EnCore Oil PLC

Encore oil looking cheap at 28p. I think it is wise to buy.

Growth Equities and Company Research published a full analysis of Encore Oil's assets on 28th March. We recommended shares in the reversed entity as a 'strong buy' at 31.25p. Shares have subsequently slipped back to 28.25p but we see no reason for the fall in share price. Inf act, Encore announced positive news at Westerdale. Testing operations at the well have confirmed the presence of gas which flowed up to 130,000 cubic feet per day from the Brotherton interval. The team put out a cautious statement which said that the results were 'inconclusive'. The team has had to suspend operations at this site as Westerdale is located in on a national heritage site. However, Encore intends to revisit Westerdale and carry out further tests this October.

Encore Oil was formed as an unlisted privately run business in 2005. The group was initially funded by the management and individuals from the industry who chose to back the former Encana team responsible for the discovery of the Buzzard field. The group managed to raise $6 million and started out by looking a few previously unexplored north sea blocks. The team identified exploration targets in two blocks in the Inner Moray Firth area and recognising that the acreage might be up for application in the 23rd Seaward Licensing round, started putting a strategy in place to acquire these blocks. After holding a number of discussions, Encore chose to partner with Apache and Samson. In February 2006. it announced a reverse takeover of AIM listed Oilquest Resources.

The group's portfolio now includes a parcel of onshore assets in the Wessex and Weald basin in Dorset, the Cleveland basin assets which holds the Westerdale and Kirkleatham gas discoveries and two projects in the North Sea. Following recent news from Westerdale and Kirkleatham, we have chosen not to alter our valuation. We continue to believe that Golden Eagle 18/5G in the North Sea could potentially be worth 12p, the PetroCanada package which hosts six discoveries is easily worth 38p, and Kirkleatham and Westerdale could potentially be worth around 4.5p. This is in itself underpins the company's current capitalisation and at 28.5p, we believe the group offers significant upside and the shares are a BUY.

32.5p today...on the uptrend now

hyloe98, alot of potential for this. Awai farm agreement in MAy!!!

a speculative BUY!!!!... Key strength is the highly regarded Encana Team who discovered the Buxxard field in North Sea. Has a high % of working interest in licences.


