Malcy’s Blog: Oil price, Beacon, UOG, Borders & Southern.

WTI (May) $85.41 -25c, Brent (June) $90.10 -35c, Diff -$4.69 -10c.

USNG (May) $1.69 -8c, UKNG (May) 78.9p -0.1p, TTF (May) €31.93 -€1.365.

Oil price

Beacon Energy

Beacon has announced that mobilisation of the drilling rig for the SCHB2 side track, which had originally been scheduled for mid-April, has been delayed by approximately two weeks.

The rig is currently contracted to a third-party operator for well operations located approximately 50km from the Erfelden site.

The Company has received notification from the rig contractor that due to extended ongoing operations encountered by the current operator, release of the rig is now expected at the end of April 2024.

The Company will provide a further update once mobilisation of the rig has commenced. Side track operations are expected to commence around seven days after mobilisation. The side track operation itself is expected to take approximately 14 days.

Larry Bottomley, CEO of the Company, said:

“Beacon Energy is obviously unable to control third-party delays of this kind however it is minor slippage to our previously guided timeline. We continue to prepare the site for the arrival of the rig so that the side track activities can commence as soon as possible. We look forward to the commencement of the side track as we seek to realise the full potential of the SCHB2 well and will provide further updates on mobilisation as required.”

Whilst this is a disappointment to Beacon these things happen and a small delay is part of the process and it is only a minor problem. The shares have fallen this morning which is an overeaction to be honest. 

United Oil & Gas

United Oil & Gas has announced an update in relation to Egyptian receivables.

United has received a payment from Egyptian General Petroleum Corporation for USD $1 million. These funds will be used to extinguish the debt and leave the Company debt free while the paperwork to withdraw from Abu Sennan concession is finalised.

The remaining receivable balance is the equivalent of c. USD $0.5 million and is anticipated to be received over the coming months.

A further update on the completion of the settlement of the debt will be made shortly.

United Chief Executive Officer, Brian Larkin commented:

“We are pleased to have received the funds from EGPC as this enables us to settle our debt and move the business forward, focusing on our key assets of Jamaica and Waddock Cross.

We will finalise settlement with our debt provider and issue a further update to shareholders shortly.”

A bit of good news today for UOG as they complete their -undesired- departure from Egypt by paying off the final part of the debt and can concentrate on the relatively modest rest of the portfolio…

Borders & Southern

I wrote briefly about Borders & Southern recently, on 1st March Harry Baker took over as CEO and he kindly invited me in to meet the team and look at the maps and squiggly lines that I hadn’t seen for many years. I met with him,  Finance Director Peter Fleming and Business Development Manager, Bruce Farrer.

There is clearly an enthusiasm at the company that I for one hadn’t detected before, the company has three production licences in the Southern Falklands Basin, 100% owned and the operator. Readers will know that fiscal terms locally are favourable with a 9% Royalty and CT of 26%. 

There have been both 2D and 3D seismic operations completed and a drilling campaign which discovered the Darwin field with its first well. Darwin is a 3.2 tcf wet gas discovery with, two adjacent tilted fault blocks, Darwin East and Darwin West which have an un-risked best estimate of wet gas initially in-place for the combined area of 3.2 TCF and for gross Contingent and Prospective Resource of 462 million barrels of liquids (condensate & LPGs).

Most importantly, the significant amount of liquids makes the discovery economic at current economics in its own right and with near field prospectivity there is very decent upside. I get the impression that the primary move for Harry Baker as incoming CEO is to monetise this discovery and with a data room open that option is route one.

But as he said to me in our meeting ‘funding is the key to unlocking this asset and there are very few projects around the world with its risk profile’. Indeed we both feel that with a great deal of under investment of late, partly created by ESG and a misread of fossil fuel demand, companies are competing for more, not less substantial opportunities worldwide to fill their hoppers. 

This makes a number of things that might happen quite important to B&S, firstly there is the small matter of the Sea Lion project still underway in the nearby North Falkland Basin which is expected to get FID later this year, should that happen it would surely give the SFB a significant boost. Another positive is that there are plenty of rigs in the Namibia area for obvious reasons and that mobilisation from there is a simpler task than most.

Accordingly I feel that this is a brilliant opportunity for Baker to use his industry knowledge and perhaps more importantly his financial heavy lifting skills to develop this asset which is one of very few worldwide projects with the opportunity to make a difference. 

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