barrel Current production (~600 bopd) Projected production (2,500 bopd) Revenue 40.0 40.0 Royalties 11.0 11.0 Operating costs 20.3 12.9 Operating netback per barrel 8.7 16.1 Notes: (i) Oil price is based on assumed average oil price for 2016, (ii) operating costs are an average per barrel over field life for Trinidad producing fields and (iii) operating netback is on a pre-taxation basis Acquisition strategy In line with the growth strategy of the Company to create value for shareholders, and to provide Range with additional production and revenue, the Board continues to evaluate potential acquisitions of high quality assets at attractive valuations. The Company has witnessed an increase in the available attractive opportunities in recent months, and given Range's strong cash position, the Company is well positioned to take advantage of this opportune environment for acquirers, as well as continuing to accelerate its 2016 work programme. Further updates will be provided as appropriate.
o1lman: Nostra Terra Oil and Gas Company plc ("Nostra Terra" or the "Company") Permian Basin Acquisition Nostra Terra (AIM:NTOG), the oil and gas exploration and production company with a portfolio of assets in the USA and Egypt, is pleased to announce the acquisition of producing assets in the Permian Basin of New Mexico from Alamo Resources II, LLC. Highlights -- Significant increase in production and reserves o Total proved (1P) reserves 2,655 Mbbl of oil and 553 MMcf gas as at 1 October 2015, 1,648 Mboe attributable to NTOG -- Permian Basin with stacked pay -- Shallow (2,000') conventional oil -- Lifting cost approximately $17 per barrel -- Significant amount of upside available from proven (1P) reserves not currently producing (currently less than 20% producing) -- 100% Operated, 100% Held By Production o 2,880 gross (2,732 net) acres o NTOG will be the operator o Operator fully controls development pace and costs -- Steady, predictable PDP production base o 55 active vertical producing wells and 12 active injector wells o Nov 2015 average production of 122 bopd gross (92 bopd net) o Shallow declines -- Total Net Proven (1P) Reserves of 2.7 million boe (99% oil), 1.65 million attributable to NTOG o Multiple low cost, low risk optimization opportunities o 6 behind-pipe recompletions/re-stimulations/workovers/return-to-production cases o 3 water flood projects in various stages of development surrounded by successful analogs o 54 PUD vertical locations with EURs ranging from 31 to 43 Mbo/well Acquisition Nostra Terra has agreed to pay US$3.0 million to acquire a 60% WI in producing assets located in the Permian Basin. US$2.7 million is due by 31 March 2016 ("Closing") and an additional US$0.3 million is due one year after the anniversary of Closing, payable in cash or shares in Nostra Terra at the discretion of Nostra Terra. Nostra Terra anticipates financing the acquisition with a debt facility covering all the acquisition cost. The net cash flow in the current oil price environment will service the debt while excess cash may be reinvested. The assets generated turnover of approximately $1.80 million for the year ended 31 July 2015, with a profit before tax of approximately $0.25 million, (which included $1.02 million non-recurring expenses). Nostra Terra's working interest of 60% would give a pro forma turnover of approximately $1.08 million revenue and profit before tax of approximately $0.15 million at current oil prices. Reserves Total net proven reserves (1P) of 2,747 Mboe (2,655 Mbbl of oil and 553 MMcf gas) as at 1 October 2015, 1,648 Mboe attributable to NTOG -- Net proven and developed producing reserves ('PDP') estimated at 424 Mbbl of oil and 347 MMcf gas as at 1 October 2015. -- Net proven developed non-producing reserves ('PDNP') estimated at 447 Mbbl of oil and 140 MMcf gas as at 1 October 2015. -- Net proven undeveloped reserves ('PUDS') estimated at 1,784 Mbbl of oil and 66 MMcf gas as at 1 October 2015. Permian Basin The Permian Basin is one of the premier oil and gas producing regions of the United States. Straddling New Mexico and Texas, the Permian Basin is approximately 240 miles wide and 300 miles long. In June 2014 the Permian Basin was estimated to be the world's second largest oil field in terms of total recoverable resource, with at least 75 billion barrels of oil equivalent present. In January 2016, the US Energy Information Administration (EIA) estimated that the Permian Basin's crude oil production amounted to just over 2m barrels a day in December 2015, a 0.7% gain on November, but a 12% rise over December 2014. Of the seven most prolific oil and gas producing regions of the United States the Permian Basin is the only one which has continued to increase production on a quarter by quarter basis since the start of 2015. The EIA calculates that the average Permian Basin rig added production of 412 bpd in December 2015, an 80% rise since December 2014. Although the active rig count has fallen from 548 in December 2014 to 212 in December 2015, oil production has grown sharply in the same period from around 1.75m bpd to around 2m bpd. Reflecting industry interest in the Permian Basin, Chevron put a number of large scale US oil and gas projects on hold in January, choosing instead to focus its efforts on development of its Permian licenses. When explaining the rationale for its change in strategy, Chevron said the Permian Basin has proven to be the most cost efficient basin within the United States. Matt Lofgran, Chief Executive Officer of Nostra Terra, commented: "We're excited about the acquisition of these assets in the Permian Basin, one of the most prolific basins in the world. The leases will add significantly to our production, revenues, and reserves. While we will add over 1.6 million barrels of proven reserves, less than 20% of that is currently producing, providing scope for significant improvement. The leases are 100% operated and 100% HBP (not at risk of expiring), meaning Nostra Terra will be the in full control of the development pace. The industry is facing a difficult time with low oil prices which most in the industry believe to be temporary. This creates an opportunity-rich environment where assets such as these can be acquired at much better prices than previously. By having the stable production base we're able to use debt to acquire producing assets where net cash flow can service the debt while still providing free cash flow to the Company. We are actively pursuing additional opportunities to continue our growth, some of which are in advanced negotiations." Further updates will be made in due course. Tom Ervin, consultant to Nostra Terra, has reviewed this announcement for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009. Mr. Ervin is a Geologist, a member of SIPES, and the Dallas Acquisition and Divestitures and Mergers group.