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ENCORE OIL 33p SPECULATIVE BUY
Broker: Westhouse Securities Listing: London AIM
Sector: Oil & Gas Market Cap: 67.5m
Reuters: OILQ.L Year High/Low: 31p/ 12.2p
Website: www.oilquest.net Next Results: Finals, September 2006
OilQuests merger with EnCore brings onboard the dream team who found the Buzzard oil field in
2001. The team have the credibility to do deals that progress the offshore portfolio, acquired from
Petro-Canada and create value for shareholders. EnCores 9.1m drilling budget has been fully funded
via a 17.5m new equity raising at 15.625p per share leaving it cash funded at least to 2007.
To 30th June 2005 2006f
Turnover (k) - -
Admin Expense (k) 1,141 2,000
Op Profit (k) -1,225 -9,000
Loss before Tax (k) 2,178 11,000
EPS (p) -7.14 -5.3
P/E (x) NA NA
Strengths
Management have an outstanding and proven track
record in creating value via trading offshore blocks and
finding oil in the UK North Sea
Attractive portfolio of offshore UK North Sea licence
interests with high operated working interests ranging
from 47%-95%
Potentially good exposure to offshore Western Sahara,,
the Laguera Block with a 100% working interest and
operator status
$60 Oil price/ Positive environment for North Sea drilling
Weaknesses
Dependent on drilling programmes resulting in
commercially feasible finds; no major onshore UK find
since Wytch Farm in 1973
Will retain the former OilQuests onshore portfolio
Unlikely to be generating revenues from continuing
operations over 2006-2007
Reliance on equity funding for operations, acquisitions
Business Background & Activities
Formerly Hereward Ventures, an oil and gold explorer, the
board redefined strategy in March 2005 to focus on the
acquisition of petroleum licence interests. Over 2005
OilQuest drilled numerous targets in the South of England,
notably Sandhills, Hordean East and Bouldnor Copse with
very limited success. OilQuest raised 3m in early 2005 to
participate in the drilling of 7 wells during 2005.
The board have now agreed a reverse takeover with EnCore
companies, which is expected to complete in early March.
EnCore was established in April 2005 to explore for oil in
the UK North Sea, raising US$6m in mid 2005 via private
placements to friends & family. EnCore has already made
acquisition of drilling rights over blocks in the UK 23rd
Round and in the Western Sahara.
The transaction will see EnCore acquired for 48.45m
OilQuest shares, the existing Oil Quest holders will receive
44.37m shares. In addition a placing of 64m shares at
15.625p will raise 10m pre-expenses. OilQuest will be
renamed EnCore Oil following the merger.
EnCores board include the highly regarded EnCana team
who discovered the Buzzard field in the North Sea in 2001.
Buzzard has reserves of over 600m barrels and was the
biggest North Sea find since the 1980s. The team will be
using similar strategies to acquire exploration/ appraisal
prospects with a view to joint venturing, farming-out the
drilling of these prospects on a risk-sharing basis or
swapping assets. The team have good contacts with North
Sea oil majors.
The EnCore Portfolio-acquired from Petro-Canada
Subject to regulatory approval; EnCore will have interests in
6 licences covering eight blocks:-
23rd Round EnCore Stake Operator Licence
Block 18/5 25% Apache Traditional
Block 19/1 25% Apache
Apache plans to drill 19/1 in H2 2006 subject to operational
constraints. A sidetrack well is planned for 18/5 over 2006/7.
Petro-Canada Acquisition
Block 21/24 95% EPL Traditional
Block 21/30 95% EPL
Block 21/29 61.3% EPL
Block 21/29b 51.6% EPL
Block 15/26a 47.5% EPL
Block 29/6a 20.1% Venture Prod
The total unrisked contingent resources of the Petro-Canada
licences being acquired by EnCore Petroleum are 24.3m
bbls. Further appraisals could result in substantial upgrades
to the resource definition of these properties (which are
being sold for just US$1.75m).
In addition EnCore has received the offer of an award for the
offshore Laguera block, a 20,000 km adjacent to
Mauritania, but in the Western Sahara. The UN recognises
Western Sahara as a non self-governing territory. The
Pelican Gas Discovery is 175km to the south. Negotiations
are underway which are likely to result in a production
sharing agreement over the Laguera Block.
Activities Market Financials
