WTI (June) $82.21 -55c, Brent (June) $88.02 -40c, Diff -$5.21 +15c.
USNG (May) $1.65 -16c, UKNG (May) 74.0p +1.51p, TTF (May) €29.52 +€0.30.
Oil price
It was a right old mixed bag yesterday, US data was poor as business activity fell but maybe thats good for interest rates you never know. But the inventory data saw a big draw of 6.368m barrels rescued what might have been a bad day.
I have been going on a bit about Namibia lately, it’s the Namibian International Energy Conference in Windhoek where everybody who is anybody is on parade. And that includes, by video I admit, the Opec Secretary General who welcomed the country as a ‘significant crude producer’ and they, Opec will do all they can…
I mentioned Sintana who have participated in the big find by GALP at Mopane and which is all the buzz and Eco Atlantic who are on trend just down the road. Today it is announced that Sintana has acquired one of the last blocks in Namibia, PEL 79 through Giraffe and with QXL, a smart move methinks.
Zephyr Energy
Zephyr has announced the spud and start of the main drilling operation on the State 36-2 LNW-CC-R well at Zephyr’s flagship project in the Paradox Basin, Utah, U.S.
Further to the Company’s announcement on 17 April 2024, the rig-up operation for the Helmerich & Payne Rig 257 was completed yesterday, 24 April, and shortly thereafter the surface section of the well was spud.
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Figure 1: Helmerich & Payne Rig 257 in situ at the Paradox project |
The well, for which the Company expects to recover substantially all the drilling costs incurred through the well control insurance policy that it had in place for the State 36-2 LNW-CC well will target the Cane Creek reservoir and the highly productive natural fracture system encountered by the original well. Drilling is planned to a total depth of 10,362 feet measured depth (9,600 feet true vertical depth) and will incorporate a short, 270-foot horizontal reservoir section. The well has been designed and permitted such that the horizontal section can be extended to a further 10,000 feet in the Cane Creek reservoir, should that be required in the future.
Drilling operations are expected to take approximately 30 days. After reaching TD and setting a production liner, the Rig will be demobilised and the well will be prepared for production testing.
Colin Harrington, Zephyr’s CEO commented:
“After months of meticulous planning we are delighted to have commenced full drilling operations with the prime objectives of delivering a safe and timely drilling operation followed by a successful well test.
“We look forward to providing regular updates as drilling progresses.”
Just what the Zephyr shareholders wanted today with news that the Paradox well has been spudded and the company are back to where they left off last year. A lot of water has passed under the bridge since then but the class of this management has meant that they developed the non-operated portfolio without which many wouldn’t have survived and had good enough insurance to pay for this well.
So high hopes then for the voyage to TD of 10, 362 feet including a short look at the horizontal reservoir section, this should take around 30 days with flow testing after that. The market will be watching with considerable interest, any success that opens up the Paradox will indeed be a company maker…
Afentra
Afentra has provided the following update regarding the previously announced Angolan acquisition.
Government Approval of Azule Acquisition
Afentra is pleased to announce that it has received approval from the Government of Angola for the previously announced acquisition of a 12% non-operating interest in Block 3/05 and a 16% non-operating interest in Block 3/05A from Azule Energy Angola Production B.V. (‘Azule’), pursuant to a sale and purchase agreement between Azule and Afentra’s wholly-owned subsidiary, Afentra (Angola) Ltd, dated 19 July 2023.
The Company is now working with Azule to finalise the formal completion of the Azule Acquisition which is anticipated to occur within Q2 2024 as previously announced. At that time, we will provide an update on the deal completion including the asset cashflow from the 1 October 2022 effective date.
Punja Discovery Block 3/05A – Enhanced Fiscal Terms
Following a request by the Block 3/05A partnership the Government of Angola have declared the Punja Development Area located in Block 3/05A, as a marginal discovery. As a result, the applicable fiscal incentives will be applied to this discovery, significantly enhancing the commercial value of this potential development.
Commenting on the update, CEO Paul McDade said:
“The Angolan government’s approval of the Azule Acquisition allows us to proceed with the completion of our third transaction in Angola providing Afentra a material equity position in these world-class assets. The improved fiscal terms for the Punja Discovery is another clear indication of the support given by the Government of Angola to parties willing to invest in their oil and gas sector. This further encourages us to continue to work with Sonangol and our joint venture partners to grow production and reserves as we develop the vast potential of both the producing fields in Block 3/05 and the significant discoveries within Block 3/05A.”
