17th January 2019
- In Brief:
Touchstone Exploration (LON:TXP) – 12p – Securing its Future: The Company’s disclosure of the independent evaluation of its Ortoire licence is the first indication that it will be increasing its focus on its exploration and appraisal acreage.
We believe that this is a significant milestone, as quite correctly, the management team has been focusing on establishing a solid cash producing foundation. While we don’t doubt that the Company will maintain significant resources on maintaining and growing its production portfolio, by increasing the focus to longer-term projects, the management is ensuring that the Company has future beyond managing its decline curve. With this news, the Company is re-establishing balanced to its portfolio and taking steps to secure its continued growth.
With the last run of announcements, the pattern that is being established, outlining management’s approach, should be one that the Company’s owners appreciate.
Victoria Oil & Gas (LON:VOG) – 19p – Weak 4Q, Strong 2019: The Company’s closing update to 2018 needs to be set in the context of the update provided by the Company just ahead of Christmas last year, in which the Company outlined its agreement to recommence supplying gas to the Logbaba power station.
While the bears will undoubtedly point towards the impact that the loss that the power station had on gas sales, we believe that the fact that management moved as quickly as it did to restore a sales contract, and continues to diversify its revenue base, of the positive takeaways.
Consequently, any weakness in today’s share price should be seen as an opportunity.
Caspian Sunrise (LON:CASP) – 7p – 2019 Outlook Lifted: The closing update provided by the Company on an operational level details a significant amount of frustration, which has been reflected in the share price performance over the last 12 months.
Contrasted against this, however, is the news that the Company’s outlook for activity in 2019 has been considerably lifted by Kazakhstan’s improvements its regulatory regime, which has encouraged operators, such as Caspian Sunrise, that were previously holding off from officially entering into appraisal programs.
Consequently, we believe that with a brighter outlook for increased activity in 2019, that the underlying value proposition within the Company’s portfolio will start to be better reflected in its market value.
While we believe that some measure of support from the Company shareholders will be required, this will be set against and appraisal programme that will seek to build on the highly encouraging results to date.