Looking around at the commodity small caps – you’d think it is the summer season rather than the final Q3/Q4 period. You certainly wouldn’t have guessed that a global QE3 has been launched. It’s like a mill pond out there – at the moment. Either the cash flooding the markets is heading for the larger cap commodity players first or the market is simply being sloth like when it comes to reluctantly correcting the mess/valuation gaps it created in the risk off 2011 year that past.
But the tell-tell signs of greedy interest (noses in troughs) are there if you look closely. A number of AIM stocks have seen larger than normal volume. Now, volume really is your friend – so take note of it. When it’s up, it usually means that larger players are involved. And after an almost 18month exodus, its about time the big boys returned.
Europe Oil & Gas is a prime example of a ‘break from the old routine’ as it soared over 90% today based on Seismics. Sure – the opportunities look inviting, but a 90% rise based on Seismics? Is this 2009 or 2010 again? Well, YES – actually it is really. And EOG are living proof of it.
So don’t get frustrated by the lazy olde market. While it’s trying hard to play the recent QE3 injections as cool as a cucumber – the truth is, Mr Market is feeling like a WAG at a Gucci/Prada sale.
Seismics are a science by themselves. Improving by the year with new technologies, 2D has been replaced by 3D soon to be 4D. Mapping targets/rock formations/geology has never been so advanced than it is today. But as many investors know all too well – it doesn’t matter how comprehensive your Seismics are – mother nature rules. CHAR recently drilled their second well which like the first missed the main targets. The Seismics looked great, so good in fact, that the market soaked up a £90mln placing at 250p per share giving CHAR a market cap of around £450mln in early 2011.
CHAR is trading at 31p today.
So, it would be fair to say that EOG’s 90% rise today bodes well for other companies conducting Seismics with results pending. As mentioned on thesharehub before Serica (SQZ) currently have their Namibia licence being mapped for free by BP. Well, not quite ‘free’ – at the expense of an interest % holding of course – but nevertheless, it’s costing SQZ nothing in cash. Results of BP’s Seismics are expected in the next 8 to 12 weeks (although could be sooner).
Unlike CHAR – SQZ has numerous other assets in their portfolio and production to boot. Debt free and with circa $20mln cash in the bank. Today the company had a market cap of around £50mln. Hence you would be forgiven for thinking we are in a risk off bearish and devoid of all stimulus market. But it is quite the contrary!
So if you think the markets playing it cool, then SQZ might be a good place to start when looking to ruffle some feathers. If the Seismics on Namibia come in any where near those demonstrated by CHAR – then SQZ could see an EOG type rise for 3 or 4 days running!
In 2009 and 2010, the market took a few weeks to get into the swing of things. Like Celebrity Strictly come dancing – the competitors are edging into the starters gate at present but not quite ready to explode onto the scene just yet. Give it to week 3 or 4 and there might be a few star jumps, spins and cheesy grins on the way.
For EOG shareholders, the show has already started.
Europa Oil & Gas plc - EOG.L, 19 September 2012
Two large prospects identified on Irish Atlantic Margin Licensing Options
Europa Oil & Gas (Holdings) plc, the AIM listed oil and gas exploration, development and production company focussed on Europe, is pleased to provide a technical update on its 100% owned Licensing Options (`LO’), LO 11/07 and LO 11 /08, located in the highly prospective South Porcupine Basin, in the Irish Atlantic Margin, covering a total area of approximately 2,000 sq km. This update includes details of two large, previously unknown prospects identified on Europa’s acreage.
