Cairn Energy

Interims from Cairn this morning which were a mixed bag but I thought mainly promising in nature. The good news in production came from Catcher as predicted elsewhere and the not so good news was from Kraken also widely reported after numerous operational issues. Production is revving up in the 2H which might help them reach their guidance.

Longer term they have Nova in Norway where first production is expected in 2021 after PDO submission which is imminent. Senegal remains the key prize and with FEED is said to be under way in 4Q of 2018 leading to first oil in 2022. The only fly in the ointment is the arbitration regarding Woodside’s participation in the project, they say in the announcement that transfer of the operatorship is expected in Q4 2018 which must mean that they either know the result is imminent or they are taking a bit of a flyer……

Finally,  on the subject of arbitration they are more involved in the recent claim against the Indian tax authorities which closed in The Hague recently.  With judgement not due until next year it will continue to hang over them, although it has become a sideline after operational success, the seizure of shares and dividends is as much a claim on tax grounds as a cause celebre in international tax law, losing it will be more than just a write off in many ways.

Diversified Gas & Oil

Results today from DGO are even more immaterial than usual due to significant expansion through acquisitions and the massive equity raise that accompanied those deals. After all with production up 90% since the year end and debt raised in the business we probably won’t know how it looks until the second half of this year.

DGO has attracted the attention of a number of investors across the range and the model, which includes paying dividends out of equity only just raised, looks appealing. I look forward to meeting with them again soon and seeing how everything is bedding in, assuming that more deals haven’t been done in the meantime…….

Eco (Atlantic) Oil & Gas

Eco has issued its CPR on the Orinduik Licence, Guyana with a headline 2.9 MMboe gross prospective resources. The report identifies 9 large prospects and at least ten exploration leads with close to 2.5bn barrels of recoverable oil and 2.45 TCF of associated gas. Three of the targets have an estimated probability of success of 22.4% at this stage, very impressive indeed.

it is clear that the recent Exxon successes have enabled the finds such as Hammerhead-1 to see those formations ramp up into Orinduik and give the team immense confidence.

Im on the move now but will write more later but this is amazing news for Eco in particular. I am assuming that Total opt in so Eco are looking at a minimum of 450m barrels and with a value of between $6-9 in the ground the share price is way too low and that is before potential upside, as they say in all the best brokerage houses, do the math……