WTI $72.98 +7c, Brent $74.76 +8c, Diff -$1.78 +1c, NG $3.63 +4c, UKNG 83.41p +3.31p
As I suggested yesterday doing anything but keeping a flat book the night before an Opec+ meeting and a long weekend in the US is very wise, dont be left wrong and unable to trade out of it. The meeting tomorrow would actually be a biannual meeting and that much more important but with monthly gatherings the impact is less striking.
The market expects 500-1000/- b/d increase but it may be at the lower end of that range especially if the recommendation from the JTC said that global oil demand growth might waver but with inventory falls such as last night’s API draw of 8.2m barrels continuing the global drawdown.
Union Jack Oil
Union Jack has provided an update on the planned proppant squeeze operation at the Wressle
oilfield development, located in North Lincolnshire, covered by licences PEDL180 and PEDL182.
Union Jack holds a 40% economic interest in this development.
Union Jack has been advised by the by the Operator, Egdon Resources U.K. Limited that it has been
informed by Schlumberger Oilfield UK Plc, the main contractor that a period of 14 to 28 days could
occur before operations can commence at Wressle. The revised timetable is due to the contractor`s
equipment being held on a job over-run in continental Europe. This is compounded by tighter import
legislation and visa requirements which are beyond the Operator`s and contractor’s control.
The contractor has provided assurance to the Operator that this revised timeline will be adhered to.
Executive Chairman of Union Jack Oil plc, David Bramhill, commented:
“We look forward to reporting on progress at Wressle, where oil is currently free-flowing on long term test at an acceptable rate pre proppant squeeze.
“We are at a pivotal moment in the ongoing development of Wressle and the next step is expected to
deliver net oil production to Union Jack of 200 barrels per day and materially improve our cash flow
profile and profitability”
The news yesterday, along with some ill-judged comments on social media prompted a near 10% fall in UJO shares. This is beyond ludicrous as a 2/4 week delay makes little difference in the overall economics of Wressle which in itself is only a part of the UJO story. A fall like this is an opportunity to add further funds to an investment position which has not been altered as a result of this commotion.
Egdon has announced that it has conditionally raised approximately £1.44 million before costs via a subscription for new ordinary shares of 1 pence each in the Company. It also announces that the holders of the Convertible Loan Notes have exercised their right to convert into new ordinary shares of 1 pence in the Company.
The Company has conditionally raised approximately £1.44 million through the issue of 115,228,000 Subscription Shares at a price of 1.25 pence per share. The Issue Price represents a 16.67 per cent. discount to the closing price of the existing ordinary shares of 1 pence each on Tuesday 29 June 2021, the last trading day prior to this announcement. In addition, each Subscription Share will be granted a right to subscribe for 0.5 of a new Ordinary Share at a price of 2.5 pence per share, exercisable at any time until the date of the second anniversary of their issue.
Mark Abbott, Managing Director of Egdon, commented:
“We are very pleased by the level of support from both existing and new investors for this Subscription. The funds raised will enable Egdon to strengthen its liquidity position and provide additional funding of ongoing core projects. We are pleased with the continuing support of Petrichor and the Concert Party and also welcome Shard Capital as a new cornerstone shareholder.”
Egdon also announced yesterday as Operator the news about the Wressle delay about which Mark Abbott suggested that it was not a great problem as delays go, I tend to agree and note my comments as above. For Egdon shareholders their is more to worry about the need for cash and hence the deep discount nature of the call, I also cannot find out what is happening to the Premier shareholding in Egdon now Harbour is up and running.
Victoria Oil & Gas
VOG has announced that due to the impact of the COVID-19 outbreak on staff availability and interaction time with our auditors, the Company will be unable to post its annual audited accounts to shareholders for the year to 31 December 2020 by the 30 June 2021 deadline pursuant to AIM Rule 19.
Further to the guidance provided by AIM Regulation in “Inside AIM” on 27 January 2021, the Company requested an additional period of up to three months to publish its Annual Report. AIM Regulation has granted the extension, and therefore the Company will publish its Annual Report by 30 September 2021. However, VOG expects to publish the Annual Report well ahead of that date. The Company has also applied for and been granted an extension to delay the filing of its audited annual accounts by Companies House until 30 September 2021.
VOG has also posted a trading update saying that its Gaz du Cameroun operation in Douala, Cameroon has continued to deliver natural gas to 30 or so industrial customers, supplying safely and continuously throughout 2020 and the year to date.
Unaudited attributable revenue for calendar year 2020 was $13.2 million (2019: $20.8 million). The overall reduction in revenue year-on-year is due to the reversal of any revenue invoiced to ENEO in 2020. The attributable revenue in 2019 included $8.0 million related to grid power provided to ENEO. Thermal and industrial power revenue was $13.0 million in 2020 compared to $12.0 million in 2019, a 8% increase year-on-year and a healthy increase considering the backdrop of Covid-19 and its effects on business. Unaudited revenue to 31 May 2021 was $6.2 million (2020 for the same period: $5.4 million).
