We believe that in order to achieve the well completion in the fourth quarter (Q4) of 2018, we would expect to see drill permits and a financing partner both announced during Q3. Once these milestones are in place, we believe that the share price could begin to more fully reflect the value of the Paradox Basin holding.Full report is available via Capital Network website
The nanomaterials market is transitioning from a concept technology to commercial applications. Haydale (LON:HAYD) specialises in the integration of nanomaterials into commercial and industrial technologies. We argue that this is a good position to occupy within the value chain – exposed to end market growth but not exposed (negatively) to the likely future price compression in raw graphene or other nanomaterials.
Major applications for Haydale (LON:HAYD) include composite materials, specialty inks and coatings, and additive manufacturing (3D printing). The nanomaterials are graphene and silicon carbide, and potential others in future. We argue that these applications have now reached a tipping point from research to commercial reality (see pie charts p2).
In the trading update of July 19th, Haydale (LON:HAYD) announced that FY June 2017 total income (revenue and other) has doubled, meaning about £3.9m for the year. Based on the order backlog, and major projects under way, we expect further strong growth in the next few years. We consider two of the specific channels for further growth.
In November 2016 Haydale announced a Joint Development Agreement with Huntsman Corporation to develop graphene enhanced resins. Adding small amounts of graphene in the resin layers of materials like carbon fibre can dramatically improve (x10) the dissipation of electrical charge (aerospace applications) and heat (aeros and autos). The deal with Huntsman potentially dramatically accelerates Haydale’s penetration of this market.
Solo Oil Plc (“Solo”) is a London (AIM) listed oil and gas investment company engaged in the acquisition and development of a diverse global portfolio of oil and gas assets. The company has a core portfolio of non-operated assets in Tanzania, including a stake in the prolific Ruvuma Basin, an interest in the producing Kiliwani North gas development on the Songo Songo Island, and a 10% interest Helium One, including the Rukwa project. Other assets include non-operated interests in the Weald and Wessex Basins (Horse Hill and Isle of Wight) onshore UK, a strategic investment in Burj Africa in Nigeria and an enhanced Oil Recovery project in Ontario, Canada.
Green Dragon Gas (GDG) announced that the China National Development and Reform Commission (NDRC) has approved a Project Code for the Overall Development Plan (ODP) on the Greka Shizhuang South Zaoyuan portion of the Main Block (GSS), concluding that the ODP does not require an approval process and only needs to be registered. Management reckon this approval will shortens the time to large-scale commercial gas production from the GSS Block. We note that this announcement follows the recent approval (18.4.17) of the ODP on the GCZ Block. Both GSS and GCZ Blocks were specifically mentioned within China's 13th Five-Year Plan as being critical to domestic production requirements, and the latest approvals demonstrate the Chinese Government commitment to fulfilling this ambition. We see the next catalyst for the stock as the probable approval of an ODP for the GGZ Block in 2017.
The development program on GSS would add 42 vertical and 47 LiFaBriC wells by 2020 for a net investment of US$49.2m by GDG which has a 60% participating interest in this block with its 40% partner, China United Coalbed Methane Corp (CUCBM), a wholly owned subsidiary of China National Offshore Oil Corporation (CNOOC). This would come in addition of the already approved and more material development program on GCZ which would add 147 wells by end 2018.
Our valuation of GDG at 221p per share, based on a risked valuation of 2P reserves and adjusted for Net debt/cash and capitalised corporate costs, is unchanged. However, the approval of a second ODP this year should increase investors’ confidence in the quality of GDG’s assets and in the company’s ability to realise this valuation (Figure 1).
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