Approval for this addition in Angola that we already knew about is fantastic news and takes the stakes in blocks 3/05 and 3/05 to 30% and 21.33% on completion if my memory is correct. In addition the news about the Punja discovery means that the Government want to make it work and shows further assistance to oil and gas industry.
Theres a very good reason that the shares are in the bucket list and why they have doubled in the last year, with a target price of 100p they remain amongst the winners in the selection box, and what’s more, there’s more to come…
Petro Matad
Petro Matad has provided the following operational update.
Key Company Updates
· The Company is working with the local government agencies to secure the remaining approvals necessary from Matad District to allow the 2024 operational programme to commence. Preparations are being made to complete the Heron 1 well for production once approvals are in hand and when contractor crews return to Mongolia.
· Petro Matad continues to push the central government to complete the certification process and confirm Block XX as State Special Purpose land to streamline the permitting process in future years and reduce the risk of interference or obstruction.
· SunSteppe Renewable Energy (SRE), the Company’s renewable energy Joint Venture, continues to make good progress. An exclusive MoU with Oyu Tolgoi mine to develop a Green Hydrogen project has been signed and grant funding from the Japanese government has been secured. SRE’s 50MW Battery Energy Storage System project has now received technical approval.
Operational Update
Block XX land access and Heron 1 completion
Following the approval of land access from the Matad Citizens’ Representatives Committee, the Company has been liaising with the local authorities to secure the Matad Governor’s resolution and the land use agreement. Petro Matad has been working to correct misinformation about the Company from local activists and protesters that have been critical of oil production operations in the area for some time, protesting online and in person against the committee’s decision. The execution of the aforementioned documents will allow work in the areas chosen for 2024 operations to go ahead irrespective of the slow progress of the central government process to complete the certification of the Block XX Exploitation Area as State Special Purpose Land.
Petro Matad is also standing-by to pay compensation to the herders whose registered pastures were impacted by the award of the 214km2 Block XX Exploitation Area. These payments, set out in law, should be paid from the State budget but recognising that the process could be very slow, Petro Matad had proposed paying the herders directly itself. Payments of c.$5,000 per family were due to the 10 families affected. Petro Matad had previously proposed making payment via industry regulator, the Mineral Resources and Petroleum Authority of Mongolia (MRPAM), but this was ultimately not accepted by the Ministry of Finance. Changes in the procedures to allow non-State entities to pay are now working through the Mongolian government’s system but, having requested and received a letter supporting direct payment by the Company from MRPAM, Petro Matad is ready to pay as soon as the 2024 land use agreement is signed with the Matad authorities.
With local land use approvals progressing for 2024, Petro Matad is making preparations to complete the Heron 1 well. Contracts are in place with service providers and timing of mobilisation is under discussion. Talks with PetroChina Mongolia are continuing in order to have offtake arrangements including transport, processing, export and sale of oil in place once the well is ready to produce.
Certification of Block XX as State Special Purpose Land
This process is still being held up by the Provincial Governor’s refusal to sign off on the government’s key Tripartite Agreement and whilst completion of the District level approvals will allow 2024 operations to go ahead, the Company is still pushing for the long-delayed certification process to be completed. Certification will simplify future permitting and reduce the chances of interference. The Ministry for Economic Development, which is in charge of stimulating foreign investment in Mongolia has been very active on this issue and is preparing a submission to Cabinet to attempt to remove the obstacles to completing the process. The Company continues to cooperate with all relevant agencies to make sure this process is completed but, at the same time, is looking at any legal recourse it may have if the central government fails to rectify the situation and so delays operational activities in future years.
Renewable Energy Projects
Our renewable energy Joint Venture has had a very active period at the start of 2024, with its two high-graded projects having taken important steps forward.
