Oil & Gas Corporate News
Ascent (LON:AST) Resources (BUY, £0.20) (AST, 5p, ? 11.11%) announced that it has raised £17m, before expenses, by way of a Firm Placing of 100,000,000 New Ordinary Shares at a price of 5p per share and a Conditional Placing of a further 240,000,000 New Ordinary Shares at a price of 5p per share. The funds raised will primarily be used to advance the Company's flagship Petisovci/Lovasi/Ujfalu project, through the drilling and completion of the Pg-11 sidetrack, the Pg-10 and Ujfalu-III wells, and capitalise on the areas P50 estimated gas in place of 412BCF.
Comment: The funds will enable Ascent to carry out a three well campaign designed to prove up the potential of the area, as highlighted in our recent research report. Unfortunately, the placing was not carried out in the best market conditions and at a placing price of 5p. The combined dilution decreases our risked valuation down to 15p.
Gulf Keystone Petroleum (LON:GKP) (BUY, £2.00) (GKP, 123.5p, ? 1.02%) reported a significant initial oil flow on the Shaikan-2 Appraisal Well in a 44m interval at a depth of 1,792-1,836m in the Jurassic age formation. Substantial smoke and/ or the oil flare is/ are visible from the Company's office in Erbil some considerable distance from the Shaikan-2 location, indicating that a significant flow has been encountered and prompting the Company to issue this announcement. The Company is currently conducting a test, which is expected to continue for another 72 hours to obtain further results, i.e. flow rate, oil quality and similar information, which will be reported in the next announcement. Shaikan-2 is the first deep appraisal well to be drilled on the Shaikan structure. The well is drilling approximately 9km to the south-east of the Shaikan-1 discovery well.
Comment: This is excellent news for Gulf Keystone although we have to wait for more data in order to be in a position to make a more definitive assessment. Despite Shaikan being a world-class discovery, a 9km outstep was never going to be a guaranteed success as the properties of fractured carbonate reservoirs can vary significantly. We are increasing our probability of success for the P50 case on Shaikan from 2/3 to 3/4 and raising our price target to 220p. We remain strong buyers of the stock, which has been weak for no…
