WTI $84.05 +$48c, Brent $84.71 +99c, Diff -66c, +51c, NG $5.19 -24c, UKNG 171.8p -8.2p

Oil price

Oil has started heading back up with a number of key influences scheduled for the next few days. The Bank of England doesn’t normally influence oil prices but tomorrow it will announce its rate decision and the market is expecting a  modest hike of say 0.25%. Allied with that is the two day Fed meeting starts today and it will confirm that the taper will be initiated, the first step itself for inflation worries and rates rising over there.

Of course the big daddy, the Opec+ Ministerial meeting itself is on Thursday and despite some rather limp criticism from the White House regarding gasoline prices I expect the monthly addition of 400/- b/d to be rubber stamped. But it’s not as simple as that, I reckon that there are a number of members of the expanded group that are already producing at or close to capacity which might keep the market tight. Whilst we know that some members can step up to the plate we all know it’s not like that.

As for retail gasoline prices as per The White House questioning this week it has slowed down, at $3.39 a gallon it is up just 0.7c on the week but still up 20 cent m/m and a whopping $1.28 y/y. Finally it is election day in the US today and although there is not much excitement except maybe for the Virginia Governorship which could go Republican.

Sound Energy

Sound yesterday announced that Afriquia Gaz and Sound Energy have agreed an extension to the period during which the contractual conditions precedent to the Phase 1 LNG Sale & Purchase Agreement announced by the Company on 29 July 2021 are required to be satisfied until the 30 November 2021.

As announced on 29 July 2021, the LNG SPA is conditional upon fulfilment of certain conditions precedent and the extension now agreed is expected to allow those conditions precedent not yet satisfied, relating to the plant development contract, financing and remaining regulatory approvals to be documented contemporaneously.

Graham Lyon, Sound Energy’s Executive Chairman, commented:

“Much work has been completed in the last months to conclude all conditions precedent to the LNG SPA in London, Rabat and Pescara. We are confident that all conditions precedent  to the LNG SPA will be satisfied and FID and the ‘Notice to Proceed’ with Phase 1 development can be announced and all contracts executed.”

Yesterday’s RNS should give people comfort that it’s all coming together for Sound on the Phase 1 LNG SPA. The company are juggling all the moving parts and to close one bit you need the other, hence the use of word contemporaneously. 

To me it all looks like Graham Lyon and his team are almost there, once the final pieces of the jigsaw are assembled then Government approvals, surely a straightforward issue given local gas shortages, should be awarded. I expect further good news within weeks and that would be most welcome for Sound shareholders. 

Savannah Energy

Savannah has announced that its Accugas subsidiary has commenced gas sales to First Independent Power Limited’s (“FIPL”) power plant, FIPL Afam, in Nigeria. As announced in early 2020, Savannah signed a gas sales agreement with FIPL Afam marking, at that time, Savannah’s first new gas sales agreement in five years.

FIPL is an affiliate company of Sahara Group, a leading international energy and infrastructure conglomerate with operations in over 42 countries across Africa, the Middle East, Europe, and Asia. Sahara Power Group is the largest privately-owned, vertically integrated power company in Sub-Saharan Africa with plans to expand its power generation capacity in Africa to more than 5,000MW by 2023.

The FIPL Afam plant has a power generation capacity of 180MW. Following the successful construction of a short pipeline to establish connection, and recommissioning of the third-party pipeline linking FIPL Afam to Accugas’ network, Accugas has commenced gas deliveries to FIPL Afam of up to a maximum daily nominated quantity of 35 MMscfpd. The average daily nomination for this week is 25 MMscfpd.

Andrew Knott, CEO of Savannah Energy, said:

“First gas sales to FIPL Afam represents a great milestone for Accugas and Savannah, and the achievement of a key performance goal for 2021. This marks our entry into the high growth Port Harcourt Industrial area. We look forward to developing our relationship further with FIPL over the coming months and are excited to continue our role as the gas supplier of choice to the Nigeria power sector.”

