FoxDavies Daily Monitor - TomCo Energy, Circle Oil and Hardy Oil & Gas

Thursday, March 7, 2013

TomCo Energy (LON:TOM) - In the Driving Seat: Today's equity raise alleviates the pressure on the stock and allows management to focus on the development of its oil shale project in Utah. The EcoShale process for extraction of oil from the shale has been trialled successfully, and with Red Leaf's early production system is being funded by Total's investment, the risks associated with the project have been reduced dramatically. Once the steady state production issues have been resolved, TomCo will be able to move swiftly into the production phase. We are reiterating our BUY Recommendation and 5p Target Price.
In this news:

  • £1.7mm raised
  • 1.2p.

Circle Oil (LON:COP) - Infill Drilling Moves Forward, But Risks Remain: Today's operational update continues to reconfirm the initial expectations of the asset. With production having moved ahead only 600bopd since the last update, we are becoming concerned that the completed wells don't appear to be having the impact on the gross production that we would have believed that it should. Still, we believe that this is most likely due to timing effects, but the longer that it goes on, the more concerned we will be. We also remain concerned that the political situation in Egypt continues to deteriorate, however, at this stage, we are not sufficiently concerned to raise our country risk premium, but the next three months will be key. We are reiterating our BUY Recommendation and 95p Target Price.

Hardy Oil & Gas (LON:HDY) - PY-3 Still a Sore: Today's final results, seeing as the Company has no producing assets, is largely informative. That the Ganesha arbitration has ruled in its favour has been a boon, and the disclosure that costs will be awarded comes at a fortuitous time; now the question is how quickly it receives that cash. There is sufficient cash on the balance sheet to sustain it for another year, but there still remains a financing risk, driven principally by the timing of the costs of the restart of PY-3, the availability of funding and the timing of the dispersement of the Ganesha arbitral costs award. That PY-3 is still not online is a sore for the Company, and the longer it does on, the more disgraceful it will be. Nevertheless, we are confident that given time, the project will come back, and with D3's development looking increasingly likely, the longer term outlook looks brighter than the near term outlook. We are reiterating our BUY Recommendation and 185p Target Price.
In this news:

  • D3 - Submitted a revised Declaration of Commerciality proposal for the Dhirubhai 39 and 41 natural gas discoveries
  • D3 - Completed PSDM processing of 3D data covering the eastern area of the block
  • CY-OS/2 - Hon'ble tribunal ruled in the Company's favour, allowing for a further three years to appraise the Ganesha-1 natural gas discovery and awarded interest and costs to the Company (contingent asset - $24.8 million)
  • GS-01 - Submitted field development plan for the Dhirubhai 33 natural gas discovery
  • PY-3 - Secured partner consensus on the field's facility technical specifications and continued work towards the submission of a full field development plan
  • D9 - Relinquished the block due to poor hydrocarbon potential of the block.

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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. More

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