Oil and Gas Eye Q1 2014

AIM fallers

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Risers in Q1 provided positive operations and portfolio management updates

In Q1, 34% of companies in the AIM oil and gas universe recorded share price gains, with strategic agreements, farm-out deals and positive operations updates the main drivers.

SacOil Holdings’ share price rose 188%. In March, it announced that, with The Public Investment Corporation, it had entered into a Memorandum of Understanding with an entity managing investment portfolios and shares on behalf of the government of Mozambique to investigate opportunities relating to the future distribution of gas in Southern Africa.

In February, Egdon Resources and its partners said they had completed a farm-out agreement with Total in respect of UK onshore exploration and development licences PEDL139 and PEDL140 in Lincolnshire. The agreement marked the entry of the first oil major into UK shale gas exploration. In January, Egdon Resources and its partner also entered into an opt-in agreement with Total for licence PEDL209, also in Lincolnshire. Egdon’s share price ended Q1 up 104%.

In March, Madagascar Oil released an update on the ongoing Steam Flood Pilot at the Tsimiroro oil field in Madagascar – its flagship asset. It said recent results from the pilot point to the positive response of the reservoir to thermal recovery techniques and the prospect of commercial development of the field. Its share price rose 46% over Q1.

In February, Empyrean Energy said it had 119 producing wells on its Sugarloaf project in the Eagle Ford Shale as at the end of 2013. Marathon Oil, the project’s operator, aims to drill 100-110 wells on Sugarloaf in 2014, a significant increase on the 48 wells drilled in 2013. Empyrean added that Marathon’s decision to co-develop the Austin Chalk alongside the Eagle Ford Shale is likely to have a positive impact on its reserves and value. Its share price ended Q1 up 43%.

In January, Europa Oil & Gas announced that phase 1 of the PEDL 181 licence onshore UK has been extended by a year. This will enable it to drill the Kiln Lane-1 prospect in the second half of 2014. Europa holds a 50% interest in, and is operator of, PEDL 181. The following month, it announced the renewal for a further year of its 100% owned Tarbes Val d'Adour permit in the Aquitaine Basin, onshore France, adding that it would look to secure a partner to work with it to advance Tarbes in the limited time available. Its share price rose 35% over Q1.

Four companies entered the Oil and Gas Eye index at the end of Q1: Hurricane Energy, Tower Resources, President Energy and Circle Oil.

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