Edenville Energy PLC

United Kingdom-based Edenville Energy PLC (EDL) is involved in the development and exploration of energy commodities, mainly uranium and coal in Africa. The operations of the group are differentiated in two core operating segments, namely Coal and Other. The group has around three coal deposits in the Rukwa Coalfields: Namwele, Muze, and Mkomolo.  The Company's other projects comprise of Lake Nyasa, and Matiri North and South. The group is a member of the FTSE AIM All-Share.

Recent News
On 2^nd September 2019, the company released that the 2nd cash payment under the funding agreement with Lind Partners LLC of US$50,637.38 was made on 30^th August 2019.

On 21^st August 2019,the company announced that they had taken delivery of 2 newly acquired thirty-tonne trucks to be used in mining load and also drag at its flagship Rukwa Coal Project site.

Financial Highlights (FY2018, £)

(Source: Annual Report, Company Website)

In FY2018, the company’s reported revenue stood at £337 thousand.The loss for the year was £1.8 million,an increase from the previous year data. Basic and diluted loss per share increased to 0.12 pence as compared with the financial year 2017 loss per share of 0.11 pence.

Total expenditure burns rates decreased by 11 per cent from £3,173,958 in FY17 to £2,834,892 in FY18. The group had washed coal of 192 tonnes in stock and produced 13,938 tonnes in the FY18. The company’s corporate overheads of total expenditure surged to 34 per cent in FY18 from 33 per cent in FY17.

Share Price Performance

Daily Chart as at September-03-19, before the market closed (Source: Thomson Reuters)

On 3^rd September 2019, at the time of writing (before the market close, GMT 9:05 AM), Edenville Energy PLC shares were trading at GBX 0.0675 and increased by 8% against the previous day closing price. Stock's 52 weeks High and Low are GBX 0.35/GBX 0.02.

Conclusion
In 2018, the company had a very challenging year.  During the year 2018, the company managed to accelerate the production, widened the customer base and signed several long-term supply contracts. The company also overcame some challenges related to a lack of available transportation, an unusually heavy rainy period, and a high percentage of fine coal arising from the production.
In FY18, the company also had to raise capital both through convertible loan and equity means to execute the plans. This was done against the background of a very tough market globally for junior mining companies.

The company is in the development phase, it generated first time revenue, and all the operations are financed through its cash reserves and grants. The profitability margins have remained in the negative zone for the period. The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of competitors.

In 2019, the short-term company’s goal is to open the Northern Mining Area, increase the production to reach the break-even point in the third quarter of the financial year 2019 and be cash flow positive within the next ten months. In the medium term, the company is looking to monetise the huge amount of fine coal by-product being produced, which would make a substantial difference to the profitability. In the longer term, the company is still following the coal to power project and will always look for prospects for additional cash-flow positive projects.

Based on the above rationale, we have given a "Watch" recommendation at the current price of GBX 0.0675 (as on September 3, 2019), before the market close, while we look for any upcoming catalysts.
 

Nostrum Oil & Gas PLC

Nostrum Oil & Gas PLC (NOG) is an independent oil and gas group. The group is involved in the development, exploration, and production of independent gas and oil in the pre-Caspian Basin. The company has several products comprises of stabilized liquid condensate, dry gas, crude oil, and liquefied petroleum gas (LPG). The operational facilities of the company are in Chinarevskoye field. The group has 3 fields in north-western Kazakhstan that provides operational synergies, such as the Darzhinskoye field, the Yuzhno-Gremyachenskoye field, and the Rostoshinskoye field. The group is a member of the FTSE AIM All-Share.

On 29^th October 2019, the company will announce the nine-months operational update.

Financial Highlights (H1 FY2019, US$ million)

(Source: Interim Reports, Company Website)

In H1 FY2019, the company’s reported revenue decreased by 9 per cent to $174.2 millionas compared with the corresponding period of the last year. EBITDA reduced by 2.7 per cent to $110.2 million against $113.2 million in H1 FY18. EBITDA margin stood at 63.3 per cent, an increase of 7.1 per cent from the previous year same period data. Net operating cash flow increased to $116.8 million as compared to $99.9 million in H1 FY18. In the first half of 2019, the company’s closing cash balance was $120.8 million, an increase of $45.1 million against the $75.7 million in H1 FY18. Total debt stood at $1,132.9 million. Net debt declined by $22.1 million to $1,012 million as compared with the corresponding period of the last year. Average production after treatment was 31,096 boepd in H1 FY19. Average sales volume stood at 29,210 boepd in H1 FY2019.

Share Price Performance

Daily Chart as at September-03-19, before the market closed (Source: Thomson Reuters)

On 3^rd September 2019, at the time of writing (before the market close, GMT 11:06 AM), Nostrum Oil & Gas PLC shares were trading at GBX 20.80 and increased by 3.74% against the previous day closing price. Stock's 52 weeks High and Low are GBX 261.74/GBX 19.84. The company’s stock beta was 1.6, reflecting the higher movement of the stock as compared to the benchmark index.

Conclusion
The growth and future success of the company are dependent on the successful completion of expansion strategies proposed, but future development and results of operations might be adversely impacted if the group is unable to manage the expansion effectively. Regardless of operating performance, financials of the group can be adversely affected by changes in commodity pricing, currency exchange fluctuation, and economic and political events. By lowering costs through deploying new extraction technology and deploying rigorous field management programs, the company seeks to maximize output from its portfolio in an efficient way.

The company’s revenue had decreased in the first half of the financial year 2019.The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of its competitors. The company has a higher degree of threat due to future exploration, development and production uncertainties.

Based on the above rationale, we have given a "Watch" recommendation at the current price of GBX 20.80 (as on September 3, 2019), before the market close, while we look for any upcoming catalysts.

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