* Two sizeable prospects, Mullen in LO 11/07 and Kiernan in LO 11/08, identified in the lower Cretaceous clastic play of the Irish Atlantic Margin – a play proven by the Burren oil discovery * Seismic mapping shows potential for large stratigraphic closures of up to 120 sq km in size in the case of Mullen and 244 sq km in the case of Kiernan * Both prospects supported by amplitude anomalies identified on 2-D seismic data * Detailed mapping shows the development of a possible mechanism for trapping hydrocarbons * Studies indicate potential for an additional lower Cretaceous source rock as well as the proven Jurassic source rock * Reprocessing of key seismic lines over both prospects is in progress and will be followed by a rock physics and 2-D inversion study to calibrate the seismic response * Discussions with potential joint venture partners for both licences are on-going
Europa’s CEO, Hugh Mackay commented, “Having identified two large structures in the Irish Atlantic Margin, our initial technical work and prospect mapping exercise has exceeded our expectations. Combined with the presence of a functioning hydrocarbon system, as indicated by the Burren oil discovery, the size of these structures is tremendously exciting and warrants further priority investigation. We have embarked on a work programme that will provide volumetric estimates in due course and further mature the technical case of these prospects. We look forward to presenting the prospects at the Ireland Atlantic 2012 Conference in Dublin on 12 November 2012.
“In the meantime, we continue to work towards progressing all of our licences, including Berenx Deep, the large gas appraisal project in onshore France, which has a net mean contingent resource of 277 bcf as estimated in the recent competent person’s report. Elsewhere, work is on-going in anticipation of drilling either our Wressle or Broughton prospects in the UK early next year, each of which we rate as having a one in three chance of increasing our current production of 200 boepd. I look forward to providing the market with further updates on our progress in due course as we look to deliver on our goal to generate substantial value for shareholders.
” Further Information Europa was awarded a 100% equity interest in Licensing Options 11/07 and 11/08 in November 2011 as part of the 2011 Irish Atlantic Margin Licensing Round. The Licensing Options cover two four-block parcels in the Porcupine Basin and have a total area of approximately 2,000 sq km. Both areas are situated off the west coast of Ireland on the margins of the Porcupine Basin in water depths of between 700m and 2,000m in Quads 43 and 54. Previous drilling in the basin led to the discovery of Connemara, Spanish Point and Burren, providing evidence for the existence of a viable petroleum system. The Company’s current focus is to understand the potential of the large Cretaceous stratigraphic traps in the Mullen and Kiernan prospects. The Mullen prospect lies in approximately 1,000 metres water depth with the Lower Cretaceous reservoir targets lying at a depth of approximately 3,850m below mean sea level (`bmsl’). Mullen is located approximately 200km off shore from SW Ireland, approximately 140km SSW from the Lower Cretaceous Burren oil discovery, 35/8-1 and approximately 50km NW from the ExxonMobil-operated Dunquin exploration prospect which is due to be drilled Q1 2013. Seismic mapping conducted by Europa shows potential for a large stratigraphic closure of up to 120 sq km. Possible flat spot direct hydrocarbon indicators, in the form of reduced amplitudes, have been observed in the down dip direction. In addition, seismic reflectors have demonstrated potential channel geometries. These are interpreted to be deep water turbidite channels of Aptian age associated with a local uplift event on the basin margin. The sand provenance is considered to be from the Porcupine High to the west. Detailed mapping shows the development of a possible mechanism for trapping hydrocarbons as there are strong indications of channels pinching out up dip. These sands are demonstrated locally by well 43/13-1, drilled by BP in 1988, c. 20km away. The Kiernan prospect lies in approximately 1,780 metres water depth with the Lower Cretaceous reservoir targets at a depth of approximately 6,000m bmsl. Kiernan is located approximately 145km off shore from SW Ireland, approximately 200km SSE from the Burren oil discovery and approximately 65km SE from the ExxonMobil-operated Dunquin exploration prospect that is due to be drilled in Q1 2013. Mapping shows potential for a large stratigraphic closure of up to 244 sq km. Possible flat spot direct hydrocarbon indicators, in the form of reduced amplitudes, are observed in the down dip direction. In addition, seismic reflectors demonstrate potential channel geometries which are interpreted to be deep water turbidite channels of Vallanginian age associated with a local uplift event on the basin margin. The sand provenance is considered to be the Old Red Sandstone of South West Ireland. Detailed mapping shows the channels to onlap the basin margin, providing a possible trapping mechanism for hydrocarbons. Reprocessing of key seismic lines over both prospects is currently in progress. This will be followed by a rock physics and 2-D inversion study to calibrate the seismic response. Europa is seeking a joint venture partner for both licences and a data room at its offices in London has been opened. * * ENDS * *