Oil and Gas Eye Q4 2013

Risers in Q4 enjoy exploration success and production increases

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Q4 saw 41% of AIM oil and gas companies record share price gains. Exploration success and higher revenues from increased production were the main drivers, with strategic deals also a key growth factor.

Tower Resources’ share price rose 239%. At the beginning of October it announced the successful completion of its acquisition of Wilton Petroleum Limited, which owns a 20% carried interest in the Marovoay Block-2102 onshore Madagascar. The acquisition marks a new country entry for Tower Resources.

The deal also increases the cash on its balance sheet, as Ophir Energy has agreed to compensate Wilson Petroleum for the loss of carry on a commitment well following its decision to relinquish its interest in Block-2102.

In November, Andes Energia announced a light oil discovery in a conventional play in the Neuquen basin in Argentina. It also said it had been awarded a new exploration permit in a block in the southeast region of Paraguay. The new licence increases its exposure to the unconventional play in the Chaco-Paranaense basin. The company’s share price ended Q4 up 129%.

Joined by Lekoil and Falkland Oil and Gas, Andes Energia was one of three companies to enter the index at the end of the quarter.

Lekoil announced a significant upgrade to resources at the Ogo discovery offshore Nigeria compared with pre-drill expectations. In November, it successfully raised £62 million through a placing, and its share price rose 47% over Q4.

In December, Empyrean Energy announced a 3.5% increase in net profit for the six months ended 30 September 2013. It said this was partly due to the successful results of well down-spacing and the increased pace of drilling at its flagship Sugarloaf AM project in the Eagle Ford Shale, which had a positive effect on production.

It also said it hopes to report growth in 2P reserves in the coming year as a result of increased drilling activity in the Austin Chalk formation in the Eagle Ford Shale. Its share price ended Q4 up 60%.

Successful drilling results contributed to a 39% increase in Trinity Exploration’s share price. In December, it announced an oil discovery at its TGAL-1 exploration well within the Galeota licence in Trinidad, and said Petrotrin’s 35% interest in the Trintes field in Trinidad would be converted to an over-riding royalty, increasing Trinity's working interest in the field to 100%.

In December, Forum Energy said production had started from the Galoc-5H and 6H wells that were drilled and completed under the Phase II development of the Galoc field offshore the Philippines, in which it has a 2.27% participating interest. Its share price rose 29% over Q4.

Performance of Oil and Gas eye index and oil price since 2008

EY - Performance of Oil and Gas eye index and oil price since 2008

Source: EY, Thomson Datastream