The first project involves the provision of Green Hydrogen to Mongolia’s major Oyu Tolgoi copper and gold mine in which Rio Tinto is the major investor. An exclusive Memorandum of Understanding has been signed with Oyu Tolgoi and the Japanese Overseas Environmental Cooperation Centre (OECC) to develop the project and supply Green Hydrogen (which is hydrogen produced from renewable energy) which will be used to provide heat to facilities at the mine. Through the involvement in the venture of OECC, the partnership has already secured some Japanese Government grant funding to support this ground-breaking green energy initiative. An application for further grant funding is expected to be made in due course. The total grant funding for a project such as this could be up to 40% of the capital expenditure requirement. Oyu Tolgoi, in the South Gobi region of Mongolia, is one of the largest known copper and gold deposits in the world and Oyu Tolgoi LLC is a Mongolian company, jointly owned by Erdenes Oyu Tolgoi LLC on behalf of the Government of Mongolia (34 per cent) and Rio Tinto (66 per cent). Rio Tinto also manages Oyu Tolgoi on behalf of the partnership. Petro Matad is delighted to see SRE cooperating on this exciting project which is designed to demonstrate the potential for Green Hydrogen to be used as a fuel in large scale mining and so to contribute to the decarbonisation of such operations.
SRE’s second high graded project is the Choir 50MW Battery Energy Storage System (BESS). Choir is a town in central Mongolia and the site of the largest electricity substation in the central portion of the Mongolian national grid. The government has identified the need for a substantial BESS at Choir to help stabilise the grid and reduce high-cost import of power from China and Russia at peak hours, when Mongolia cannot meet domestic demand, and the economically wasteful export of power during off peak periods when the country’s base load exceeds domestic demand.
SRE has secured approval of the feasibility study from the Ministry of Energy for a 50MW BESS project at Choir and is now preparing the application for the licence to construct. This project could be online as early as 2025 and will help to stabilise the Mongolian electricity grid, reduce the amount of coal used in power generation and increase the dispatch of existing renewable energy producers. SRE is keen to move this project ahead as quickly as possible. Mongolia has recently commissioned its first BESS, an 80MW project funded by the Asian Development Bank, and this has had a positive impact through what was a very hard winter in Mongolia. The Ministry of Energy has identified a significant need for BESS projects around the country and SRE is well positioned as an early entrant to be a major player in this sector.
Mike Buck, CEO of Petro Matad, said:
“We are pushing to secure approval from Matad Soum for the land access required to execute our 2024 work programme and we are gearing up for operations during the summer. The negative reactions to the committee’s decision and misinformation spread by activists were not unexpected and underline why the central government certification process is so important for the long term and is our preferred solution.
However, with 2024 parliamentary elections looming and central government moving slowly, we are pursuing the local solution as a priority. We are also pushing the central government hard to resolve its internal issues which have created the frustrating obstruction of the state special purpose certification process for Block XX. We will buy ourselves a long-delayed operating window with the local approval for 2024 if we can get it, but we do not want to go through such a process every year.
Separately, the progress made by our renewable energy joint venture is very pleasing and to see it so quickly in partnership with Japan’s OECC and involved with the decarbonisation of the globally significant Oyu Tolgoi mine is testament to the credibility, professionalism and motivation of the team.”
For Mike Buck and his team, who must have the patience of Job by the way, they are doing anything at all possible to get get underway at the Heron field. I’d like to say that it might change anytime soon but I don’t see that and can’t hold up any hope that the authorities are doing anything to develop Heron, at least in the short term.
i3 Energy
i3 Energy has announced the Company’s 2024 capital budget and production guidance. The Company will hold an investor webinar on Thursday 2 May 2024 at 12:00 pm BST including a Q&A session (details of which can be found below).
Highlights:
· 2024 Capital Budget
2024 Capital Budget of USD 50.9 million, forecasted to deliver 15 gross wells (10.5 net, 95% net i3-operated) to be drilled across the Company’s diversified portfolio in Central Alberta, Simonette, and its northern Clearwater acreage.
· Production Growth
Forecast exit 2024 production of 20,250 – 21,250 barrels of oil equivalent per day (“boepd”), representing a year-over-year increase of approximately 3% from the prior year average exit rate (December 2023), or approximately 8% from current levels, as the Company expects to recommence drilling in June 2024 and positions for accelerated Montney development in 2025.
