Quick Insights About Three Oil & Gas Producers: HUR, MATD, and TXP

Hurricane Energy PLC

Hurricane Energy PLC (HUR) is an oil and gas exploration and development company that discovers, appraises and develops hydrocarbon resources from fractured basement reservoirs. The company has licenses focussed on the Rona Ridge and owns a portfolio of offshore licences on the UK Continental Shelf.

Lincoln Crestal’ 205/26b-14Well Update (as on 9th September 2019)

On the Transocean Leader drilling rig, the group noted speculation regarding the flare. On the Lincoln Crestal well, the company confirmed that a drill stem assessment had formed oil to the surface, and this will result in a flare. On 8th September 2019, the well was shut-in to allow a strategic pressure of build-up test.

Operational Updates (as on 2nd September 2019)

For its Lancaster EPS (Lancaster Early Production System) and the Lincoln Crestal (205/26b-14 well), the company came up with an operational update: Average production rate of about 14,400 bopd (barrels of oil per day) from First Oil to latest lifting on 17th August 2019,  Lancaster Early Production System availability and production since First Oil above guidance, crude oil of 1.2 million barrels sold in the last three years, and Lincoln Crestal well, being prepared for drill stem testing. In Lancaster EPS, most new aggregates stabilised water cut was 7.5 per cent, and overall system availability was presently in excess of 85 per cent long term guidance.

Financial Highlights (FY2018, US$ million)

The company’s reported operating loss decreased from $25 million in FY17 to $12.7 million in FY18. The Group’s loss after tax for the year 2018 stood at $60.9 million and increased significantly against the loss of $7.0 million reported in 2017, due to an increase in non-cash fair value loss on derivative financial instruments of $42.4 million associated with Hurricane’s convertible bonds. The total comprehensive loss for the year surged from $7 million in 2017 to a loss of $59.1 million in 2018. The basic and diluted loss per share rose from 0.46 cents in the financial year 2017 to 3.11 cents in FY2018. The net cash position stood at $123.2 million at the end of FY2018.

Outlook

The company is hoping to be the first company to prove that oil can be commercially produced from fractured basement rock formations in UK waters and if it is able to prove production is sustainable at the Lancaster field, then it is likely to attract the interest of oil majors. For the Q3 FY19, the group plans to produce an average of 9,000 barrels per day, which is expected to increase to 13,000 barrels per day in the fourth quarter, demonstrating the scale and deliverability of its production. However, to fully understand the scale of the reservoir and sustainability of production, the market requires nine to 12 months of production data from now.

Share Price Performance

Daily Chart as at September-09-19, before the market close (Source: Thomson Reuters)

On September 09, 2019, at the time of writing (before the market close, at 1:45 PM GMT), Hurricane Energy PLC shares were trading at GBX 44.70, up by 3.95 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 64.70/GBX 38. At the time of writing, the share was trading 30.91 per cent below the 52w High and 17.63 per cent above the 52w low. The traded volume (average) for 5 days was down by 6.06 per cent versus 30 days average traded volume. The group’s stock is reflecting significantly higher volatility as against the benchmark index based on the company’s beta of 1.23. The outstanding market capitalisation was around £855.80 million.

Petro Matad Ltd

Petro Matad Ltd (MATD) is an Oil & Gas Producing company primarily focused on exploration and production of oil in the geographic region of Mongolia. The company’s assets include PSCs (Production Sharing Contracts) such as Matad Block XX in the far eastern side of Mongolia close to the Chinese border and Ongi Block, Bogd Block I, Von the western central part of Mongolia.

Heron-1, results of drilling and wireline logging (as on 9th September 2019)

Heron-1 had been drilled to the entire depth of 2960 metres through the top Lower Tsagaantsav reservoir encountered at 2803 metres, and 5 metres lower than the pre-drill forecast. The formation drilled in the range of 2803-2880 metres was mainly sandstone interbedded with siltstones and shales. Over this interval, Oil and gas shows were recorded. According to the drilling data, in Heron-1 the gross reservoir interval appear alike to the prolific reservoirs found in oil wells very near to the north in Block XIX. The company has gathered wireline logs and the study of these data support the reading of a gross interval (77-metre) of the possible oil reservoir. Overall, the oil saturation and reservoir quality on the wireline logs are suitably inspiring.

