Today's Oil and Gas Update: Eland Oil & Gas PLC, Europa Oil & Gas (Holdings) Plc, Green Dragon Gas Ltd., Gulfsands Petroleum plc, Nu-Oil and Gas, Victoria Oil & Gas plc, Zoltav Resources



• In Brief:

o Zoltav Resources*** (ZOL LN – 28p) – Cash Flow Highlights Renewed Focus

o Eland Oil & Gas (ELA LN – 57p) – Back in the Saddle

o Europa Oil & Gas (EOG LN – 7p) – Prospects Good, Drilling Better

o Green Dragon Gas (GDG LN – 107p) – A Mixed Bag

o Gulfsands Petroleum (GPX LN – 5.12p) – Finance Update

o Nu-Oil and Gas (NUOG LN – 0.38p) – Fish or Cut Bait

o Victoria Oil & Gas (VOG LN – 73p) – ENEO Contract Renewal

In Brief

• Zoltav Resources*** (LON:ZOL – 28p) – Cash Flow Highlights Renewed Focus: While headline profits are always welcome news, the more notable takeaway from today’s results announcement has been the scale of the refocus that is being undertaken by the management team. Nowhere have the actions that the management team have taken been better exemplified than by the 38% reduction in admin costs, or the results than in the 151% increase in net operating cash flow. While these actions are impressive, we believe that the renewed focus is more telling in the Company’s management of its portfolio, with the Koltogor licence being deemphasised in favour of partnership approach, and the pending conclusion of its technical assessment program on its Bortovoy licence. While we believe that investors should be pleased with today’s news, we believe that the catalyst for revaluation of the Compa ny’s underlying assets will be the outcome of its Bortovoy technical program in 2H’17.

• Eland Oil & Gas (LON:ELA – 57p) – Back in the Saddle: Today’s announcement of a 22mm bbl increase in 2P Reserves underlines scale of the work programme that the Company has undertaken in the last 12 months. Whilst it is not all been plain sailing for the management team, as today’s announcement confirms, the management team have not been sitting back waiting for things to happen. We believe that today’s news ends its recent operating difficulties and underlines the fact that the Company remains focused on generating shareholder value. We believe the following the disappointment of the last 12 months, that not only will investors be pleased with the actions that management have taken on their behalf, but also that their patients now looks like being rewarded. As we have said in the past we continue to believe that the operating team in country, led by its COO is one of th e most astute in the region, which we are now pleased to see being reflected in the valuation.

• Europa Oil & Gas (LON:EOG – 7p) – Prospects Good, Drilling Better: Today’s disclosure by the Company that is identified a number of prospects in its Irish FEL 2/13 licence is good news, is in order to deliver exploration led value growth at the drillbit, you need to have put in the hard work to identify and deal risk those prospects in the first place. While news of the commencement of drilling will be the signal to start the revaluation, investors should take heart from the fact that the Company continues to fill the exploration hopper.

• Green Dragon Gas (LON:GDG – 107p) – A Mixed Bag: Today’s results announcement is positive in as far as we see an increase in reserves, but where it really counts on the cash flow statement, the results are decidedly less impressive. We have highlighted in the past our main concern has been the impending creditor deadlines, which unless successfully refinanced almost certainly place the Company in the hands of the creditor. Whilst management has pointed out that they have significant acreage positions with which to trade, that depends on a willing buyer reaching an agreement with a willing seller at a fair market price. This becomes distorted if the buyer can sense that it is a “fire sale” being undertaken to satisfy an event such as a need to restructure or refinance the balance sheet. Consequently, we find ourselves considering the same range of outcomes as we did as long a s four years ago. It remains to be seen whether the management team can successfully negotiate what is going to be a difficult period ahead, which will be important for all shareholders. No matter what the outcome, we believe that the Company would benefit from a fresh set of eyes and ideas at the executive and board level.

• Gulfsands Petroleum (LON:GPX – 5.12p) – Finance Update: As updates go, I think today’s inferred disclosure that the Company will be undertaking an equity raising at some time in the first half of 2018 has to rank amongst one of the longest notice period given for an equity raise. While the financing that secured between now and then is hoped will generate significant additional value for shareholders in the intervening time, the pending equity raise will continue to be a drag on the valuation. Between now and then, however, the Company will need to be more fulsome in its disclosures with regards to its asset base (excluding Syria), and more importantly it’s outlook for the future.

Nu-Oil and Gas (LON:NUOG – 0.38p) – Fish or Cut Bait: While we recognise the Company’s aim with these news disclosures, we believe time has now come for it to start closing in on providing details for its first projects, what, when, how and more importantly how much. Given the amount of time that the Company has taken to get to this point, and money used to sustain itself, with no discernible progress towards sustainable revenues, time is approaching for this management team to “fish or cut bait” with its projects.

• Victoria Oil & Gas (LON:VOG – 73p) – ENEO Contract Renewal: While traditionally news of contract renewal for its gas offtake business would cause jitters, this time round we are less concerned due not only to the number of clients that it has, but also the nature of the market in which it operates, i.e., it is the only game in town in Douala. Couple this with the fact that the only other serious near-term contender was BowLeven, and the Company has tied up its most promising gas assets, we believe that the impact that the uncertainty of the ENEO contract renewal is significantly reduced.

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