The bucket list update.

February 2019 bucket list update

The bucket list performance has been more than usually volatile since February and August 2018. The figures below reflect performance on a 12 and 6 month basis which took in both the rise in the oil price and the end of year fall. This time last year Brent was interestingly $65 the same as today but in August when we last checked the list it was $74 before peaking on October 10th at exactly $80.

This should mean that if oil stocks followed the crude price unerringly the prices now would not be changed but of course we have many exploration companies and of course some have made discoveries or acquisitions over the period.

As a reminder the bucket list was designed as the idea of leading fund manager Adrian Collins who wanted a selection of stocks to de-risk the commodity price. At the time in late 2015, the oil price had been falling for some time and finding the bottom was going to be difficult. As it happened the low was exactly three years ago at $27 and the first year of investing in the list was a veritable bonanza. As such this is a list of stocks with varying degrees of beta in terms of management, funding and geographical exposure. Some people pick and choose, i’m sure none buy them all as was the original plan, the list is below you will see quite how different the performance has been over 1 year and six months.

Bucket list performance February 2018-2019 

  1. Eco Atlantic Oil & Gas +220%
  2. Genel Energy +58%
  3. Faroe Petroleum +55%
  4. Hurricane Energy +47%
  5. Jersey Oil & Gas +32%
  6. Reabold Resources +29%
  7. Amerisur Resources +7.2%
  8. Premier Oil +2%
  9. Rockhopper Exploration u/c
  10. Savannah -5.9%
  11. =President Energy and Trinity -15%
  12. SDX Energy -21%
  13. Far Ltd -25%
  14. Sound Energy -50%
  15. Aminex -53%
  16. VOG -58%
  17. Echo Energy -67%

On a 6 month view the table looks like this 

  1. Eco Atlantic +235%
  2. Jersey Oil & Gas +30%
  3. Faroe Petroleum +16.3%
  4. Amerisur Resources +14%
  5. Savannah Petroleum +0.4%
  6. Hurricane -7.5%
  7.  President Energy -12.5%
  8. Reabold Resources -17%
  9. Trinity Exploration & Production -23%
  10. Genel Energy -24%
  11. SDX Energy and Aminex -33%
  12. Rockhopper and Sound Energy -44%
  13. VOG -53%
  14. Far Ltd -57%
  15. Echo Energy -72%

At this stage it is pertinent to decide what changes if any need to be made to the line up, readers know that these happen very rarely as the make up of the list is meant to be of long term holdings. Although the dramatic fall in the oil price of over 60% from the high of $85 on October the 10th to $50.25 in January has ravaged the sector it is my view that most companies will recover if not gain through successful exploration and management action.

So, briefly here are my comments on the list as usual. Eco Atlantic was picked back then as a ‘firecracker’ nothing has changed, indeed it is now about to drill in Guyana and will test the theory. Genel I am more than comfortable with, drilling at Tawke bringing on significant production from Peshkabir is added to by success at Taq Taq and exciting M&A activity, let alone Bina Bawi opportunities. Faroe has departed, there always seems to be one but it is not for us to dictate to markets, just find them. Hurricane should not be so lowly priced but the risk is about to be proved so it’s not surprising that those who are believers are sitting tight and the shares have seen a few ‘squeaky bums’ taking profits, I still believe that 2019 will prove Dr Trice and team correct and the area is huge. Jersey Oil & Gas is also about to find out quite how much is in Verbier, Equinor has always thought highly of the asset as do I, no change here ahead of imminent drilling. Reabold has only just got stuck into its programme, the shares fell after the Wick disappointment (which was not normal investment style) but since then only good news such as California and Colter, still very much in the list.

