| North Sea Oil Plays by James Faulkner of WatsHot.com On WatsHot.com, James provides two hot new recommendations each month, regular updates on his share tips, rumours, book reviews and his daily thoughts and insights into the markets. This is an extract from James' most recent weekend editorial on WatsHot, in which he identifies three London listed oil plays to potentially benefit from takeover activity. JAMES WILL BE PUBLISHING HIS LATEST HOT TIP NEXT WEEK. CLICK HERE TO JOIN WATSHOT.COM NOW The recent bid for Nautical Petroleum (NPE) has left punters speculating as to which north sea oiler will be next on the M&A shopping list. Investors could do worse than dip into Ithaca Energy (IAE), whose steeply rising production profile singles it out as a key target - indeed, it has already been the subject of one approach earlier this year. Ithaca Energy's (IAE) portfolio consists of oil assets in the Inner and Outer Moray Firth, gas and condensate assets in the Central North Sea, and gas assets in the Southern North Sea. Focused on the exploitation of existing discoveries rather than exploration, the company seeks to acquire existing production or discoveries that may no longer meet the investment criteria or strategy of the existing owner. Currently its portfolio comprises four producing fields, two ongoing developments and a raft of other appraisal opportunities Ithaca is in the middle of an ambitious production programme that should see output quadruple from c.3,200 barrels of oil (net) equivalent per day (boepd) in 2011 to 21,600 boepd by 2014. The main production landmarks will be the ramp-up of the Athena development field (ongoing) and the start-up at Stella/Harrier (production drilling in late 2012, onstream Q4 2014). At this point the company will be generating considerable levels of free cashflow which will be available to reinvest in further growth via other developments and acquisitions. As the operator of all its key assets, Ithaca is the master of its own destiny as it is able to control the pace and cost of its activities. It has already proven that it has the wherewithal to successfully develop North Sea assets, such as the Beatrice field, of which it assumed the operatorship in 2008 and proceeded to increase production from 1,500 boepd to more than 11,000 boepd. A successful outcome at Stellar & Harrier would establish Ithaca as one of the larger mid-tier North Sea operators. With cash in hand of $110 million at the end of March 2012 and a $400 million borrowing facility in place, the firm is fully funded to carry out its development activities. To find out oil play number 2 sign up for WatsHot.com now!
Shares in Xcite Energy (XEL) had been trading as high as 400p back in early 2011, but have since fallen to just 79p at time of writing due to funding uncertainties surrounding its Bentley heavy oil field, thought to be one of the largest undeveloped oil fields in the North Sea. However, some of this uncertainty has been removed of late through an amended agreement with BP whereby the International Oil Company (IOC) will provide the offtake services to market and sell the Bentley crude oil in return for an incentive-based fee per barrel. In addition, BP will provide $5 million of financing for Phase 1B of the Bentley field development as part of the reserves based lending facility being negotiated with a group of commercial banks. BP will also provide working capital support estimated to be worth $20-$40 million depending on Bentley crude oil production and blending requirements. Recent drilling results have been positive, with the 9/3b-7z well having reached target depth of 9,646 ft and hitting a reservoir section in excess of 2,000 ft with 100% net pay. In addition, the top reservoir, at 3,609 ft true vertical depth, is higher than previously encountered in any part of the field to date, thereby giving an oil column depth of approximately 121 ft. With production testing on the way and BP on board, the outlook appears positive and there is a long way to go before the shares move anywhere near broker Seymour Pierce's 242p price target. JAMES WILL BE PUBLISHING HIS LATEST HOT TIP NEXT WEEK. CLICK HERE TO JOIN WATSHOT.COM NOW To access James' latest thoughts on the market, weekly editorials, hot rumours and lots more, sign up to WatsHot.com now by clicking here | |
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