AIM-market farm out deals are back and that’s big news for two oil explorers in particular, with their short and medium-term financial positions now looking significantly brighter.
Challenger Energy shares immediately reacted to the company’s newly improved proposition, with the price more than doubling with the news that Chevron will now lead its exploration project offshore Uruguay.
The US oil major is paying Challenger $12.5million in cash and it agreed to commit $35million of investment to advance the project and drill a high-impact exploration well.
It leaves Challenger as a rarified position on AIM – comparatively cash rich, with an active and funded exploration programme
Shares saw a correction as the week wore on, but still closed a healthy 24 per cent higher.
Black gold: Challenger Energy shares more than doubled with the news that Chevron will now lead its exploration project offshore Uruguay
Challenger wasn’t alone- after a long wait, like a proverbial London bus, AIM market investors saw two major farm-out deals arrive at once.
Eco Atlantic Oil & Gas expanded its joint venture with big-name additions as French major TotalEnergies and Qatar Energy each bought into a project offshore South Africa.
Like Challenger, Eco will receive a vital injection of cash, up to $12million in phases, and future costs will be covered by the new partners. Shares initially ran up 22 per cent to 11.9p in mid-week trades before correcting to 9.92p come Friday.
Investors across the sector will now look to their other small-cap exploration holdings, hoping this is more than a coincidence and more industry deals may follow.
It was a pretty flat week for the AIM All-Share Index, which fell 0.24 per cent to 740p come Friday, roughly on par with the FTSE 100 blue-chip index’s performance.
The market responded generally well to Chancellor Jeremy Hunt’s Spring Budget, as evidenced by the mid-week swell in equities prices, though with few surprises on offer, the Budget’s impact was over before it started.
One curio came in the form of an import levy on nicotine-based vaping products. Specifics of the levy were not disclosed, but for reasons unclear, prominent AIM-listed vape distributor Supreme plc shot up 18 per cent following the announcement.
This week in London Stock Exchange delistings was brought to you by AIM-listed professional services group Mattioli Woods.
Mattioli on Friday agreed to be taken off the stock exchange by private equity player Pollen Street Capital for £432million.
Pollen Street is paying 804p per share in cash for Mattoli Woods; a 34 per cent premium to last Thursday’s closing price.
Investors took kindly to ImmuPharma plc’s financial update in which the group said it ‘is in active discussions with a broad range of potential commercial partners with the objective of completing deals across the portfolio in 2024’.
Noting the untapped value within the business, it said its 10.8 per cent holding in Incanthera is worth £916,000, while it also has 7.3 million warrants that can be exercised at any time. Shares shot up 54 per cent.
Active Energy Group plc shot to the top of the AIM movers leagues following news of a settlement deal with Player Design, resulting in a $1.65million cash payment.
It recoups funds earmarked for the development of the Ashland Facility and includes the transfer of some non-essential production equipment. Shares rocketed 123 per cent higher.
Tlou Energy Ltd was another top mover in the energy sector, adding 34 per cent in a week that saw the Africa-focused developer’s interim results.
‘The company has made excellent progress over recent months and remains on track to get gas-fired power into the grid in Botswana later this year,’ said the group.
Itaconix plc continued to rally on the back of last week’s trading update. The plant-based polymers group noted a record year of revenues and there were more share price gains in the tank with the stock adding 30 per cent this week.
Lastly, Harland & Wolff Group Holdings plc, operator of the iconic Port of Belfast dockyard, was awarded preferred bidder status for the Falkland Islands Port Replacement Project issued by the Falkland Islands Government.
It was a welcome development for the shipbuilding and fabrication firm after having its bid approach for an Isles of Scilly Steamship Company contract rejected in November.
H&W’s shares spiked 26 per cent on the news.
