Opinion

Range Resources, Genel, Wentworth, Trinity


Range Resources

A Trinidad operations update from Range this morning which details the infrastructure upgrade which is part of the ongoing modernisation activities at the Beach Marcelle field which is what they raised the money for last month. The upgrades were needed to provide a greater resilience in the production infrastructure and accommodate production growth in the years to come.

Once this has been completed Range will drill two development wells at Beach Marcelle in Q4  one of which will be a follow on from a well drilled last year which was one of their best producing wells of late coming in at c. 100 bopd of production. All being well both the new wells will produce at that rate and the second will be drilled from a new pad capable of drilling two additional follow on wells planned for next year.

Genel Energy

More good news from Genel today as they report that DNO has set a new Peshkabir production target of 50,000 bopd by the year end and the programme has raised the previous field 1P and 2P reserve estimates. Peshkabir 6 and 7 completed in August and are about to undergo rigless testing lasting several weeks. This will be followed by P-8 which spuds in ten days and P-9 in October.

Development drilling at the Tawke field is set to resume shortly where the work over programme has stabilised production at above 85,000 bopd. All in all this makes Genel look very strong right now, Peshkabir is delivering in spades, Tawke is on the mend and the oil and gas at Bina Bawi and Miran provide significant scope for medium and long term upside.

Wentworth Resources

Interims from WRL this morning which as usual only reflect backward facing numbers and with so much going on at the company it is more than ever the future that counts under new management team of Eskil Jersing and Katherine Roe. EBITDA improved by 229% to $4.18m compared to 1H 2017 and with cash of $4.04m and a reduction of long term loans by $2.67m the financial position is strong enough.

Average daily gross production from Tanzania was up 115% to 79.3 MMscf/d and the quarter exited at a rate of 89 MMscf/d. More importantly they are getting paid, cash payments if $12.97m from gas sales and recovery of long-term government receivables came in the first half.

As I discussed in my recent note work in Mozambique is being assessed with regards to above ground security and farm-out and monetisation options. The next few months will provide an insight into the new management team's progress but I am confident that the value in WRL will be confirmed in due course.

Trinity Exploration & Production

Trinity has announced that following repayment of government debt a couple of weeks ago and now repaying the CLN it is debt free. Given the problems Trinity has faced this is a quite remarkable achievement. The company are now in the rare position for an Aim E&P of being debt free, cash in hand and with what is now one of the lowest G&A's in the sector. Trinity's model of high margin operations gives them an enviable level of profitability and considerable growth opportunities in the portfolio .

Having reorganised the finances in July Trinity has already got to work on the drilling programme with the construction of locations undress for 4 new wells as part of a 6 well campaign which will make 8 for the year. Excellent relationships with local regulatory bodies and supply chain companies has meant that this programme was initiated so quickly. Investors should not forget that the potentially game-changing Galeota field development is still being processed in the background.

Today really does mark a massive degree of progress for the company which is now primed to deliver production growth and cash flow in both short, medium and long term. With its lean cost base being less than almost anyone I know the margin will rise and so will profitability. Trinity brings together the reserves, resources and production metrics that should give it an EV premium to most in the sector and today that rerating process should begin.


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