Business Overview
Anglo African Oil & Gas PLC (LON: AAOG) is an oil & gas and mining company, domiciled at London. The company offers a wide range of services, including extraction, exploration, operations, production, management, and development of oil and gas natural resources.

Recent News
On 27^th February 2020, the company announced that it had issued 21,169,612 new ordinary shares of 0.1p each at a price of 0.21p each. This fund would be used to settle the dues of certain creditors.

Corporate & Operational Update (As on 12^th December 2019)
The budget for the planned work programme for the Tilapia field required recovery of the contributions due from SNPC and timely future contributions by SNPC towards its cost.  The company is asking SNPC for repayment of the outstanding debt, which is approximately US$5.3 million, but had not received any repayments. The proposed acquisition of Tunisian assets that the Group had pursued earlier in the year received negative indications from significant shareholders, and they would not support the Proposed Acquisition, and therefore, AAOG did not pursue it. 

Financial Highlights - H1 FY2019
In the first half of the financial year 2019, the company’s revenue was at £173,524 versus £106,378 in H1 2018. The reported loss after tax stood at £2,452,741 against loss of £2,171,606 in H1 2018, which reflected the significant costs that the group has incurred in building the team to capitalise on the opportunity presented by TLP-103C. The basic and diluted loss per share was 1.03 pence in H1 2019 versus a basic and diluted loss per share of 2.71 pence in H1 2018.

Share Price Performance

Daily Chart as on 16^thMarch 2020, before the market closed (Source: Thomson Reuters)

On March 16, 2020, at the time of writing (before the market close, at 12:36 PM GMT), Anglo African Oil & Gas Plc shares were trading at GBX 0.11, down by 29.03 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 12/GBX 0.11. 

Conclusion
Although the top-line performance has improved, the bottom-line performance has declined for the period. The company issued new ordinary shares for the settlement of certain creditors, which shows that the company is facing a liquidity crunch. The budget for the planned work related to the Tilapia field which required contributions due from SNPC had not received by the Group.  The company is asking SNPC for repayment of the outstanding debt, which is approximately US$5.3 million, but had not received any repayments.  The company had requested government support to resolve this issue so that the work could proceed. The Group is taking steps to reduce costs and is reviewing financing options due to significant cash shortfall and lower than anticipated payments. Absent payment from SNPC and other sources the company would result in failure to drill well TLP-103C-ST. Moreover, the Group had recently been informed that the rig over which the company had signed an option to drill TLP-103C-ST, would not be available until June 2020 at the earliest. 

The company is facing many uncertainties and issue which would hamper its business and affect its business performance. The company is facing a cash crunch issue which could affect the operations of the company.

Based on the headwinds and uncertainties associated with the company’s business, we have given a “Sell” recommendation at the current price of GBX 0.16 (as on 16th March 2020 at 8:08 AM GMT).

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