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FoxDavies views from the trading floor - Ophir Energy, Melrose Resources and Aurelian Oil & Gas

Wednesday, March 28, 2012
from FoxDavies Capital

Ophir Energy (LON:OPHR) pushed 3% higher to 502p during lunchtime trading after the company said it intends to place up to 30.5 million new ordinary shares via an accelerated bookbuild which will be launched immediately. J.P. Morgan Cazenove, RBC Capital Markets and Oriel Securities Ltd. are acting as bookrunners to the placing. Capital will be used to part-finance an expanded 2012/2013 exploration programme; it will enable Ophir to remain at 40% equity position for longer in Blocks 1, 3 and 4 to test deeper prospect inventory and chase the base of slope stratigraphic fan play (Mozambique analogue). Capital will also facilitate an Ophir-operated drilling programme on East Pande and Block 7 (Tanzania) plus Block L9 (Kenya) and facilitate additional exploration in Gabon. Ophir also plans to introduce industry partners into operated East African positions during the second half of 2012 and is preparing for an Q1 2013 East African programme on the operated acreage in Block 7, East Pande and L-09. East African offshore gas play continues to evolve at pace; the West African programme is gearing up for drilling in Q2 2012. Ophir looks forward to a 2012-2013 programme of 22 high impact wells targeting over 9 TCF plus over 1.3 BbbL of net, unrisked, recoverable resources. Company's plan to drill nine wells in 2012 remains on course.

Melrose Resources (LON:MRS) pushed 2% to 128p right from the open, before settling around the 124p level after the company reported its results for the year ending the 31st of December 2011. The company posted a 2011 pretax profit more than three times higher than a year earlier, reflecting stronger oil and gas prices and increased Bulgarian gas production. The company, which has assets in Egypt, Bulgaria, Romania, France and Turkey, posted 2011 revenue of $291.0 million, up from $240.4 million in 2010. Pretax profit rose to $97.1 million from $29.8 million a year earlier. Melrose proposed a dividend of 3.6 pence a share, compared with 3.4 pence a share in 2010. The company said it ended 2011 with net debt of $322.7 million, down from $418.9 million a year earlier. As a result of anticipated strong cash flow in 2012, driven by production from its Bulgarian assets, the company expects to further reduce net debt in the year. Strong support looks to be around the 120p level here, with resistance sitting around 150p.

Punters favourite Aurelian Oil & Gas (LON:AUL) pushed 4% higher to 20.5p during lunchtime trading, albeit on thin volume. The shares have been very active over the last few months since the company effectively put itself up for sale. The recent range has been between 18p and 20p, and a range many day traders have been exploiting. However, any break and close above the 20.50p area could move them into a new trading range, with 20p looking to act as the new support line. We will continue to watch this one closely.

Roxi Petroleum (LON:RXP) slipped 8% to 3.9p on decent volume during afternoon trading today. The company recently announced that the Korean National Oil Corporation has bought a 35% stake in the BNG Contract Area license for about $30 million. Roxi has a 58.41% stake in the license which is estimated to contain over 500 million barrels of oil. The Korean National Oil Corporation has agreed to pay an initial cash consideration of $5 million and will invest a further $25 million in the license work program. So on that basis is was a surprise to see the selling pressure continue again today. We will be watching the news wires closely here, to see if anyone owns up to the volume.

JKX Oil & Gas (LON:JKX) slipped 7% to 170p on big volume during early trading after the company reported its Final Results. The company said its pretax profit almost quadrupled from a year earlier, reflecting considerably higher oil and gas prices, even as production declined. The company said it wouldn't pay a dividend for 2011, citing intensive capital investment notably in Russia.

Pretax profit rose to $82.1 million from $20.8 million a year earlier. Revenue rose 23% to $236.9 million from $192.9 million in 2010, with Ukraine continuing to provide the bulk of revenue. Production averaged 9,045 barrels of oil equivalent a day in 2011, down from 10,324 barrels in 2010. Looking ahead, the company said it has already signed a sales contract for the Koshekhablskoye gas in Russia and is now waiting for a permit to operate. It anticipates delivering gas to its buyer shortly and expects to increase its plant capacity by July.

Bayfield Energy (LON:BEH) pushed 5% to 67p on decent volume during early trading. The company has been on a cracking run since late January, pushing up from 45p to a high of 80p back on the 13th of March. On the day of the high the company did say it had found oil in Trinidad and Tobago, in its first exploration well in the Galeota License. A program of logging and sampling has been conducted, confirming a light oil and good quality reservoir with production potential of over 1,000 barrels of oil per day.

Bayfield is currently integrating the new well data into the three-dimensional seismic mapping. Management believes that the well has demonstrated development potential of 32 million barrels of oil and 69 billion standard cubic feet of gas. Initial interpretation suggests that substantially all of the gas potential lies within the Galeota License. However, it said the oil potential extends into an adjacent license in which Bayfield has no participating interest. The company's drilling rig will now move to the second of Bayfield's seven exploration and appraisal well commitments in the Galeota License. Bayfield is the operator of the Galeota License area with a 65% interest, while Petrotrin holds the remaining 35%.

Written by Steven Asfour, Sales Trader at Fox-Davies

Contribution from FoxDavies Capital

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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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