Fox Davies Capital Update featuring Churchill Mining, Vane Minerals, Ascent Resources, Aurelian Oil & Gas Plc, Cairn Energy Plc, Salamander Energy Plc, Chaarat Gold

Oil & Gas Corporate News

Ascent Resources (LON:AST) (BUY, £0.20) (AST, 4p, ▲ (14.29%)) through its subsidiary Ascent Slovenia Limited (ASL), has increased its interest in the Petišovci project in Slovenia, following the transfer of Kulczyk Oil Ventures Inc's (KOV) 30% stake in the Dolina shallow oil field, and 10.5% stake in the Globoki deep gas field. In addition to a small cash payment, a royalty will be paid by ASL to KOV of an additional $60,000 for each Bcf of independently certified 2P gas reserves produced in the future, applicable to the acquired interest. Under the terms, Ascent will assume all development costs related to the acquired interest.

Comment: This is a good deal for Ascent, increasing its interest in its flagship project in Slovenia against a small royalty increase. We remain Buyers with an unchanged target price.

Cairn Energy Plc (LON:CNE) (CNE, 414.9p, ▲ (1.64%)) announced that it has commenced drilling operations on the Alpha prospect (Alpha-1) in the Sigguk Block, approximately 175 kilometres offshore Disko Island, west Greenland. This drilling programme targets the Alpha and T8 exploration prospects which lie in water depths of between 300-500m. The wells have planned target depths of 4,200m and 3,250m and are anticipated to take 55 and 38 days respectively. Each well is being drilled using a pilot hole through the initial top hole section.

Aurelian Oil & Gas Plc (LON:AUL) (AUL, 41p, ▼ (1.2%)) announced that drilling has commenced on the Trzek-2 well in Poland. The rig will drill vertically to a target depth of 4,150m to evaluate the Rotliegendes reservoir as previously tested by the Trzek-1 well in 2007. Target duration for this pilot hole is approximately three months. Thereafter the well will be sidetracked and drilled some 1,500m horizontally towards the Trzek-1 well. The well will then be completed for fracture stimulation. This phase of operation is planned to take six to eight weeks therefore resulting in a total timeframe of four to five months from spud. The Halliburton fracture stimulation crew will then be mobilised to Trzek-2 and up to 10 fracture stimulations, a proven technology in shale and tight gas developments globally, will be carried out in sequence. The details of this operation will depend on the reservoir properties encountered. A flow test to determine the productivity of the stimulated well is expected to commence in late November with flow rates to be reported in December. Following the completion on the Trzek-2 well, the rig will be mobilised to the Trzek-3 well site. The company also announced that it has commenced the acquisition of a 220km2 3D seismic survey over its Cybinka and Torzym licenses in Poland. The survey, which is planned to delineate leads which management believes could total approximately 100mmbbls of unrisked prospective resources, will straddle equally the two licences in the proven Zechstein Reef play of Aurelian's Permain Basin Core Area.

Salamander Energy Plc (LON:SMDR) (SMDR, 234p, ▲ (3.4%)) announced the spudding of the Tom Hum Xanh-1X exploration well in Block 31, in the Vinh Chau Graben system, offshore southern Vietnam. Salamander holds an operated 35% interest in Block 31, which was the subject of a previously announced farm out arrangement between Salamander and Origin Energy in December 2009. The 31-THX-1X well will be drilled to a depth of approximately 2,500m and is targeting oil in the Eocene-Oligocene clastics as well as pre-Tertiary basement in a horst block structure in the centre of the basin. The mean gross pre-drill estimate of prospective recoverable resource is c.80MMbbl. The well will be drilled by the PVD-1 jack-up rig in a water depth of 18m. It is expected to take approximately 32 days to complete on a dry hole basis.

Mining Corporate News

Chaarat Gold (LON:CGH) (CGH, 40.75p, ▼ (0.61%)) announced that the Company has raised approximately £3.85M (before expenses) through the issue of new ordinary shares at a price of 40 pence per share. The Placing represents approximately 8.5% of Chaarat's existing issued ordinary share capital. The money will be spent on further drilling to increase and upgrade the resource in the Tulkubash zone Conducting the necessary studies and reports required for regulatory approval and production permits Drilling recommenced in the Tulkubash zone in May 2010. Within the T0700 project area, a JORC compliant resource of 336,000 oz at a grade of 4.18 g/t has already been delineated.

Churchill Mining (LON:CHL) (CHL, 102.5p, ▲ (2.76%)) announced, in conjunction with its Indonesian partners, their intention to increase the project coal production rate by up to 10mtpa to 35mtpa. Coal production from the Northern Pit would increase from 20mtpa to 25-30mtpa and production from the Southern Pit would remain at 5Mtpa. Churchill's feasibility and development work has identified that planned mine facilities at the Northern Pit have the capacity to support a mining production rate of 40-45Mtpa. In this context, Churchill has executed project optimization studies which show that the overland conveyor, which will transport the coal from the Northern Pit, has an enhanced capacity of 25-30Mtpa, an increase of 5-10Mtpa. Churchill is now incorporating this additional coal production into the project feasibility study, which it now expects to release during the third quarter of this year.

Vane Minerals (LON:VML) (VML, 3.5p, ► (0.0%)) announced continued successful results from further delineation drilling at the Wate project. The Company’s wholly-owned subsidiary, VANE Minerals (US) LLC, has encountered two significant ore-grade intercepts in Hole WT-37. On the 25th of May 2010, the Company announced the completion of an NI43-101 resource of 695,000 lbs U[3]O[8] grading 0.80% U[3]O[8] on the Wate Pipe which is located on state lands held in the joint venture (JV) with Uranium One Exploration U.S.A. Inc (U1). The JV intends to complete limited additional drilling in order to increase the resource to 1 million pounds U[3]O[8] which is the resource needed, based on internal guidelines, to move the project to prefeasibility.