· Cash Flow
USD 70 – 75 million of 2024 Net Operating Income (“NOI”) and USD 55 – 60 million of EBITDA before hedging gains and losses, based on budget price assumptions of USD 82/barrel (“bbl”) for WTI and CAD 2.25/Gigajoules (“GJ”) for AECO natural gas.
· Shareholder Returns
As part of i3’s commitment to its total return model, subject to Board approval, the Company is expected to return forecasted dividends of £12.3 million (USD 15.7 million) in 2024, representing 0.2565 pence per share per quarter or 1.0260 pence per share for the year, which translates to a forward yield of 8.1% based on the closing price of i3’s ordinary shares of 12.66 pence on 23 April 2024.
Majid Shafiq, CEO of i3 Energy plc, commented:
“Following very successful initiatives in the first half of the year to increase our balance sheet strength and liquidity, i3 is extremely pleased to announce a substantial USD 51 million capital programme for the remainder of the year, which will drill a diverse group of oil and gas wells across our portfolio in Canada. The majority of wells will be drilled in the second half of the year, with the high-volume Central Alberta gas wells producing into a forecast strong winter pricing environment and pad drilling of our exciting Montney acreage expected to commence early in Q1 2025. The programme is designed to deliver production growth and support our dividend programme, whilst maintaining liquidity and a conservative leverage position to maximise flexibility to deal with volatile market conditions and opportunities as they arise.”
i3 is on the up, at least for the time being with a very positive 2024 outlook with strong production and capex guidance, 20,250-21,250 boe/d is slightly ahead of last year on capex of $50.9m. And at $82 WTI EBITDA is $55-60m giving scope for a divvi of £12.3m making a forward yield of some 8%. If it makes all the numbers, and apart from history it should and is therefore positive news.
Coro Energy
Coro yesterday advised that it held its Annual General Meeting earlier.
The Company also announces that, as a result of the outturn of the AGM, the Company has requested that trading in the Company’s ordinary shares on AIM be suspended with immediate effect.
The resolutions put to the AGM were voted on by way of a poll and the results are as follows:
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Resolutions |
For |
% |
Against |
% |
Withheld |
|
1 |
451,946,229 |
96.53% |
16,260,452 |
3.47% |
77,279,082 |
|
2 |
146,216,513 |
27.07% |
393,994,930 |
72.93% |
5,274,320 |
|
3 |
417,323,458 |
76.57% |
127,726,243 |
23.43% |
436,062 |
|
4 |
417,322,658 |
76.54% |
127,888,785 |
23.46% |
274,320 |
A “Vote withheld” is not a vote in law and is not counted in the calculation of the percentage of shares voted “For” or “Against” any resolution.
The Company is pleased to announce that shareholders have supported Resolutions 1, 3 and 4, enabling flexibility for further fundraising in the forthcoming period. The Company has today also received verbal confirmation from its key Noteholders in respect of their ongoing support with regards to the near term funding needs of the business. As at 23 April 2024, the Company had unaudited cash balances of approximately US$0.5 million.
However, Resolution 2, concerning the re-election of James Parsons as a Director of the Company, was not passed at the AGM. Accordingly Mr Parsons is no longer a director of the Company.
Whilst the Company has commenced the process of recruiting at least one additional director with immediate effect, the Company’s Board currently comprises a single director.
Following the AGM, the Company’s Board is not therefore quorate under the Company’s Articles of Association (the “Articles”) or s154 of the Companies Act 2006 (the “Act”) and the Company is not therefore able to effectively operate under the Articles or the Act.
Accordingly, the Company has requested that trading in the Company’s ordinary shares on AIM be suspended with immediate effect pending, inter alia, the appointment of at least one additional director. Notwithstanding the suspension of trading in the Company’s ordinary shares, the Company will continue to make notifications as and when there are matters requiring disclosure in accordance with the Company’s obligations under the AIM Rules for Companies and/or the UK Market Abuse Regulation.
Further announcements will be made, as appropriate, in due course.
Not much to add here, shareholders vote off the Chairman and without enough directors are now suspended from trading…
And finally…
Last night in the Prem Liverpool lost away at Everton for the first time since 2010 in the league, 2-0 and maybe they are letting the title slip away…The Eagles beat the Magpies, Wolves lost to the Cherries and the Red Devils came back from behind to beat the Blades 4-2.
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