Oil and Gas Eye Q3 2012

Shares in US shale oil-focused Nighthawk Energy increased 92% over Q3. It announced that the John Craig 6–2 well at its 75% owned project at Jolly Ranch in Colorado had tested commercial oil flows, which will contribute to a significant step up in its production levels. Work is underway to put the well into permanent production.

Magnolia Petroleum announced the start of production at an additional five wells in its onshore oil plays in Oklahoma. It plans to have 100 producing wells by the end of 2012. By the end of June it had 80, contributing a 129% increase in revenues for the first half of the year compared with the same period last year. Magnolia's share price ended Q3 up 55%.

In August, Lansdowne Oil & Gas said the Irish Department of Communications, Energy and Natural Resources had offered it, and its partner Providence Resources, a new licensing option over five part-blocks adjacent to the Barryroe oil field. Earlier in Q3 both companies announced a significant increase in Barryroe oil in place resources, and Lansdowne said this highlighted its very material asset in its portfolio. Its shares increased 54% and Providence Resources' increased 35% over Q3.

Mediterranean Oil and Gas' shares rose 43% over Q3 following the announcement of a farm-out agreement with Genel Energy for its 100% interest in Area 4 offshore Malta. Genel will acquire 75% of Mediterranean's interest in Area 4 for a US$10m cash payment and carried costs on two exploration wells. The two have also signed an Area of Mutual Interest agreement to cooperate in buying exploration and production assets in Libya, Tunisia and Malta for a minimum of three years. Mediterranean also announced the sale of 13 non-core exploration and production gas assets onshore Italy during Q3.

In July, Gulfsands Petroleum announced its Chorbane permit located onshore Tunisia has been renewed for three years. Its shares ended Q3 up 20%. Gulfsands was one of four companies to enter the Oil and Gas Eye index at the beginning of Q4, joined by IGas Energy, new AIM entrant Eland Oil & Gas and Valiant Petroleum.

In September, Valiant Petroleum announced it had started a strategic review in which options to merge or sell the business will be considered. Its share price ended Q3 up 11%.

In August, Petroceltic International and Melrose Resources said they had reached terms for a merger which will create a regionally focused North Africa, Mediterranean and Black Sea oil and gas company. This will enhance the enlarged group's financial flexibility and, from the date the merger becomes effective, HSBC will provide a new US$300m facility. The enlarged group will seek a UK Main Market listing within 12 months. Petroceltic's share price ended Q3 up 4%.

Performance of the Oil and Gas Eye index and oil price over Q3 2012

Source: Ernst & Young, Thomson Datastream

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