Financial Highlights (H1 FY2019, US$’000)

(Source: Final Results, Company Fillings, LSE)

For the six-months ended 30 June 2019, the company posted a loss of $4.41 million, compared to a loss of $6.65 million for the same period in 2018. Basic and diluted loss per share stood at 0.67 cents versus 1.38 cents in H1 FY18. The group’s cash balance as at 30th June 2019 stood at $16.12 million ($12.33 million in Financial Assets and $3.79 million in cash), compared to a cash balance of $15.55 million ($3.01 million in Financial Assets and $12.54 million in cash and) on 30 June 2018.

Following the two effective placings in 2018, no new fundraising has been undertaken during 2019 as the group’s cash resources are adequate to meet the costs of the planned 2019 drilling programme wholly.

Operational Update

Petro Matad provided an update on it’s Red Deer-1 well and Heron-1 well in Block XX in the eastern part of Mongolia. As per the update, the company had completed all processes to obtain land permits for the Gazelle and Heron well sites, and issuance of the final signature is pending with the governor of the area. The company had also obtained the land permit for the Red Deer well.

Share Price Performance

Daily Chart as at September-09-19, before the market close (Source: Thomson Reuters)

On September 09, 2019, at the time of writing (before the market close, at 2:30 PM GMT), Petro Matad Ltd shares were trading at GBX 7.9, up by 3.61 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 9.20/GBX 1.93. At the time of writing, the share was trading 14.13 per cent below the 52w High and 309.32 per cent above the 52w low. The traded volume (average) for 5 days was up by 51.73 per cent versus 30 days average traded volume. The group’s stock is reflecting significantly higher volatility as against the benchmark index based on the company’s beta of 2.84. The outstanding market capitalisation was around £50.69 million.

Touchstone Exploration Inc

Touchstone Exploration Inc. (TXP) is an upstream oil and gas production and exploration company. The group’s business is differentiated in two core segments, namely Trinidad and Canada. The group’s main producing properties are situated onshore within Trinidad. The company was earlier known as Petrobank Energy and Resources Ltd. The company’s common shares are traded on the AIM market of the London Stock Exchange and the Toronto Stock Exchange under the symbol “TXP”.

Financial Highlights (H1 FY2019, US$ 000’s)

(Source: Interim Results, Company Fillings, LSE)

In the first half of the financial year 2019, average daily oil production increased by 19 per cent to 1,944 bbls/d as compared with the corresponding period of the last year, while crude oil sales were of 1,768 bbls/d for the three months ended June 30, 2019. Brent Benchmark price reduced by 7 per cent to $66.03 per bbl in H1 FY19 against the $70.67 per bbl in H1 FY18. Operating netback declined by 9 per cent to $26.85 per barrel in the Q2 FY19 and remained almost the same at $28.20 per barrel in H1 FY19.

In H1 FY19, the petroleum sales rose by 16 per cent to $20,723 thousand as compared with the corresponding period of the last year. Delivered funds flow from operations of $1,310 thousand ($0.01 per share) and $3,740 thousand ($0.02 per share) in Q2 FY19 and H1 FY19, respectively. Net loss increased by 159 per cent and 59 per cent to $1,018 thousand and $833 thousand in H1 FY19 and Q2 FY19 respectively. The company snapped the quarter with cash of $7,250 thousand and net debt of $10,010 thousand, representing 1.3x net debt to trailing-twelve-month funds flow from operations.

The company’s President and CEO, Paul R. Baay, said that the group continues to operate from a comfortable financial position, through positive cash flows and constant operating netbacks. Following the spudding of the Coho-1 well, the company is wholly attentive on developing the Ortoire block exploration drilling programme. The company also represents the start of a potentially transformational period and look forward to updating the market on the Coho-1 well results in the course of the next two months.

Share Price Performance

Daily Chart as at September-09-19, before the market close (Source: Thomson Reuters)

On September 09, 2019, at the time of writing (before the market close, at 2:30 PM GMT), Touchstone Exploration Inc shares were trading at GBX 16.02, up by 6.8 per cent against the previous day closing price. Stock’s 52 weeks High and Low are GBX 22.50/GBX 10.28. At the time of writing, the share was trading 28.80 per cent below the 52w High and 55.84 per cent above the 52w low. The traded volume (average) for 5 days was up by 32.25 per cent versus 30 days average traded volume. The group’s stock is reflecting significantly higher volatility as against the benchmark index based on the company’s beta of 2.22. The outstanding market capitalisation was around £24.73 million.

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