chart trader: By Sarah Kent LONDON-- Royal Dutch Shell PLC on Thursday announced a near 60% slump in fourth-quarter profit, hit by sliding production and plunging global oil prices. The Anglo-Dutch oil company's fourth-quarter profit on a current cost-of-supplies basis--a number similar to the net income that U.S. oil companies report--tumbled to $1.8 billion down from $4.2 billion a year earlier. Its profit for the year slumped 80% to $3.8 billion from $19 billion in 2014. Despite the loss, investors reacted positively to the news. Shell's shares rose 4% in early London trading. The sharp profit decline caps a week of dismal financial performances from the world's largest oil companies, as a 20-month slide in the price of oil forced write-downs and eroded earnings for 2015. Shell rival BP PLC reported a loss of $5.2 billion in 2015, on a par with the hit it took after its Gulf of Mexico blowout in 2010. Chevron Corp. and Exxon Mobil Corp. posted their weakest annual results in more than a decade. Oil prices have fallen by around 70% since June 2014, hammering big oil companies' ability to generate profit from their oil and gas production. Though the likes of Shell and Exxon have sizable refining arms that tend to profit when oil prices fall, that hasn't been enough to offset the impact of the price slump. Shell's exploration and production business lost $5.7 billion last year, hit by write-offs, falling prices and lower volumes. The company said its oil business brought in 48% less last year than in 2014 and revenue generated from natural gas fell 27%. Volumes tumbled 4% in the year, dented by a mixture of divestments, expiring licenses, security issues in Nigeria and limitations on output from a giant gas field in the Netherlands. Proved reserves--an indication of an oil company's ability to replace the oil it pumps every year--are expected to fall by 20% in 2015. The results mark the company's last set of earnings before it closes its roughly $50 billion acquisition of BG Group PLC on Feb. 15. Shell has come under criticism from investors and analysts for the price it is paying for its smaller rival, but the deal will provide a welcome boost to volumes. Shell has said it expects its BG takeover to increase production by 20% and bolster reserves by 25% compared with the end of 2014. The company has positioned the acquisition as a means to refocus its strategy as one of the world's largest liquefied natural gas producers and a major player in deepwater oil projects. The completion of the deal will mark "the start of a new chapter in Shell, rejuvenating the company, and improving shareholder returns," said Chief Executive Ben van Beurden. Shell has already taken steps to cut costs and reduce spending to help mitigate the impact of slumping prices. The company said its operating costs fell $4.1 billion last year and are expected to fall another $3 billion in 2016. It plans to cut 10,000 jobs over the course of 2015 and 2016 and sell $30 billion in assets in the wake of its BG acquisition. Its dividends, though, remain protected and the company has promised to distribute payouts of at least $1.88 a share to investors this year. "Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that," Mr. van Beurden said.
