Phoenix Global Resources PLC

Phoenix Global Resources PLC (LON: PGR) is a FTSE AIM Index listed upstream oil and gas entity.

Investment Rationale – SPECULATIVE BUY at GBX 4.39

• Oil Prices: Thin trading volumes and tight supply has supported the oil prices, despite the dented demand amid Omicron Covid-19 variant.
• Operational Improvements: PGR reported EBITDA gains on the back of cost reductions and improved oil prices.
• Operational Achievements: PGR has extended the exploration rights over 11,918 acres in Mata Mora for 5 years. Moreover, the average daily production increased to 4,863 boepd (barrels of oil equivalent per day) in H1 FY21 from 4,369 boepd in H1 FY20.
• Technical Indicator: From a technical standpoint, the momentum oscillator 14-day RSI (~43.00) is in the oversold zone, while the stock price is hovering near the lower Bollinger Band.

Key Risks

• UK GDP: The UK economy witnessed a disappointing GDP growth of around 0.1% during October 2021, less than the estimates of 0.4%.
• Pandemic Impact: The oil prices can remain under pressure as the Omicron variant has impacted the demand outlook.

H1 FY21 Financial Highlights (for the six months ended 30 June 2021, as on 14 September 2021)

(Source: Company Website)

• Revenue: PGR reported a revenue of US$36.14 million in H1 FY21 (H1 FY21: US$24.9 million), comprising US$35.1 million of revenue from oil sales.
• Oil Sales Price: There was a 20% surge in average realized sales price in H1 FY21 versus H1 FY20.
• Balance Sheet: As on 30 June 2021, the Group reported the cash in hand of US$50.0 million (31 December 2020: US$5.4 million).

One Year Share Price Chart

(Data Source: REFINITIV, Analysis done by Kalkine Group)

Conclusion

During H1 FY21, EBITDA gain was US$7.23 million against the EBITDA loss of US$34.5 million in H1 FY20. It also agreed to increase the bridging facility with the Mercuria Group, to fund the Company’s planned work. Therefore, the Company holds a sound financial position to deliver further growth. The stock made a 52-week High and Low of GBX 7.45 and GBX 3.90, respectively.

Based on the stronger financial position, upbeat production, and operational excellence, we have given a “SPECULATIVE BUY” recommendation on Phoenix Global Resources PLC at the closing price of GBX 4.39 (as on 24 December 2021).

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level (indicative stop-loss price).

*The reference data in this report has been partly sourced from REFINITIV.

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