 Kola Adesina, Group Managing Director, Sahara Power Group said:

“In order to bring energy to life, we at Sahara, through our diversified power assets, continue to seek partnerships that enhance our customer experience and quality of life by ensuring the health of the electricity value chain. We believe with Savannah, we have a partnership that works.”

 It is good to see this deal in particular under way as it is indeed a milestone one in the SAVE story. Clearly there are a number of really exciting projects in the process and this is just one of them. In my recent interview with Andrew Knott, despite being slightly hindered by corporate regulations he was clearly excited by how much is on the horizon for Savannah. 

Despite having spent a lot of time being suspended, Savannah should return with a great deal of fire power and one if not two deals to add to what is becoming a dominant position in Nigeria and other nearby countries. I am putting my most recent interview with Andrew Knott below for reference.

Core Finance CEO interview: Andrew Knott, Savannah Energy

President Energy

President notes and is pleased to confirm the contents of the public announcement made today by Atome Energy PLC its green hydrogen and ammonia production company due to float on AIM in London later this year regarding the appointment of ATOME’s Chief Executive Officer.

ATOME ENERGY, the green hydrogen and ammonia production company due to join the London Stock Market later this year, announces the appointment of Olivier Mussat as its Chief Executive Officer with effect from 1 November 2021. Olivier Mussat has joined ATOME straight from his role as the Chief Investment Officer for Global Energy at the International Finance Corporation, part of the World Bank Group, where he had been for nine years involved on both early stage and mature businesses.

Prior to joining IFC, Olivier was Head of Oil and Gas Project Finance at Standard Chartered Bank after roles in Schlumberger and General Electric. He graduated from Virginia Wesleyan University before completing a Master of Science degree in Technology and Management from École Centrale Supelec in Paris.

Olivier completes the main Board of ATOME prior to its upcoming float on the London Stock Exchange, joining amongst others Mary-Rose de Valladares, the former General Manager of the International Energy Association’s Hydrogen Technology Collaboration, James Spalding, the former Paraguayan General Director of Itaipu, the second largest hydroelectric dam in the world by output, and Peter Levine, the energy entrepreneur.

Peter Levine, Chairman of ATOME, commented:

“I am delighted to welcome Olivier to our main Board as CEO of ATOME. He brings with him just the right skillset for this important role, namely a wealth of experience in the key areas of management, structuring, finance and development of international energy projects.

“This very positive appointment is reflective of the serious and substantial nature of ATOME’s projects and potential and of ATOME’s ability to recruit leading industry professionals including Mary-Rose de Valladares and James Spalding. All of us at ATOME look forward to working with and supporting Olivier’s leadership to deliver the significant value creation potential of ATOME.”

 Olivier Mussat, CEO of ATOME, commented:

“The exciting potential of ATOME in green hydrogen and ammonia production together with its projects gave me no hesitation when I was invited by Peter to become CEO of ATOME. “Having worked with both electrons and hydrocarbon molecules as energy carriers, I believe that green hydrogen and ammonia is the best chance to deliver the energy transition.

“ATOME has the right expertise and the right strategy to deliver realistic projects, located in the right areas, near readily available baseload green power on tap 24/7 with access to land, water, transport links and end markets with the right partners to fulfil these business objectives.”

Atome is now all dressed up and ready to go, and it has everything in place, including a market place ready primed for a hydrogen investment or two as it contemplates flotation in coming weeks. Everyone from Jim Ratcliffe down want to pick a colour of hydrogen and run with it at the moment and this investment by President should create a very decent investment for their shareholders. 

Gran Tierra Energy

Gran Tierra Energy Inc. Announces Third Quarter 2021 Results today, it has achieved Average Total Production of 28,957 BOPD, Up 53% Year-Over-Year and Up 26% from Prior Quarter. Generated Net Income of $35 Million, increased Funds Flow from Operations(1) to $69 Million, Up 197% from Prior Quarter and generated Free Cash Flow(1)of $34 Million, Highest Since Fourth Quarter 2012. Credit Facility Balance Paid Down to $150 Million at September 30, 2021; Current Balance of $130 Million.

