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Lochard, Exillon Energy, Ophir Energy, Max Petroleum, Leni Gas and Oil news briefs

Contributed by Fox-Davies Capital

Lochard - Putting the Past Behind?: Apart from the obvious sore festering in its balance sheet that is the "Gemini  Loan," for which the previous management rightly paid for with the loss of office, today's reserves statement hopefully starts to put the Company back on the road to redemption. Consequently, the Company putting itself up for sale is probably the best outcome that could be envisaged, but valuations are likely to be limited as pretty much all the near-term value created on the back of shareholders' risk capital will be swallowed by its loan to the Company.

Exillon Energy - On track to achieve oil production of 17.0mbpd by year end: August production averaged 13.2mbpd which is 14.7% above H1-2012 production average. We remain positive on the Company on the back of increasing production output coupled with expectation of improving operating leverage due to the commissioning of captive entry point into Transneft pipeline and captive power generation facilities. The balance sheet of the Company is strong with $138.5 million of cash and cash equivalents as at 30 June 2012 and net cash position was US$38.3mm.

Ophir Energy - Upgrades resources estimate for Block 1, Tanzania: The Company has revised in-place resource for the Upper Cretaceous Mzia discovery in Block 1 from the previously announced 2-6 TCF to 4-9 TCF based on the positive results from additional seismic and petrophysical analysis. Although today's announcement is positive, we believe investors will wait for the drilling results (which are expected by year end) to make an upward revision in the valuation. Otherwise, Ophir has assembled a portfolio of highly prospective exploration assets across West and East Africa which provides a base for significant frontier exploration potential and thus providing opportunities to grow the resource base. The liquidity position of the Company is very strong with the June end cash balance of $454mm. In this news:

- Additional seismic and petrophysical analysis has increased management estimates of in-place resource for the Upper Cretaceous Mzia discovery in Block 1 from the previously announced 2-6 TCF to 4-9 TCF. Mean in-place estimate is 6 TCF. 
- Drilling is expected to re-commence in Block 1 in late September and will initially focus on step-out exploration and appraisal around the 3.4 TCF recoverable Jodari discovery to confirm the first LNG hub for development in Tanzania.
- Ophir Management estimates that gross discovered in-place resources for Blocks 1, 3 and 4 are currently 13.5- 21 TCF (2.3-3.5 bboe); meeting the threshold for a two-train LNG development

Max Petroleum - Drilling Update: Drilling of BCHW-1 exploration well in the Baichonas West Prospect on Block E, (Kazakhstan) is completed. Max expects to begin testing in October 2012 to determine commerciality. We would be looking to further updates on BCHW-1 test results and spudding of new well at Dossor Northwest prospect in Western Block E.

Leni Gas and Oil - Spain - Better Late than Never … Legal Dispute - Revealing: LGO announced that it has extended the completion of Spanish assets divestiture until the 21 September 2012 for additional non-refundable cash deposit of €100m. The revised consideration of €9.3mm (€8mm earlier) safeguards the Company's interest from delay transaction closure. The divestment is potentially the best option for the Company in light of the announcement of the commencement of Trinidad field operations. A plan for recompleting the two productive wells, MN-44 and MN-209, presents an opportunity for revenue flow by early next year. The announcement on the legal dispute is quite illuminating. Quite a lot of the questions being asked of MOG's management, LGO have no right to get answered; however, what is more concerning is that it demonstrates a startling lack of involvement in the management of the asset by the Company. All in all, a mixed bag. We will be keeping a watching brief to see how the Company manages this going forward, and what it tells us about the wider prospects for the Company.