chart trader: Subject: Commodities, Economic/political and Share news DJ Oil Industry Cuts Back As Price Dips Below $30 (FROM THE WALL STREET JOURNAL 1/13/16) By Timothy Puko and Justin Scheck Big oil companies deepened their cutbacks to staff and investment Tuesday, as the price of oil briefly slipped below $30 a barrel for the first time since December 2003. Oil giant BP PLC said it would lay off about 4,000 workers from its exploration and production business. Petroleo Brasileiro SA, Brazil's state-run oil producer, trimmed its production targets and slashed its investment budget by about a quarter, an acknowledgment that the company's previous oil-price assumptions were overly optimistic. The Federal Reserve Bank of Dallas, which is forecasting a 1.4% increase in jobs this year in Texas, said employment could shrink if oil prices stay weak. "The biggest risk to the forecast is if oil prices are in the range of $20 to $30," Dallas Fed senior economist Keith Phillips said in San Antonio. "Then I expect job growth to slip into negative territory as Houston gets hit much harder and greater problems emerge in the financial sector." That is exactly where prices landed briefly on Tuesday. Benchmark U.S. oil futures dipped as low as $29.93 before settling down on the day at $30.44, the seventh consecutive decline for the contract. Prices have fallen to $30 from $40 in just one month -- a pace that has rattled stock, bond and currency markets from Moscow to Riyadh, Saudi Arabia, to New York. The moves underscore the severity of a historic decline in oil prices now in its 19th month. New uncertainty this year about the health of China's economy has heightened concerns about demand for the world's crude oil -- which even with the sharp cutbacks by energy companies remains in robust supply. Illustrating the changes in the market's dynamics, the first freely exported tanker of American crude was making its way across the Atlantic this week to Europe after leaving Corpus Christi, Texas, on New Year's Eve. The tanker is one data point in a tide of crude oil. The amount of crude in storage is around record highs. Big exporters such as Saudi Arabia have kept pumping at a rapid clip even as prices sink. Meanwhile, U.S. producers are finding new ways to maintain their own output even as they cut costs. "We just really haven't seen production [fall] in the U.S., and that's what we need to see for oil to stop going down," said Ben Ross, portfolio manager at Cohen & Steers Inc., which has $52 billion in assets under management. Producers "pushed the technology and they really squeezed the most out of . . . these rigs." Money managers in near-record numbers are betting that oil prices will fall even lower, spurring analysts to cut their own forecasts again. Morgan Stanley on Monday joined Goldman Sachs Group Inc. in suggesting crude could hit $20. Royal Bank of Scotland Group PLC has called for $16, and Standard Chartered PLC said prices could fall as low as $10. Regional prices in major producing nations including Canada and Iraq have recently fallen below $20. Prices are likely to keep falling until producers, especially those in North America, finally pull back. "You have to make it obvious" to them to stop, said Scott Shelton, broker at ICAP PLC. "They're in denial." BP's cuts will affect workers in places including Angola, Azerbaijan and the U.S., where BP has big oil and gas production operations, a spokesman said. Some 600 of the cuts will come from BP's operations in the North Sea. The company currently has about 3,000 employees in the North Sea and 24,000 exploration and production employees world-wide, the spokesman said. BP has also been laying off staff as part of a $1 billion plan it announced in 2014 to cut costs in the wake of its 2010 Gulf of Mexico disaster. Since the price slump, the oil industry has cut about 250,000 jobs globally, according to Houston consultancy Graves & Co. Banco Santander analyst Jason Kenney said he expects to see even more layoffs in the coming months as companies struggle to cope with falling revenue. "We need to see significant disinvestment going forward," he said. Petroleo Brasileiro, also known as Petrobras, said Tuesday it will invest $98.4 billion from 2015 through 2019, down from a June projection of $130.3 billion. The company reduced its targets for oil production in Brazil by 40,000 barrels a day in 2016 and 100,000 barrels a day in 2020. The latest figures mark the second time Petrobras has had to revise its five-year business plan. The company tweaked its spending outlook in October after oil prices and Brazil's currency, the real, fell below its original projections. The $130.3 billion figure was already a stark turnaround from Petrobras's previous five-year budgets, which typically surpassed $200 billion as the company aimed to develop massive offshore oil fields and build costly oil refineries in Brazil. --- Paul Kiernan and Dan Molinski contributed to this article.
chart trader: By Interactive Investor | Thu, 7th January 2016 - 14:01 Oil tips and takeover targets for 2016 Industry expert Malcolm Graham-Wood names his favourite oil majors, and tells Interactive Investor who could be taken over and which small-caps will do well this year. I think M&A activity will pick up in 2016. The longer oil prices stay low, the more companies will get a realistic valuation of what their assets are worth, which is when the buyers will come in. At the moment, sellers still feel they'll get more than they deserve for their assets. As there is no hurry, the buyers are happy to wait, which is when the Exxons (XOM) of the world will pounce. I don't think there will be a great hurry, but I definitely see a pick-up in M&A activity in 2016. There are one or two companies potentially in line to be taken over next, maybe more if there's a lot of M&A. Pantheon (PANR) will stand out if they drill one or two of their big prospects this year. The company is for sale in the longer-term, management have said that, but the longer it takes the better for shareholders as I'm sure it will just accrete value over time. I think Far, which is in Senegal with Conoco (COP) and Cairn (CNE), will also be taken over this year. They have done extremely well finding their huge discovery and they have other things in their portfolio which they can continue to run. They might cut a deal so it's just the Senegal asset that gets taken away, but I think that acreage is worth significantly more than the whole of its current market capitalisation, so I expect them to be taken over. Elsewhere, there are one or two others that might be taken over. Victoria Oil and Gas (VOG) is languishing after getting itself in a good position in Cameroon, moving from drilling to producing and selling. But the price of its shares is too low for the amount it's producing. I would expect someone like BowLeven (BLVN), who is in the country already to come and take over VOG. There's one other thing to bear in mind: there is always talk of what's going on with the bigger and more powerful North Sea oil companies, which now aren't as big