Unaudited cash and cash equivalents at 31 December 2020 was $1.8 million (31 December 2019: $7.2 million). Cash as at 1 June 2021 was $2.5 million (1 June 2020: $5.0 million). Unaudited net debt as at 31 December 2020 was $12.8 million (31 December 2019: $10.7 million). The Company continues to manage its creditors and cash flow as appropriate. As announced on 18 June 2021, VOG has arranged additional finance through a loan note instrument with Meridian Capital (HK) Limited, part of which is conditional on a Rule 9 waiver being granted by The Takeover Panel and approval by independent shareholders on a poll in due course.
The management at VOG are flat to the boards working on the various processes including the results and annual report. Operationally I am convinced that they are delivering hence the recent support by Meridian.
State 16-2 well data assessed and integrated; additional resource potential across multiple overlying reservoirs; additional development potential through hydraulic stimulation.
Zephyr has provided an update on its flagship project in the Paradox Basin, Utah. Since the successful completion of the State 16-2 “dual-use” stratigraphic test well earlier this year, Zephyr has worked to analyse and interpret the extensive geological data obtained during the drilling programme – data from both the project’s primary target, the Cane Creek reservoir and from multiple potential stacked reservoirs overlying the Cane Creek.
In addition to the work carried out by the Company, Zephyr engaged the third-party consultant Premier Oilfield Group to assist the Company in determining the viability of additional methods for the development of the Paradox project. A U.S. Department of Energy-backed project team, led by the University of Utah’s Energy & Geoscience Institute, also contributed data and analysis as part of their evaluation of the State 16-2 well data related to ongoing Paradox Basin research.
Results from the recent evaluation work have reconfirmed Zephyr’s view that the planned State 16-2LN-CC well is a suitable location from which to test the natural fracture play in the Cane Creek reservoir. Drilling operations are scheduled to commence in July.
Results from reservoir, fracture stimulation and simulation modelling suggest that the Paradox project could also be developed by way of a hydraulically stimulated resource play which provides an alternative to the NFP and which would potentially facilitate broader project development across more than one reservoir.
Analysis of the twenty overlying reservoirs suggests that all reservoirs are likely to be hydrocarbon filled to some degree, based on the State 16-2 well sidewall core data and petrophysical analysis of several offset wells. Of the twenty overlying reservoirs, the Company has high-graded eight reservoirs which have adequate thickness for potential future development. If development of the eight high-graded reservoirs proves feasible as an HSRP, the Company estimates:
The potential for up to 200 well locations across the eight overlying reservoirs; and a risked contingent resource potential, net to Zephyr, of up to an additional 125 million boe on an estimated P50 Hydrocarbon Initially in Place of around 1 billion barrels of oil equivalent on currently held acreage.
This estimate of the HSRP potential is preliminary and highly dependent upon developing better understanding of each zone’s reservoir pressure, fluid phase, geomechanical properties, permeability and a successful proof of concept hydraulic stimulation and production well. The contingent resources are classified as ‘Development Unclarified’ and are risked for Chance of Development.
Additional data gathered during the planned drilling of State 16-2LN-CC well will be the first step in determining the viability and method of future asset development.
Colin Harrington, Chief Executive of Zephyr, said:
“A huge amount of time and effort has been invested to complete this updated evaluation of our Paradox resource base, and I am encouraged that we may have a wider viable development alternative to the natural fracture play in the Cane Creek reservoir. I am both cautiously optimistic and excited about our initial findings for the overlying reservoirs and the potential for substantially increased resources on the Paradox project.
“The results suggest multiple viable scenarios for considerable upside – from the exploration potential of the overlying reservoirs to the hydraulic stimulation of targeted reservoirs, or from a combination of both.
“It’s important to bear in mind that while the potential project upside is exciting, the Paradox Basin is an immature play with limited data when compared to offset Rocky Mountain basins, with the only notable production coming from the Cane Creek reservoir NFP and with only very limited prior testing of the HSRP. That said, the knowledge gained from the development of other basins has the potential to be leveraged and applied in the Paradox, and we are very grateful to Premier for sharing their deep experience and expertise in relation to hydraulic stimulation. Recent advances in the technology and understanding of modern completion techniques may also prove beneficial to future development efforts.
“Our next steps are to safely and responsibly drill the State 16-2LN-CC well to targeted depth, obtain further log and geologic data, and test the well should efforts to target production prove successful.
“Given the substantial potential increase in project scale, the Board will also explore the possibility of a multiple well programme in the near-term, as additional drilling could serve to better define and unlock the significant potential value of this asset.
The analysis that Zephyr has done recently along with the EGI and Premier, has produced what I consider to be excellent and brings very exciting possibilities for the Paradox. It should be remembered that unlike other basins in the US has much less data that is needed to confirm the true viability of the upside. The analysis shows that both forms of upside for the Paradox make it look not only viable but of significant size.
