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Northland Capital Partners View on the City: Nostra Terra Oil & Gas, Advanced Computer Software Group plc, Sunrise Resources and 3Legs Resources

Published: 19:44 18 Mar 2014 AEDT

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OIL & GAS: 3Legs Resources (LON:3LEG)

OPERATIONAL UPDATE: ON-TRACK/ LATERAL WELL LOCATION DECIDED

  • Drilling of the Slawoszyno LEP-1 vertical well has now been completed to a TD of 2,819m in the Cambrian (Piasnica) interval. 
  • A comprehensive series of logs have been run and preliminary data suggests that the Sasino (Ordovician) shale is of similar thickness to that encountered in the Strzeszewo LE-1 vertical well, whilst the Cambrian interval is slightly thinner - both in line with expectations. 
  • The well has been cased, cemented and temporarily suspended.
  • After reviewing data, the Lublewo LEP-1 well location has been promoted as the location of the key lateral well test targeting the Sasino (Ordovician) shale interval for a 1600m planned horizontal multi-frac.
  • Permits have been obtained for drilling and the rig is being mobilised for movement to the location leaving testing on schedule for Q314.

NORTHLAND UK VIEW: The establishment of the Lublewo well location for the planned 1600m lateral is a key milestone. This year’s programme of delineation and testing is on track and has thrown up no surprises as the JOA continues to build on the extensive knowledge base. As stated, we expect the multi-stage frac (20 or more stages) to provide the clearest indication to date of the commercial potential for the western Baltic licences.


TMT: ADVANCED COMPUTER SOFTWARE (LON:ASW)

FY PRE-CLOSE: SMALL BEAT AND FURTHER NHS CONTRACT WIN

  • FY14 revenue expected to be no less than £202m (+67%) and adj. EBITDA no less than £45m (+67%). 
  • Cash conversion >100% and net debt was £49.5m (FY13 net cash: £30.9m) following the new £105m banking facility last March to fund the acquisitions of Computer Software Holdings and Compass Computer Consultants.
  • Good performance across all divisions (Advanced Business Solutions, Advanced Health & Care and Advanced 365 Managed Services).
  • Separately announced award as preferred supplier by Oxford Health NHS Foundation Trust for a multi-year contract for the supply of a single integration health record across all pathways including mental health, child, community and specialised services. Third multi-year contract win in Community and Mental Health Trusts.
  • Results expected week commencing June 2nd.

NORTHLAND UK VIEW: Guiding to a small beat against consensus at the top and bottom line and the outlook remains upbeat. Given the sizeable acquisitions during the year, we will have to wait until the prelims in June to get a better understanding of the underlying growth (8% in H1). Third contract win in the community and mental health space is encouraging and there is a large addressable market since 68 NHS contracts are expected to be renewed between 2014 and 2016. Formula of buy-and-build software companies that enable increased efficiency continues to work and further acquisitions remain likely.

 

OIL & GAS: NOSTRA TERRA (LON:NTOG)

PARTICIPATES IN 11.6% INTEREST IN CT WELL DRILLING AHEAD

  • Nostra Terra will participate in its 15th horizontal well (eight producing/seven in various planning stages) in the Chisholm Trail (CT) Prospect, Kingfisher Country (Oklahoma).
  • The CT15 well has spud and will target true vertical depth of 7,000ft in the Hunton formation.
  • Nostra owns an 11.6% working interest in the well, its third largest working interest in the CT portfolio – Ward Petroleum will become operator.
  • The well is to the east of the Grant well that produced 10-day IP of 471 boed in September 2013 following recompletion.

NORTHLAND UK VIEW: Nostra delayed committing to this well as it was subject to a challenge over operatorship that has now been resolved with Huskey Ventures to operate during drilling and Ward Petroleum to assume operatorship thereafter. The well is a very useful addition to the portfolio that could materially raise volumes. The company is targeting significant growth this year after some frustration last year due to the holdup in receipt of funds from the Richfield settlement and is aided by the addition of production based lending this year. The portfolio of material CT wells in hand and other potential upcoming wells should help bring about a significant increase in volumes. 

 

MINING: Sunrise Resources (LON:SRES)

FROM YESTERDAY: PLACING: RAISES £0.5M

  • Sunrise Resources has raised £525,000 through the issue of 116,666,664 new shares at a price of 0.45p per share in a placing and subscription completed by Northland Capital Partners.
  • 58,333,332 warrants have also been issued at an exercise price of 0.6p per share.
  • Following the issue of these shares there will be 501,616,877 shares in issue.

NORTHLAND UK VIEW: Sunrise Resources will use these funds to undertake exploration at its projects located in Western Australia and Nevada. The Company will begin drilling at its Cue Diamond Project within the next few weeks targeting the Soapy Bore, Target 5, Area 1a and Area 6 targets.

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