Next comes Amerisur, up on the year and it has recovered from an awful slump last autumn, this has been due to a genuinely huge find in the Llanos Basin and a potentially very lucrative farm-out to Occidental, further nearby M&A work by others serves only to rubber stamp its value, directors buying heavily helps too. Premier and Rockhopper tend to stick together performance wise although the former would tell you that it has many more strings to its bow than just Sea Lion. Having said that the Falklands may be crucial to RKH but for longer term developments is is almost as crucial to Premier. The best way to play it may be through RKH though and Premier is always being linked with fancy asset purchases it can’t afford…Savannah Petroleum has taken forever to complete the Seven Energy deal which when up and running will be transformational, unfortunately it has rather obscured the massive success in Niger last year with five successful wells. Stick with it for a ‘sorting out’ year and hopefully they will stick to the knitting.

Another stock doing all the right things is President and it is another that the market has given no credit for. A massive increase in production after a successful autumn drilling campaign has led to a huge increase in revenues which PPC is ploughing back into the ground, and more with another raise mainly for the gas assets, very very cheap. Trinity too has got back on the straight and narrow and has recently reported another excellent quarter with the drill bit and is also seriously undervalued. Quite why SDX Energy is not right at the top of the pile as it was at one stage last year is a mystery but one that can be explained. Whilst it was regularly reporting successful wells in Morocco everybody wanted a piece of the action, the market has not realised what that is going to mean for revenue and more importantly high margin profit. Also the market is waiting for the start up of South Disouq in Egypt which should happen any time soon so expect SDX to rally in the next few months. Far has had no luck, all the time it was making great progress in Senegal with Cairn it was undervalued and should have been higher, with its excellent farm-out to Petronas the significant upside was telegraphed and should still be delivered. The exploration well in The Gambia was just that but the punishment was way overdone, expect a solid fightback from Cath and the team. Aminex has suffered from lengthy delays in Tanzania and I could be excused for ditching it but I sense that the tide has turned and that process will be helped by the new Chairman. Sound Energy has had further success at Tendrara and now we wait for testing which may lead to meaningful gas reserves. At VOG I am expecting much change, last year was an unmitigated disaster but at least now the fundamentals are right whereas the share price is just wrong and must change. Finally Echo Energy was again punished after early success and remember was up over 30% in the interim list. With the seismic well under way at the flagship Tapi Aike acreage 2H of this year should be very exciting as they work the data and prepare to drill the best prospects.

So, any changes will only be on the margin as the list cannot afford to become unwieldy and I remain confident that the existing selections are full of inherent value one way or another. With Faroe leaving it will be replaced by Serica which I consider to be better value than most of its peers and having met with Mitch Flegg last week I am sure that there is plenty of upside for such a well financed and strong UK company. With Serica replacing Faroe and Rockhopper giving exposure to Sea Lion I think it’s time for Premier to take a spell on the bench and it will join RockRose who would have gone in today had it not been suspended. Also on the bench are IGas with an exciting programme upcoming, Petro Matad who are looking to an exciting drilling campaign in the spring, Coro where James Menzies and team are putting a good package together and Pantheon who may return to the list after their recent US activity.

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10 comments on “The bucket list update.
  1. Julian Sherwood says:

    Hi Malcy, it is good to see that you are keeping faith with Aminex. I recall that you once said you had a target price of at least 10p. Is that still the case? Thanks in advance

  2. Dean Penny says:

    You left premier out of the 6 month list.

  3. Pete says:

    Why would VOG change? It’s SP has been sliding for years. Mostly because the board are disingenuous, no significant new customers and ENEO could pull their contract at any time.

    Even ENEO coming back online has done nothing for the SP. I worry about your judgment and motive when you continue to back a dog like this one whose management is proven to be totally untrustworthy – if not vaguely fraudulent in how they award themselves financially despite achieving next-to-nothing.

    • Malcy says:

      I think that what happened last week was what i was waiting for, albeit a lot longer than i had hoped or expected. For my sins i believe that you could and should make a lot of money from that franchise.
      Malcy

  4. Dave says:

    Hi Malcy,

    Are we getting a mid year update?

    Thanks

    Dave

    • Malcy says:

      Hi Dave
      Yup, always done in August so will be working out the good the bad and the ugly soon.
      Kind regards
      Malcy

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