Oil and Gas Eye Q1 2014

AIM fallers

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Fallers in Q1 suffered poor drilling results and threats to key projects

66% of companies in the AIM oil and gas universe registered a share price fall this quarter, reflecting disappointing drilling results, media speculation around key projects, and the failure of proposed strategic deals.

Max Petroleum’s share price fell 61%. In January, it said the SAGW-11 appraisal well in Kazakhstan had not found sufficient hydrocarbons to be commercial, and will be plugged and abandoned. Later in the month, it said it had begun implementation of a significant cost cutting initiative, adding that this recognises its shift from exploration and development to primarily production, with a focus on maximising cash flow.

In March, Clontarf Energy, which holds an indirect 60% interest in the Ghana Tano 2A Block, commented on media reports regarding ratification of the petroleum agreement for the block, saying that the reports suggested a ratification of a rival application that may overlap a portion of the Block. It has sought confirmation from the Ghanaian authorities that this does not relate to any area covered by the Tano 2A Block. In early April, Clontarf said the High Court of Ghana had granted its application for an interlocutory injunction and an interim order protecting its property rights in respect of the Block. The company’s share price ended Q1 down 50%.

Lansdowne Oil & Gas’ share price fell 37% over Q1. In January, it pointed to an announcement made by Providence Resources regarding press speculation that farm-out discussions regarding Ireland’s Barryroe oil field may not be progressing to plan, and that further appraisal drilling may be needed. Providence said there had been no material change to the Barryroe farm-out’s outlook since the update provided in December 2013. Providence has an 80% interest in the field and Landsdowne Oil & Gas holds 20%. Providence’s share price dropped 17% in Q1.

Providence was one of four companies to exit the Oil and Gas Eye index at the end of Q1, along with Coastal Energy, GeoPark Holdings and Gulf Keystone Petroleum.

InfraStrata announced that BP Gas Marketing Limited has decided to relinquish its option to acquire 50.495% of the shares of the Islandmagee gas storage project in Northern Ireland. InfraStrata, which has a 65% interest in the project, said it will now seek a new project partner and still hopes to drill the Islandmagee-1 well at the end of this year. Its share price ended Q1 down 35%.

Tangiers Petroleum’s share price fell 26% in Q1. In March, it confirmed that the minimum acceptance conditions for its recommended off-market takeover bid for Jacka Resources were not met by the end of the offer period, and that offers have now lapsed. The combination of the two companies would have created a small to mid-cap Africa focused upstream oil and gas company.

Performance of Oil and Gas Eye index and FTSE 350 Oil and Gas Producers index since 2008

EY - Performance of Oil and Gas Eye index and FTSE 350 Oil and Gas Producers index since 2008

Source: EY, Thomson Datastream