Oil and Gas Eye Q2 2014


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Risers in Q2 enjoy upgrades to reserves estimates

55% of companies in the AIM oil and gas universe recorded share price gains in Q2, with upgrades to reserves estimates and exploration success the main drivers. As in recent quarters, strategic deals were also a key growth factor.

Rose Petroleum’s share price rose 199%. In May, it published results of an analysis prepared by Ryder Scott of the resource potential on its leases for the Mancos and Paradox formations in Utah, and results of an economic analysis of the assets, which highlighted the project’s potential size. The company, through a wholly-owned subsidiary, holds a 75% working interest in certain oil and gas and leases in Grand and Emery Counties, Utah.

In April, Mosman Oil & Gas said it had signed agreements with Landcorp and a local farmer to access land in preparation for drilling of the Crossroads-1 and Crestal-1 wells in New Zealand.

In June it said it had made an oil discovery at its Cross Roads-1 well at the Petroleum Creek Project, and said it had raised £3 million through a placing. Funds raised will be used to increase the exploration programme at the Petroleum Creek Project, with the addition of a potential fourth and fifth exploration well and acquiring seismic in 2014. Mosman’s share price ended Q2 up 190%.

Range Resources’ share price rose 165%. In June, it announced an independently audited increase in reserves attributed to its onshore Beach Marcelle, Morne Diablo and South Quarry licences in Trinidad. It also said it has entered into an agreement with LandOcean Energy Services Co. to act as its preferred oilfield services contractor. LandOcean will also provide Range with an option to take up to $50 million of financing. This is mainly to pay for LandOcean's services, but can be used for other things if the two companies agree.

During April, Sound Oil said it had reached agreement with Niche Group for a farm down of its onshore Carita licence in Northern Italy’s Po Valley. Niche will acquire a 27.5% interest in the licence in exchange for paying 100% of the costs of a second well. In June, Sound Oil reported a 31% increase in its internal proven reserve estimates at the onshore Rapagnano gas field in Italy. Its share price ended Q2 up 79%.

Bowleven announced that it has delivered on its strategic intent to sell part of its interest in the Etinde permit offshore Cameroon by entering into a farm-out agreement with LUKOIL and NewAge. Under the agreement, Bowleven will reduce its interest in the permit from 75% to 25%, and receive aggregate consideration of around $250 million. Bowleven’s share price ended Q2 up 34%.

Joined by Zoltav Resources, Bowleven was one of two companies to enter the Oil and Gas Eye index at the end of Q2.

Performance of the 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