Energy Summary for Dec. 6, 2017
WEST TEXAS Intermediate crude for January delivery lost $1.66 to $55.96 on the New York Merc, while Brent for February lost $1.64 to $61.22 (all figures in this para U.S.). Western Canadian Select traded at a discount of $17.30 to WTI ($38.66), unchanged. Natural gas for January gained one cent to $2.92. The TSX energy index lost 4.06 points to close at 185.02.
On this slow day for news, we turn our attention to a few seldom-covered oil and gas juniors. Azerbaijan producer Greenfields Petroleum Corp. (GNF) fell two cents to 13 cents on 565,700 shares. Two days ago, the company announced that its production-sharing partner, the state oil company of Azerbaijan (SOCAR), is planning a deep drilling program at their Bahar gas project. Greenfields and SOCAR expect to finalize the drilling plans in early 2018, then begin development drilling later that year.
Greenfields has fallen to today’s 13 cents from an all-time high of $11, which it reached in 2011. The company was founded in 2010 by Rich MacDougal and Alex Warmath, whose previous promotion was an Indonesian and Thai energy explorer called GFI Oil and Gas. The two men took GFI public on the TSX Venture Exchange by reverse takeover in 2006. The stock opened at $1.30, then it dipped as low as 48 cents, and then in 2008 GFI was acquired by British company Salamander Energy for $1.13 a share (in cash and shares). Mr. MacDougal and Mr. Warmath’s follow-up promotion, Greenfields Petroleum, listed in November, 2010, with a $35.99-million initial public offering at $8.50. The stock traded above the IPO price for eight months, after which it went downhill.
As for Greenfields’ net production, this remained flat for many years, from 1,084 barrels of oil equivalent a day in 2011 to 1,169 barrels a day in 2015. Then in March, 2016, the company announced that it was increasing its interest in the Bahar project to 80 per cent from 26.67 per cent. In the same announcement, president and chief executive officer John Harkins lamented the effects of the 2014 oil price crash, saying, “Over the past 22 months, Greenfields has thoroughly investigated and exhausted a broad range of financial and strategic alternatives, all of which have failed to generate acceptable proposals.” What Greenfields was finally able to arrange were shares-for-debt deals with its creditors. In September, 2016, it implemented the shares-for-debt arrangements, raising its share count to nearly 156.9 million from 22.1 million. The following month, with the company’s stock around 27 cents, Mr. MacDougal and Mr. Warmath retired.
Considering Greenfields’ increased interest in Bahar for part of 2016, its net production for the full year 2016 was 2,082 barrels a day. In the first nine months of 2017, its net production was 3,446 barrels a day. Mr. Harkins, who has been the president and CEO since Greenfields listed, gave the company a pat on the back for the production increase. He previously worked at Amoco and TransCanada PipeLines.
Texas oil junior Advantagewon Oil Corp. (AOC), which listed in July on the Canadian Securities Exchange, today closed unchanged at 7.5 cents on 149,000 shares. In October, the company produced 33 barrels of oil a day. As of Nov. 27, it was producing 41 barrels a day. By the company’s calculations, it will break even at 60 bar rels a day. Advantagewon expects to reach this production level by year-end.
On Dec. 1, the company appointed Charles Dove as CEO. Mr. Dove’s predecessor, Paul Haber, remains with the company as executive chairman. Mr. Dove, a geophysicist, was a director of Dejour Energy from 2007 to 2009. Dejour now trades as DXI Energy Inc. (DXI) and today gained 0.5 cent to 12 cents on 176,200 shares. In the first nine months of 2017, DXI produced 288 barrels of oil equivalent a day from its assets in British Columbia and Colorado. As for Mr. Haber, he is an accountant and the chairman of Blackbirch Capital, which calls itself a merchant bank.
Italian gas explorer BRS Resources Ltd. (BRS) closed unchanged at five cents on 100,000 shares. This stock, which has remained under 10 cents for five years and is not usually a busy trader, leaped to 23.5 cents in March and enjoyed daily trading volumes of up to three million shares. The spike was a result of the company’s efforts to hype its Trava 2D exploration well. BRS released four updates about the well in March, but the promotional activity quickly stopped, and so the stock declined again. Two days ago, the company announced that it was awaiting approval from the Italian government to begin production at its Longanesi field.
BRS’s president and CEO, Byron Coulthard, is also the president and CEO of a North American mining junior called Trueclaim Exploration Inc. (TRM: $0.175). He rolled back Trueclaim’s shares 1 for 10 in 2014 and then again at 1 for 10 two months ago.