Morning Equity Briefing
Circle Oil
(COP LN)
Issues operational update
Job Langbroek
| Closing Price: | 33p |
FACTS: Circle has announced (September 9th) the re-start of operations on its Moroccan licences, the initial review of seismic work conducted over its Oman licence 49, and the imminent start-up of Block 52 seismic work.
ANALYSIS: Circle's strategy of converting oil and gas assets to early cash flow is demonstrated by its Moroccan Sebou permit operation. Gross output is now between 1.4m and 2.2m cubic feet per day and should expand sharply with the completion of a 62km gas trunk line. The seismic work in Oman is an important precursor to any future drilling plans — similarly for the proposed programme on Block 52.
DAVY VIEW: As noted, Circle's strategy of early conversion to cash flow is demonstrated by its Moroccan work. With a wide-ranging portfolio of assets, the group is still at the stage of inventorying the more attractive prospects. It offers a broad exploration package, particularly in North Africa and the Middle East. And a recent funding (£42m net) enables a drilling programme in Oman and the build-out of production in Morocco.