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Summary
- San Leon Energy extended the proposed investment date in Decklar Petroleum and Oza Field to 31 October 2020.
- It would provide a conditional loan of USD 7.5 million to Decklar Petroleum Limited, and it would also acquire a 15 percent equity interest in Decklar.
- Prospex Energy acquired a 49.9% interest in the El Romeral project in Spain.
- The transferring of assets is ongoing, and it is expected to complete soon, which was delayed due to covid-19.
San Leon Energy PLC (LON:SLE) and Prospex Energy PLC (LON:PXEN) are two FTSE listed energy stocks. Based on 1-year performance shares of SLE were up by close to 26.9 percent, whereas shares of PXEN were down by around 13.33 percent. Shares of SLE were up by nearly 4.35 percent, and shares of PXEN were trading flat from the last closing price (as on 1 October 2020, before the market close at 1:00 PM GMT+1)
San Leon Energy PLC (LON:SLE) - Acquired 10 percent interest in Energy Link Infrastructure Ltd (ELI)
San Leon Energy PLC is a UK based oil & exploration company. The Company has assets in Nigeria, Poland, Ireland, Albania and Spain. It has an indirect interest in OML 18, an oil and gas block located in Nigeria. San Leon Energy is listed on the FTSE AIM All-Share index.
Recent Event
On 30 September 2020, the Company announced that it has agreed with the related parties to extend the proposed investment date in Decklar Petroleum Limited and Oza Field in Nigeria by one month to 31 October 2020. In September 2020, the Company announced that it has agreed on a conditional loan of USD 7.5 million to Decklar Petroleum Limited that has an interest in the Oza oil field, offshore Nigeria. San Leon would also acquire a 15 percent equity interest in Decklar.
Interim results (ended 30 June 2020) as reported on 25 September 2020
In H1 FY20, San Leon generated a loss after tax from continued operations of USD 20.3 million, which widened from a loss of USD 6.8 million in H1 FY19. The expected credit impairment loss provision increased during the reported period due to the deferment in loan notes repayment. As on 30 June 2020, San Leon had cash of USD 35.6 million.
In April 2020, San Leon negotiated the loan notes instrument with Midwestern Leon Petroleum Limited (MLPL), and it had an outstanding payment of USD 88.7 million as on the reported date. Based on the year to date, the Company received loan notes payment of USD 41.5 million, and it would receive USD 10 million before 6 October 2020. The remaining amount would be received in three quarterly payments between July 2021 and December 2021. San Leon made a special dividend payment of USD 33.3 million in May 2020, as the financial position strengthened after receiving payment from MLPL. In August 2020, San Leon acquired 10 percent interest in Energy Link Infrastructure Ltd (ELI) for USD 15 million. ELI has proposed a new Alternative Crude Oil Evacuation System (ACOES) that would be used for oil export from OML 18 to Floating Storage and Offloading (FSO) vessel.
Update on Oil Mining Lease (OML) 18
(Source: Company website)
In H1 FY20, three well drilling programmes were completed by Eroton at OML 18. The final drilling at the block was deferred due to the impact of covid-19. Bonny terminal received 25,000 barrels of oil per day (bopd) for sale in H1 FY20 that was lower than 32,000 bopd received in H1 FY19. The oil delivery continues to remain affected due to the OPEC oil production restrictions and downtime. The gas sales were 39.1 million standard cubic feet per day (mmscf/d) in H1 FY20 that improved from 34.3 mmscf/d in H1 FY19. In H1 FY20, approximately 15 percent of the production downtime was caused by third-party terminals.
Corporate Developments
(Source: Company website)
Share Price Performance Analysis
1-Year Chart as on October-1-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
San Leon Energy PLC's shares were trading at GBX 27.60 and were up by close to 4.35 percent against the previous closing price (as on 1 October 2020, before the market close at 1:00 PM GMT+1). SLE's 52-week High and Low were GBX 27.98 and GBX 8.60, respectively. San Leon Energy had a market capitalization of around £118.50 million.
Business Outlook
The Company expects the financial outlook to be strong, and it would receive further loan notes payment from MLPL. It is hopeful over its investment in ELI and Oza, and it expects that ACOES would cover up for the losses that would be made by OML 18 due to the downtime. San Leon expects the final completion of the drilling at OML 18 to be completed by the end of 2021 that was halted due to the pandemic.
Prospex Energy PLC (LON:PXEN) - First gas production at Selva is expected in H1 FY21
Prospex Energy PLC is a UK based company that invests in low capital expenditure opportunities in the oil & gas sector. The Company has investments in projects that include El Romeral and Tesorillo in Spain, Suceava in Romania and Po Valley in Italy. The Company was previously known as Prospex Oil & Gas PLC, and it changed the name to Prospex Energy in July 2020.
Assets of Prospex Energy
(Source: Company website)
H1 FY2020 results (ended 30 June 2020) as reported on 25 September 2020
In H1 FY20, the Company reported a net loss after tax of £1.0 million from continued operations, which increased from a loss of £0.6 million a year ago. As on 30 June 2020, Prospex Energy had total assets of £6.2 million. The majority of the Company's assets consist of investment in PXOG Marshall Ltd that owns the Italian assets. In February 2020, Prospex Energy raised £0.7 million via placement of new shares that were used to fund the acquisition of 49.9 percent indirect stake in El Romeral, onshore Spain.
During the reported period, the Company received the formal technical environmental approval from the Italian Environment Ministry for Podre Gallina Exploration, onshore Italy. It is in early discussion for non-equity linked funding of €400,000 for the development cost of Selva gas field.
Exploration upside of the El Romeral Project
(Source: Company website)
The Company acquired the stake in the El Romeral Project for €375,000. Currently, the production is from three wells at the project, and there are multiple opportunities to increase gas production with a gas resource of 5 billion cubic feet (Bcf) from two development locations. The El Romeral power station is underutilized with around 78 percent spare capacity. If the plant operates at the full capacity, it has the potential to generate the annual revenue of €4.2 million and profit before tax of €2.4 million through the sale of electricity at an average price of €70 per MWh.
Share Price Performance Analysis
1-Year Chart as on October-1-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Prospex Energy PLC's shares were trading flat at GBX 1.95 (as on 1 October 2020, before the market close at 1:00 PM GMT+1). PXEN's 52-week High and Low were GBX 4.30 and GBX 1.25, respectively. Prospex Energy had a market capitalization of around £1.73 million.
Business Outlook
The Company highlighted that the developments are taking place at all the late-stage onshore European gas projects. Prospex Energy would complete the transfer of 49.9 percent interest in the El Romeral gas and power project soon. The gas production at Selva would have an initial rate of 150,000 scm/day and is expected to be online in H1 FY21. Prospex Energy anticipates becoming a cash flow generative company in 2021.