and as powerful as they used to be. Most of them have done really well in reducing their costs and trimming their assets. I'm talking about companies like Ithaca (IAE), Faroe (FPM), Parkmead (PMG), EnQuest (ENQ) and Premier (PMO). But a lot of people question whether we need five separate companies. Obviously, Ithaca is the best in terms of their hedging and Faroe has a good tax position. I wouldn't be surprised if shareholders wanted to throw some of these companies together, keeping all the best quality assets and parking some of the others. Keep an eye out: maybe we will see one or two at the centre of some M&A activity in 2016. Oil share tips for 2016 Which oil major will do best in 2016? The wild card will be Exxon because it has been watching the recent events unfold and has plenty of cash and muscle to start acquiring things. They would probably have gone for BG (BG.), which is likely one of the reasons Shell (RDSB) went early. If Shell walks away from the deal for whatever reason, Exxon will be in there because its assets are crucial and would fit well. I expect Exxon to make some significant moves this year, at the moment it's difficult to say where it will be, but the company is being really smart. Rex Tillerson doesn't have a reputation for over-paying and after seeing the "lower for longer" mantra, he's waiting to see what happens. After all, people will be coming to them, not the other way round. If shareholders approve the deal, Shell's acquisition of BG should go through in February/March. There may be some renegotiation of terms but Shell did put quite a big stock element in the bid, so the actual price has come down quite a lot. Shell might be in a very strong position at the end of this year. While Chevron (CVX) might get involved, most of the other majors like BP will be so concerned on saving money for their dividend that they'll cut capex to try and make the budget stand up; they will struggle to be strong in the M&A corporate market. At the moment I think this area will be dominated by Shell and Exxon. At the moment Shell has the yield, but Exxon will prove itself this year. What small-cap shares should investors buy now? I expect most investors are keeping their powder dry, trying to find stocks that will outperform the pretty grim market. We managed to find one or two last year, and those that do well will probably be in the same boat. Take Pantheon, for example, they made a huge discovery in East Texas, which will be worth significantly more than the current share price. If they drill up a couple more wells the value is there. It doesn't matter what the oil price is, they make decent money at $20 a barrel, so Pantheon has to stay there. We are keen on Sound Oil (SOU) because it is exposed to gas in Italy, which is onshore and reasonable as prices are still very high. Sound has a good strategy. You also want to find a couple of areas that might be more interesting, like the Senegal stocks. Cairn, Far and Conoco's appraisal programme could prove up a substantial amount of money, for example. You also have to pick up on a number of other areas that have changed, for example in Argentina post-election. There are a couple of players out there, for example President Energy (PPC) and Andes Energia (AEN). Oil is priced at $70 a barrel in Argentina, which is where it will stay, so there are some interesting cheap stocks that should buck the trend. You also have Amerisur (AMER) in Columbia that has a big pipeline coming on stream. There are stocks around - you just have to be really canny in trying to find them, whether they discover oil, are in gas or have special situations. They are around, you just have to dig about. What's your top oil and gas trade for 2016? The trade for next year is when to reverse the short on crude oil and when to start buying the contango in place. There are many stocks around so I don't expect that to change dramatically. It certainly won't happen at the beginning of the year, unless something specific happens. The other short position is natural gas in North America. We've seen it come below $2 over the last couple of days (at time of filming in December), which is really down to this winter's weather in the States. After the mild winter I would be short natural gas for the time being. People look at stock levels and we've started to draw against them, which is normal for this time of year. I'd be prepared to be pretty agile in my short. If it looks like there will be a cold spell, the price of natural gas will pick up. You'll want a short you can close pretty quickly. Will this year be the last for cheap costs? After the oil price fell dramatically, we've seen costs also fall in a big way: rig prices are down by at least half and seismic is as cheap as I've ever seen it. If costs rise on the back of stronger prices next year, 2016 might certainly be the last year of cheap costs. It's worth bearing in mind that the oil companies with a drilling programme and a bit of money might be able to drill up some prospects. How Saudi Arabia could kill OPEC in 2016 The outlook for oil markets in 2016 got a whole lot worse after December's OPEC meeting, as the Saudis showed they're absolutely determined to continue the battle for market share. There are two things here; firstly, they will try and continue this strategy for as long as they can, certainly the first six months of 2016. Secondly, they are going to take out the higher cost producers. That's interesting, because we thought exposing higher cost producers would mean US shale would be taken out of the equation - but I think it brings forward the possibility of a significant change within OPEC itself, in other words, the potential break-up of OPEC. In US shale there are probably lower-cost producers than half of the OPEC countries. So, the outlook is pretty grim, especially if you're a high-cost OPEC producer like Venezuela. I'm looking for things to improve a little, but the first half outlook is poor because of the Saudis' domination and Iran's production returning. As soon as sanctions start to be lifted, half a million barrels of Iranian oil will be produced each day, in due course probably a million barrels a day. At the moment, the market couldn't take it. Where might oil prices end in 2016? The fundamentals are strongly against any recovery in the oil price in the first half of 2016, notwithstanding any increase in supply from Iran post-sanctions. Demand is still very weak, I'm not expecting to see any increased draw on OPEC above the 1-1.5 million barrels that is built into the system, and that's certainly coming through already. OPEC produces 31.5 million barrels a day (bod). They would have to be producing 30 million bod or below for the oil price to pick up, but I just don't see that happening. At the end of 2016, people will start to perceive the fundamentals getting a bit tighter as 2017 numbers come through. Although it won't be happening until 2017, people will perceive demand to be picking up at the end of 2016. There is a six month lag, so you have to be six months ahead of the game. I think the end