Oil exploration & drilling in the UK North Sea
and onshore UK / other interests offshore
Mauritania
Number of shares: 204.8m
Market Makers: 5
NMS: 2,000 Screen Size: 10,000
Bid/Offer: 32p/ 34p (5.8%)
Net Cash : 19.5m
Positive environment for North Sea activity
The current environment of $60+ oil prices is expected to
result in increased exploration activity in the North Sea
from 2006-2008. This will also lead to greater competition
for licences in the drilling rounds. The last round, the 23rd
saw a record 152 licences (70 traditional, 76 promote and 6
frontier) covering 264 blocks offered to 99 companies, the
highest number since 1964.
Changes to UK legislation in 2003 have introduced
promote licences which carry 1/10th of the rental costs than
a traditional licence for the first two years during which
time the licensee can assess its block without the obligation
to drill. EnCore will be bidding for promote licences in
forthcoming rounds.
Board of Directors
Alan Booth; Co-founder of EnCore; former chairman
and Managing Director of EnCana UK (sold to Nexen
Corporation for US$2.1bn) in late 2004. Career
includes building EnCana UK up from a start-up in
1996 into a significant UK E&P company that
discovered the Buzzard field in the North Sea.
Former President of the UK Offshore Operators
Association.
Eugene Whyms; Co-founder of EnCore; Former
Finance Director of EnCana UK responsible for
mergers & acquisitions including the sale of EnCana
to Nexen. Has had over 20 years experience in the oil
industry including Head of Group Finance at
Enterprise Oil as well as mergers & acquisitions
experience.
Graham Dore; Former senior geologist with Nexen
Petroleum for 8 years to 2004 out of a total of 18
years in the UK North Sea and Norwegian shelf.
Developed the Buzzard prospect in 2001.
Mike Lynch; Former Chairman and CEO of Intrepid
Energy which was sold in 2004 for US$1.2bn. Prior
to this over 20 years experience with Santa Fe
International and the Kuwait Petroleum Corp.
Christine Wheeler OBE; Former head of Natural
Resources Division at Ernst & Young; over 30 years
experience advising oil & gas companies on taxation.
Recommendation
The reverse takeover gives OilQuest/ EnCore a new
lease of life, diversifying its interests away from
onshore UK and into the far more lucrative North
Sea. With the exception of a small gas find at
Kirkleatham in 2005, the Sandhills property had been
unsuccessful. OilQuest has done well to execute this
merger on favourable terms.
The new board are amongst the best in the UK oil and
gas sector. The market has re-rated OilQuest largely
on the back of their expertise, their ability to progress
farm-out deals and the new interests. At 33p the
enlarged group is capitalised at 67.6m but with
reserve definition still unclear the enterprise value
(47m) is speculative, especially as most of the asset
base was acquired for 1m. Key to value creation will
be the teams ability to farm-out its interests to
operators able to fund drilling expenses.
Shareholders should also expect further UK licence
acquisitions over 2006. This could involve further
equity issuance in 2007. However short-term Encore
is cash rich, post its 17.5m raising it will have
19.5m (29% of the market cap). This should reduce
by approx 10m over 2006 due to work programme
activities. Speculative Buy
Previous Recommendation: 11th April 2005 Highly
Speculative Buy
Analyst: Ravi Lockyer Date: 2nd March 2006
MAJOR SHAREHOLDERS INCLUDE (%)
Fidelity Investments 3.13
Michael Lynch 3.80
Gartmore Inv Mgmt 3.56
UBS AG 3.86
Alan Booth 4.17
AXA Framlington 5.91
Eugene Whyms 4.16
Invesco Asset Mgmt 3.13
FINANCIAL CALENDAR
Year End 30 June 2006
Interims 2 February 2006
Finals Mid September 2006
MANAGEMENT INCLUDES
Alan Booth Chief Executive
Eugene Whyms Chief Financial Officer
Graham Dore Exploration Director
Mike Lynch Non-Executive Director
Christine Wheeler OBE Non Executive
KEY RECENT EVENTS INCLUDE
2 March 2006
7 Feb. 2006
10 Jan 2006
14 Sept 2005
EGM approves merger with EnCore
OilQuest Interims; Loss 389k
Drilling update 19m gas column at
Kirkleatham- further tests underway
Final reaults; Loss 2.17m- EPS 7.1p
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Investor's Chronicle has advised BUY on Encore Oil this week...given its expanding portfolio and its upcoming Golden Eagle project and its good cashflow.