Zephyr is funded for this process and will be measured in their approach to developing the area but in my view develop it they will. The bottom line is that the area carries way more upside than management ever thought and is therefore incredibly valuable, they are in it for the long haul and are intent on building a substantial oil company.
This will be done in one of two ways, either they will bring in a big partner company or they will do it themselves, it may be a virgin play but they are not short of backers and will not give away the upside. One way or another this company is going to be a very big one indeed, a little while ago I suggested that it might be a ten bagger, I still believe in that and after a 15% drop in the shares today would suggest that after the good run this is an unlikely opportunity to get in.
Hurricane has announced the following board changes. The Chairman, Steven McTiernan, and the other non-executive directors, John van der Welle, Sandy Shaw, Beverley Smith and Dr David Jenkins, resigned from the board on 29 June 2021 with immediate effect.
Additionally, the Company announces that Alan John Wright and David Ian Craik were appointed to the board as non-executive directors on 29 June 2021. Alan John Wright assumes the position of Interim Chairman.
The Company also announces that it has received a letter from Crystal Amber Fund Limited withdrawing its requisition notice pursuant to section 303 of the Companies Act 2006, requiring that Hurricane’s board convene a general meeting of shareholders. This meeting, due to be held on 5 July 2021 at 11:00 am BST, will now no longer take place. In addition, the resolutions proposing the re-election to the board of Steven McTiernan and Sandy Shaw due to be voted on at today’s AGM will now be withdrawn.
Having consulted with its largest shareholders, the Company and the new non-executive directors, unanimously resolved on 29 June 2021, that in the event that the resolutions proposing the re-election of Antony Maris and Richard Chaffe as directors of the Company are not approved at today’s AGM, the Company would immediately re-appoint them as directors of the Company, in order to ensure that the Company is able to maintain its ability to safely and effectively operate as a listed business. Such re-appointments would be subject to approval by the shareholders at the Company’s 2022 AGM.
Antony Maris, CEO, commented:
“I would like to thank Steven and the other non-executive directors for their contribution to the Board over their years of service, particularly during the recent challenging period for the Company – I have been very grateful for their counsel and support. I would also like to welcome David and John to Hurricane and look forward to working with them as we aim to maximise the value of our West of Shetland assets for the benefit of stakeholders.”
The shares are up 25% as I write and Crystal Amber Fund Limited has succeeded in its primary ambition, this should however never been necessary and such a blatant misreading of the situation could so easily been avoided. The judge was highly competent and I read the whole judgement before I wrote yesterday.
What is now important is to get the correct people together to ensure the company is correctly financed and this technical project is completed as it was intended.
Advance Energy has provided an update on the Buffalo-10 well drilling operations, including the selection of a jack-up drilling rig for the expected commencement of drilling in late October 2021. Whilst this is early days, and I have not yet decided to cover Advance it looks like an interesting, potentially highly rewarding play.
Advance Energy’s CEO Leslie Peterkin commented:
“We are delighted to hear this progress from Carnarvon, which signals a key milestone in the process of re-developing the Buffalo field. It is also important to note that the selected rig will have drilled four wells before arriving on site at the Buffalo field, which means that the crew and the rig operations will be at their most efficient.
As a reminder to shareholders, the drilling of this well is transformational to Advance Energy, representing a potential material value catalyst for the Company. In the case of the 2C resource being established as reserves, there is potential to deliver a gross production rate of around 40,000 barrels per day (20,000 barrels per day net to Advance Energy) by the end of 2023, which in this current pricing environment would deliver exceptionally strong cash flow and compelling rates of return.
We look forward to providing further updates in the next few months as we continue to progress towards the well drilling in October 2021.”
Getech has announced a ‘significant sale of its geoscience data and a regional study package, with a value of US$536,000, which is expected to be fully recognised in the current financial year’. Getech continues to trade in line with current market expectations for FY2021.
Getech’s Chief Executive Office, Jonathan Copus, commented:
“As energy prices have recovered across H1 2021, we have seen a progressive reopening of the geoscience data market as energy companies resume their exploration and development activities.
Getech’s geoscience data, which includes gravity and magnetic data that we have gathered over decades, are a unique and proprietary resource that underpin our knowledge and analytic products and services. Our geoscience and geospatial experts help energy companies use this data to make informed decisions about the location and optimal development of natural resources.
To support our customers’ energy transition objectives, our staff are engaged in a process of continuous development to increase the analytical and knowledge functions for low-carbon industries including geothermal, hydrogen, carbon capture and storage, and strategic minerals.
We expect increased demand for our geoscience data, software and analytic products as both existing energy and natural resource customers and new customers work to decarbonise the energy sector.”
Further to the Company’s announcement on 9 June 2021, we are pleased to confirm that following discussions with the seller OMV New Zealand Limited (“OMV NZ”), both Jadestone and OMV NZ have agreed to extend the long stop date under the Maari sale and purchase agreement to 31 August 2021. Both OMV NZ and the Company continue to work to satisfy the remaining outstanding conditions and to complete the transaction.