of 2016 is going to be very important, not necessarily on fundamentals, but certainly on perceptions. How low could it go? Is Goldman right with forecasts of $20 a barrel? It certainly could go down to $20 a barrel, the only stopper on the oil price would be political movement from Russia, who is the most important player here, not Saudi Arabia. Saudi Arabia has said they'll cut production if everyone else does, and by everyone they don't mean OPEC. So the bottom line is: who else is going to help? The only countries producing 10 million barrels a day are either Russia or America, and America won't cut - they might do on price because they are being forced out of the market. If a deal happened between Saudi Arabia and Russia, however, one or two others will probably help out. But I don't think that would happen unless you got below $30 under the circumstances, that's when people would get most worried. So, there is no specific base on the oil price. Goldman could be right with $20 being the bottom, but there will be a time when the market realises it's gone too far, it always has over the years. Oils are a cyclical commodity and, like everything else, it will pick up. How long can the Saudis keep a lid on oil prices? Well, the Saudis can keep a lid on oil prices for a lot longer than most people think, for two reasons. First of all, they have decided this is a policy they are going to work through and ensure expensive oil comes off the market. Secondly, they have lived with high oil prices long enough to be pretty wealthy. I've heard they've run through their savings and are borrowing money in international markets; that's only common sense. They are determined to make sure they squeeze higher-cost oil off the market for as long as possible. They are prepared to take the pain. Where will it all end up? Tears, tantrums? I think it will end up sorting itself out in the market as it always does. In the meantime, the market was excited at the recent Paris conference by the fact that fossil fuels are on the way out and alternative energy is coming in. And that's coming from a room of 1,000 people using their tablets, phones and laptops charged by power generated by fossil fuels. Demand for fossil fuels isn't going to change overnight. Americans still drive 2.5 billion miles each month, the Chinese are building 100 airports and they are driving more. Yes, demand is down and because the world wants to use less fossil fuels and it will, but I don't think you can say this is the end of the road for fossil fuel demand, because it is just not the case. Let's bear that in mind: there is still going to be significant demand for hydrocarbons for the foreseeable future. This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
chart trader: The Parkmead Group plc ("Parkmead", "the Company" or "the Group") Preliminary Results for the year ended 30 June 2015 Parkmead, the UK and Netherlands focused oil and gas group, is pleased to report its preliminary results for the year ended 30 June 2015. HIGHLIGHTS Successful exploration leading to increased gas production -- First commercial gas production achieved at the Diever West gas field in the Netherlands, following a successful fast-track development -- The Diever-2 discovery well was flow tested at 29 million cubic feet per day (approximately 5,000 barrels of oil equivalent per day) -- Further production enhancement work planned on Parkmead's low operating cost Netherlands portfolio, including a new well at the Geesbrug gas field to maximise gas production, serving as a natural hedge to the current low oil price environment -- Awarded nine new oil and gas licences in the UKCS 28th Licensing Round, covering a total of 12 offshore blocks -- Awards include significant new acreage and proven oil fields in the vicinity of the major Parkmead-operated Perth Dolphin Lowlander (PDL) oil hub development -- Detailed technical work undertaken this year has allowed Parkmead to release non-core acreage, significantly reducing licence costs Continued progress on valuable development projects -- Entered into a Heads of Agreement outlining the structure of a joint development of the Perth, Dolphin and Lowlander fields after detailed technical analysis and development planning work -- The PDL project has been fully appraised, with a combined total of 13 wells drilled, and has expected recoverable reserves of approximately 80 million barrels of oil, double the initial recoverable reserves of a standalone Perth development -- Platypus gas field development advancing well, with the draft Field Development Plan (FDP) submission expected in the coming months Reserves and resources increasing -- Considerable 2P reserves of 26.1 million barrels of oil equivalent as at 30 June 2015 -- Contingent resources increased by 129% to 41.9 million barrels of oil equivalent as at 30 June 2015 (18.3 million barrels of oil equivalent at 30 June 2014) Strategically positioned for further acquisitions -- Six acquisitions, at both asset and corporate level, have been completed since positioning Parkmead as a new independent oil and gas company -- Parkmead is well capitalised with over US$60 million (GBP41.1 million) of total cash resources at June 2015 -- The Parkmead team is evaluating further acquisition opportunities to take advantage of the current low oil price environment Financial Strength -- Revenue during the period remained relatively strong at GBP18.6 million (2014: GBP24.7 million) -- Total assets stood at GBP105.6 million at 30 June 2015 (GBP127.4 million at 30 June 2014) -- Raised approximately US$21.1 million (GBP13.4 million) in May 2015 to accelerate opportunities -- Substantial cash balances of GBP41.1 million as at 30 June 2015 Parkmead's Executive Chairman, Tom Cross, commented: "I am pleased to report another important year of progress for Parkmead, despite the challenges of the low oil price environment. Parkmead discovered and has now brought onstream a new gas field at Diever West, in the Netherlands. This will deliver profitable gas production and important additional cash flow to the Group. We have successfully brought this new gas field onstream within 14 months of discovery, which is an outstanding achievement. Parkmead is increasing the Group's net gas production in the Netherlands through a low-cost, onshore work programme. This will act as a natural hedge to the very low global oil prices. Our major new licence awards in the UKCS 28th Round were an impressive result for Parkmead, with 12 new offshore oil and gas blocks awarded to the Group. We were delighted with the awards located close to Parkmead's PDL development, as they have the potential to add significant value to our assets in this area. Parkmead is well positioned to take advantage of the lower oil price environment and the opportunities that are arising from this. We have excellent regional expertise, significant cash resources, and a growing low-cost gas portfolio. The Group will continue with its licensing and acquisition-led growth strategy, securing opportunities that maximise long-term value for our shareholders."
