En­ergy Sum­mary for Dec. 6, 2017

Stockwatch Daily - - ENERGY - by Stock­watch Busi­ness Re­porter

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.

(*MKTOIL)

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