hyloe, URGENT! Why the hell are we getting som much of a pasting with this share. Although I see it has great prospects..but its wierd!

hyloe, do u think its worth topping up?

I think it is, jameel

hyloe, but why has the sp taken a rocky ride recently

Investors Chronicle



The Cover Story:
*How to ride the Bull Market (ways to maximise your returns).

Tips:
*Buy Alliance & Leicester - Cranswick (LSE: CWK.L - news) - Sinosoft Technology (LSE: SFT.L - news) - Walker Greenbank (LSE: WGB.L - news) - Encore Oil (LSE: EO.L - news) .
*Sell Taylor Woodrow at 381p.

Updates:
*Buy SABMiller and BDI Mining (LSE: BMG.L - news) .
*Diploma and Stanley Gibbons (LSE: SGI.L - news) are good value.

for Jameel! ...... This does not look to be an uninteresting company, though it is very new to market ..... However, it has acquired some decent (they hope) drilling rights which is a good start .... Nevertheless, as you should remember from ELP, it is a long long way from having rights to getting the stuff out of the ground.

To be honest, if choosing a low priced oilie, I would rather put my money in MRP or SEY or even CHP (more risky imo) ...... and for a fossil-fuel alternative, GTL

17.03.2006 - Trust ENCORE to do it again - GE INVESTORS!
Regardless of whether crude prices go up or down, you can always make good money in the oil sector by backing proven management who have shown themselves capable of building up production year after year. We saw this again recently with Roy Franklin agreeing the sale of PALADIN RESOURCES for 355p per share. You could have bought these for under 75p little more than 3 years ago. Harry Wilson is another serial company builder and his STERLING ENERGY is already up to 24p compared with 2p at the beginning of 2002. Once you have built up a public oil company and rewarded yourself and your backers by selling out, it is not difficult to assemble a portfolio of prospects and get brokers and bankers to finance exploration and development. The trick for small investors is to get in as early as possible. It is not surprising therefore that the respected oil analyst at KBC Peel Hunt, Tony Alves, has called Alan Booth's latest vehicle, ENCORE OIL, a " big bird hatching". As the former MD of EnCana UK, Booth and his team were responsible for discovering the Buzzard Field, the biggest North Sea find in 25 years. After a marvellous 8 year run, EnCana was finally bought by Nexen for $2.1 billion. Booth is joined at Encore by another big hitter, Michael Lynch, who takes over as Chairman. Lynch has already built up and sold 2 major oil companies, Santa Fe and then Saga Petroleum both in $ 1 billion + deals. The two men have assembled a useful portfolio of both exploration and development properties which they have reversed into Oil Quest Resources since aptly renamed Encore. The shares were requoted a couple of weeks ago at around 30p and have since crept up to 34p. Booth and Lynch inherited from Oil Quest interests in a dozen onshore UK licenses and one offshore gas license. In addition they themselves have brought in half a dozen undeveloped North Sea discoveries and a 25 % interest in 2 pure exploration plays, one of which is the exciting Golden Eagle prospect which will be drilled later this year. The 2 men have definitely hit the ground running. Within a couple of weeks of being requoted, Encore has already announced a successful onshore gas well in the Cleveland area and has signed a major offshore licence deal with the government of Western Sahara. We expect Encore's North Sea activities to drive strong production growth over the next few years and there should be plenty of solid news flow for shareholders to get excited about. As always with oil companies, it's the personnel that counts and they dont get much better than this team. The current market value of Ł60 million could look very historic in 2 or 3 years' time. You can read more about Encore on the company's excellent website at www.encoreoil.co.uk and even arrange to receive their newsletter.

Cynic thanks! for your time

Jameel
Many thanks for your latest posting, though it does read like a placed editorial - the article that is, not your posting of same! I confess I do not agree that the major asset of an oil company is its personnel; a company's major asset is its ability to find and extract oil, a virtue (or luck!) which is only partially dependant on its personnel. The article also avoids mentioning that the majority of mini-minnows actually fail (as imo, will happen to ELP).

As with my own business (not yet dealing direct in China), and also my investment in the likes of VOG, I am more than happy to enter the fray what would appear to be rather late in the day. IMO, the risk of a bad pick is then considerably reduced and the profits available much more than adequate.

that makes real sense. I am very new to all this, so on a steep learning curve. Will take your advice! I always thought SEY was a good option as it had successful oil finds! But had to come out for other reasons. Just contemplating what to do with parts of my next salary. I might consider SEY again, although it seems it has reached its peak!

From NOP news today. Encore has 10% stake in PEDL 126 & PEDL 155

UK ONSHORE

Northern has a portfolio of exploration, appraisal and production interests in
south east England. Near term activity will be focused on the Group's Weald
Basin assets, upon which Exploration Consultants Limited ("ECL") issued a
report during April 2005. The reserve estimates set out in that report were as
follows:

Gross reserves Proved Proved + probable Proved + probable
+ possible

Oil 1.27MMstb 3.6MMstb 26.5MMstb

Northern anticipates drilling, as operator, one appraisal well within PEDL 126
and one exploration well in PEDL 155. It is also involved, holding a 5%
interest, in the further appraisal of the Avington discovery. Northern will
also continue to further progress its other operated licences with a view to
adding to its inventory of future appraisal and exploration wells.

the fall in stock value is well overdone, with the drilling expected by apache
on block 19/1 in north sea second half of the year, the share price should increase
up to drilling, and if the well comes in , well the share price will go up considerably.

SG - BUY BUY IF YOU CAN. Directos seem ot have topped up. i will be buying on fri

alot of director buying and institutional investors. Why? Drilling is due to commence!