chart trader: Northern Petroleum PLC 12 November 2015 Northern Petroleum Plc ("Northern Petroleum" or "the Company") Subscription to raise GBP1.2 million Production and reserves acquisition in Canada Open Offer Operations update Northern Petroleum, the AIM quoted oil company focusing on production led growth, announces subject to shareholder approval, a proposed direct subscription of 40,000,000 new ordinary shares at three pence per share, to raise gross proceeds of GBP1.2 million ("the Subscription") and an acquisition of assets in northwest Alberta with production and reserves ("the Acquisition"), which is conditional upon financing. The Company also announces that a proposed open offer for up to a further 40,000,000 new ordinary shares at three pence per share will be made shortly to existing qualifying shareholders ("the Open Offer"). Highlights -- Non-brokered subscription of 40,000,000 ordinary shares at a price of three pence per share to be taken up by two existing shareholders, raising proceeds of GBP1.2 million, before expenses -- Funds raised pursuant to the Subscription to be used primarily to fund the consideration for the Acquisition, which will allow the Company to: - acquire assets near to existing Canadian operations, including wells and facilities, with current production of approximately 211 barrels of oil equivalent per day ("boe/d"), of which approximately 80 per cent. is oil, and proved and probable reserves of 1.185 million barrels of oil equivalent ("boe") - execute an identified work programme of well and facility reinstatement, expected to double production over the next 12 months -- Open Offer to be made to enable all qualifying shareholders to participate in the fundraising at the same issue price as the Subscription -- Net cashflow from the Acquisition and the Company's existing assets forecast to broadly cover all of the Company's general and administrative cost using an oil price of US$47 per barrel through 2016 -- Processing and pipeline tie-in facilities included in the Acquisition are forecast to result in operating cost synergies for existing Virgo operations -- The Subscription and Open Offer are subject to shareholder approval in a general meeting Keith Bush, Chief Executive Officer, commented: "The acquisition of these assets provides the Company with material additional production and reserves and is a good example of the growth opportunities available in the current oil price environment. Due to the location of the assets and their associated facilities, there is also the opportunity to increase the Company's existing production base with reduced operating expense. "With the support we have been given by our existing shareholders, we can implement a relatively straightforward and low risk work programme with a view to doubling production from the acquisition assets, which should place the Company in a strong financial position to support its costs in 2016. This in turn provides the time needed to continue the good progress made during 2015 with the Italian exploration and appraisal assets. Additional funding from the Open Offer will provide useful working capital support with the potential to unlock further opportunities for production and exploration growth and accelerate production development in Canada." For further information please contact: Northern Petroleum Plc Tel: +44 (0)20 7469 2900 Keith Bush, Chief Executive Officer Nick Morgan, Finance Director Westhouse Securities Limited (Nomad and Joint Broker) Tel: +44 (0)20 7601 6100 Alastair Stratton Robert Finlay 1. Production Strategy During the past two years the Company has pursued a strategy of production led growth, with the aim of creating a sustainable business and one that is capable of growth through production assets, as well as enabling potentially high value exploration and appraisal assets to be developed. The production asset focus has been the onshore oil field redevelopment in the Virgo area of northwest Alberta, Canada, where the Company has drilled six new wells and recompleted an existing well. These wells provided production that peaked at over 500 barrels of oil per day ("bopd") at the end of 2014. The economics of this production were adversely impacted as a result of the reduction in the oil price over the last 18 months with the benchmark crude West Texas Intermediate price dropping from over US$100 per barrel to less than US$50 per barrel. Production was therefore shut in during January 2015, including the 102/15-23 well shut in due to a pipeline issue, and an evaluation performed by the Company on how to reduce the operating expense. This led to production from one well being restarted in June 2015, with the evaluation of the other wells continuing. Average daily production from that well for the three months to the 30(th) September 2015 has been approximately 25 bopd (net of water production). The significant fall in the oil price has created uncertainty and concern in the industry in general and as a result, has also provided acquisition opportunities in a market where it may be cheaper to buy production and reserves than it is to drill for them. The Company has reviewed multiple opportunities over the past year with a view to increasing the production base and reserves, creating synergies with the existing production wells to reduce their operating expense and covering the Company's general and administrative cost. The Acquisition, as detailed below, has the potential to achieve these objectives even in the current oil price environment. 2. The Acquisition The Acquisition comprises of existing production facilities and wells on mineral leases across approximately 28,000 acres, the majority of which are in the Rainbow area of northwest Alberta (the "Rainbow Assets"), approximately 20 miles south of the Company's existing Virgo assets. The consideration to be paid for the Acquisition is Cdn$0.25 million (approximately US$0.2 million) in cash. The Company will also assume the abandonment liability for all the wells and facilities acquired. The Alberta Energy Regulator has assigned an estimated undiscounted net liability for the assets of US$1.5 million and a gross undiscounted abandonment cost of US$8.9 million. The operating cashflow attributable to the assets being acquired for the eight months ending 31(st) August 2015 was Cdn$0.4 million and the turnover for the year ended 2014 was Cdn$8.6 million. The Rainbow Assets are being sold by a Calgary based exploration and production company listed on the Toronto Stock Exchange. The Rainbow Assets were previously acquired by the vendor as part of a larger corporate acquisition and were regarded as non-core. Further to a reserves report commissioned by the vendor from a Calgary based independent third party engineering firm, the Rainbow Assets were estimated to contain, as at the 31(st) December 2014, proved plus probable reserves of approximately 1.185 million barrels of oil equivalent with a calculated net present value of approximately US$14.7 million before tax using a discount factor of 10 per cent. as at that date. The existing wells on the leases were drilled to target multiple reservoir horizons including a Devonian Keg River light oil play, the same play as targeted within the Company's Virgo assets. The Rainbow Assets had average reported production during the month of September 2015 of 211 boe/d, of which approximately 80 per cent. was oil. The Rainbow Assets include a total of 117 operated and 41 non-operated wells, of which approximately one third are either currently in production or are believed by the Directors to have the potential of being initially brought back into production. The remaining wells are either suspended or already abandoned and will be reviewed for future production potential. In addition to the wells and mineral rights, a material amount of facilities and equipment are included with the Acquisition. There are two main facilities which consist of storage tanks and water separation facilities as well as water disposal wells. There is also a direct sales point into the Plains Midstream Pipeline system for produced oil. The Directors believe that these facilities will provide operational synergies for the Company's existing Virgo assets, since production can be trucked, processed and sold through the Rainbow Assets facilities without incurring third party processing and water disposal fees, currently being paid by the Company for its existing production. The Directors have identified an initial work programme on the Rainbow Assets, which is proposed to be initiated shortly after the completion of the Acquisition, subject to the successful completion of the Subscription. The programmme involves the reinstatement of wells and facilities and is intended to double the existing oil production over the next 12 months. It is forecast that this production, combined with forecast production from the Company's existing assets, will provide sufficient net cashflow to broadly cover the Company's total general and administrative cost in 2016, using an oil price of US$47 per barrel, and should allow the Company access to the debt capital markets for future development capital if appropriate. Over the longer term, the Directors believe that the combined asset base could support production growth to in excess of 2,500 bopd, subject to accessing appropriate development capital at that time. An asset purchase agreement has been signed with the vendor for the acquisition of the Rainbow Assets and completion is conditional upon the payment of the Cdn$0.25 million cash consideration to the vendor and the deposit of any net abandonment liability, when calculated against the deemed value of the assets, with the Alberta Energy Regulator, which is not forecast to be material. Completion is expected to occur shortly after the closing of the Subscription, which is conditional upon shareholder approval in a general meeting. Northern Petroleum considers the Acquisition to be consistent with its continuing strategy of production led growth. While the completion of the Acquisition is only subject to the financing of the cash consideration of Cdn$0.25 million, if the Subscription is not approved by shareholders, sufficient funding will not be available to the Company to undertake the initial work programme on the Rainbow Assets and therefore the Company will choose not to complete the Acquisition and will need to look for alternative sources of finances to support the Company during 2016. 3. The Subscription The Company announces that it has, conditional upon passing of the resolutions to be proposed at the general meeting and upon admission of the shares to trading on AIM, raised GBP1.2 million before expenses by way of a non-brokered Subscription of 40,000,000 shares at an issue price of three pence per ordinary share. The Subscription is being taken up by Cavendish Asset Management Ltd and City Financial Investment Company Limited (the "Investors"), both existing shareholders of the Company. The issue price of three pence per share represents a discount of approximately 14.3 per cent. to the middle market closing price per ordinary share of 3.5 pence on the 11(th) November 2015, being the last business day prior to the publication of this announcement. The net proceeds of the Subscription are being used primarily for the Acquisition and initial development of the assets being acquired to increase production, as well as supporting the ongoing working capital requirements of the Company. The issue of shares to satisfy the Subscription is subject to shareholder approval in a general meeting. 4. The Open Offer The Board has decided to make an Open Offer so that all qualifying shareholders have an opportunity to participate at the same issue price as the Investors under the Subscription. Accordingly, up to 40,000,000 ordinary shares will be made available to qualifying shareholders at a price of three pence per share under the terms of the Open Offer to raise up to GBP1.2 million (before expenses), the same amount and at the same issue price as proposed for the Subscription. The Directors intend to take up at least their entitlements under the Open Offer. Funds received from the Open Offer will provide additional working capital for the Company, which will further support the business during a time of particular oil price uncertainty and volatility. The full details of the proposed Open Offer will be disclosed in a further announcement and a circular, which will be posted to shareholders in the next few days. 5. Operations Update Canada Since the end of June 2015, the 100/16-19 well has continued to produce with a water cut of approximately 25 per cent. Average daily production for the three months to the 30(th) September 2015 has been approximately 25 bopd (net of water production). The Company has liaised with the local infrastructure operator on the pipeline repair work required to bring 102/15-23 back into production, however the local operator has decided not to proceed with the repair. The Company is therefore evaluating an alternative solution whereby the Company undertakes the repair at a relatively low cost to the business. The Company has also undertaken a subsurface review on production data and the previous drilling programmes which will now be used to define future development of the acreage. Italy The key achievements to date in 2015 in Italy have been the farm out of the Cascina Alberto permit onshore northern Italy to Shell Italia E&P S.p.A. and the main governmental approvals being granted for the acquisition of 3D seismic offshore in the southern Adriatic. The Company has also received the environmental impact assessment approvals for five exploration applications to become permits, all contiguous to the Company's existing acreage offshore in the southern Adriatic. The final requirement for these applications to become permits is the decree by the Ministry of Economic Development. The exploration work programme has begun on the Cascina Alberto licence, which involves the reprocessing of existing seismic to determine whether further seismic is required before a decision can be made on an exploration well. The Company is now planning a work programme to acquire 3D seismic in the southern Adriatic across the Cygnus exploration prospect and Giove oil discovery, which is forecast to occur in the third quarter of 2016. This seismic acquisition is subject to financing, most likely through a farm out of the permit, and the positive conclusion of local appeals and operational approvals. The Company is also drafting an appraisal well environmental impact assessment submission for the Giove oil discovery, with the plan to drill a well in the next 12 to 18 months, again subject to successful approvals being received and financing. The Company's offshore permits in Sicily and the southern Adriatic are held in various stages of suspension in advance of the next stage in the work programme. The Italian exploration and production regulatory regime allows for permits to be suspended while authority is sought or appeals heard regarding the next part of any given work programme. The Company aims to drill five wells in five years across its Italian permits and exploration applications, each with the potential to add material value to the Company upon success. The completion of such a forecast programme will be subject to securing suitable financing and all the necessarily regulatory approvals. The Company has ongoing discussions with various third parties in the industry regarding possible farm outs of its Italian assets and is currently in discussions with one particular party concerning the farming out of its offshore permits and exploration applications. However, no certainty as to the outcome of these discussions can be assured. Corporate As part of the continued review of ongoing general and administrative costs and in addition to a reduction announced in March this year, the Directors and other key senior management have agreed to further reduce their salaries. It is intended that in exchange for this second reduction in salaries, nil-cost options over new ordinary shares will be issued every three months and the amount of nil-cost options issued will be with reference to the average Company share price during the prior three months and the reduction in salary taken. The Remuneration Committee will determine the terms of the nil-cost options and how long these arrangements are deemed necessary and an announcement will be made at the time of issue of the options. 6. Capital Reorganisation The Company's existing issued share capital, as at the 11(th) November, being the last business day prior to the publication of this announcement, consisted of 95,365,660 ordinary shares which are currently in issue and credited as fully paid up, each with a nominal value of five pence ("Existing Ordinary Shares"). The new ordinary shares proposed to be issued pursuant to the Subscription and the Open Offer ("New Ordinary Shares") are proposed to be issued at the issue price of three pence per share. Under the provisions of section 580 of the Companies Act, the Company may not allot shares at a price which is less than the nominal value of those shares. To enable the Company to proceed with the Subscription and the Open Offer, the Company's Existing Ordinary Shares will therefore need to be sub-divided and re-designated. It is proposed that each Existing Ordinary Share with a nominal value of five pence be sub-divided and re-designated into one New Ordinary Share of one penny and one deferred share of four pence ("Deferred Share") (the "Capital Reorganisation"). Immediately following the Capital Reorganisation, every Shareholder will hold one New Ordinary Share and one Deferred Share for every Existing Ordinary Share currently held by them. A Shareholder's pro rata entitlement to New Ordinary Shares will not be affected by such subdivision and re-designation. The Directors believe that the Capital Reorganisation should not affect the market value of a Shareholder's aggregate holding of the Existing Ordinary Shares in the Company. It is proposed that each New Ordinary Share will carry the same rights in all respects as each Existing Ordinary Share does at present, including the rights in respect of voting and entitlement to receive dividends. Each Deferred Share will have very limited rights and will effectively be valueless. Such shares will have no voting rights, no rights to receive dividends and will have only very limited rights on a return of capital. The Deferred Shares will not be admitted to trading on AIM or listed on any other stock exchange and will not be freely transferable. Further details concerning the proposed Capital Reorganisation will be made available in a circular to be posted to shareholders shortly. 7. Related Party Transaction Cavendish Asset Management Ltd, which is a substantial shareholder in the Company, has subscribed for 21,666,667 New Ordinary Shares in the Subscription. This subscription constitutes a related party transaction under the AIM Rules for Companies. The Directors consider, having consulted with Westhouse Securities, the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.
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