Gary Guidry, President and Chief Executive Officer of Gran Tierra, commented:

“Gran Tierra generated $69 million of funds flow from operations(1) during the Quarter by restoring production levels safely and diligently across our Colombian portfolio. Despite the temporary setback from the recent Suroriente and PUT-7 blockade, which we expect to be resolved quickly, we are targeting further debt reduction in the fourth quarter of 2021, in line with our previously announced capital allocation strategy. Looking ahead, with the stronger Brent oil price environment in tandem with our restored production volumes, we are on track to generate significant 2021 free cash flow(1).

With a constructive oil price environment, a successful first half 2021 drilling program and the expiry of our first half 2021 oil price hedges, we are very excited about the remainder of 2021 and all of 2022. Next year, we plan to focus on continued strengthening of our balance sheet, the ongoing development of our core assets and a measured but high-impact exploration program.”

All looks rosy at Gran Tierra and whilst I have only looked at the company for a short time I like Colombia and their portfolio looks good despite the protests taking barrels off the guidance. Along with Arrow there are opportunities to invest in Colombia and I think that whilst I won’t make a recommendation yet I’m happy with what I’m seeing so far. 

Zenith Energy

Zenith has announced that it has successfully completed a subscription for new common shares in the share capital of Zenith by a selection of existing shareholders, including institutional investors from the United Kingdom and Norway.

As a result of the Subscription, the Company has issued a total of 272,727,273 Subscription Shares at a price of £0.011 (equivalent to approximately NOK 0.13), a discount of approximately 7% to Zenith’s London Stock Exchange closing share price on November 1, 2021, to raise gross proceeds of approximately £3 million (equivalent to approximately 34,500,000 NOK).

The Company intends to use the proceeds of the Subscription as follows: £1,300,000 – funding of Zenith’s share of work programme costs in respect of the Ezzaouia concession onshore Tunisia. This will include the drilling of two side-tracks in non-producing wells with the objective of achieving a gross production of 1,000 bopd from the Ezzaouia concession.

£600,000 – expected cost of drilling a new well in the Robbana concession, also onshore Tunisia, where Zenith holds a 100% working interest. Long-lead items required for drilling of two wells already acquired and on location.  £300,000 – transportation expenses for Zenith’s 1,200hp drilling rig to Africa.

£250,000 – Tilapia II licence, (located onshore Republic of the Congo), development costs, including finalisation of licence award process and employment of operational personnel to optimise the planned beginning of drilling operations in well TLP-103C. £150,000 – expenses associated with the preparation and publication of a UK Prospectus. See below for more details and £400,000 – general working capital.

Andrea Cattaneo, Chief Executive Officer of Zenith, commented:

“We are pleased to have completed this Subscription which ensures we are fully funded to carry out our value accretive work programme in Tunisia and places the Company in a strong financial position as it enters a potentially prolific period of development in Africa.

The Board is also very pleased to have secured the participation of its largest existing UK institutional investor, as well as that of an existing Norwegian institutional investor, both of whom have been very supportive of the Company’s strategy and direction.

The funding obtained from the market will be almost entirely deployed towards developing Zenith’s production and development portfolio in Africa. We look forward with enthusiasm to creating shareholder value by systematically increasing our daily production of hydrocarbons, building on the recent success of our workover in the Robbana concession.”

Things are on the move at Zenith and with this raise they are back in front of investors and at a modest discount which is very pleasing for shareholders. I may even be tempted to have a chat with Mr Cattaneo, always an enjoyable time. 

And finally…

In the T20 World Cup yesterday England had a proper workout, after being inserted by Sri Lanka they were struggling in tricky conditions but an incredible century from Jos Buttler left them setting 164 for Sri Lanka to win. At one stage it looked tight and Sri Lanka lost a couple of late wickets to give it to England.

Today South Africa have already beaten the Bangas and Pakistan are taking on Namibia.

Last night Wolves beat the Toffees 2-1 in the Prem, tonight it’s back to the Champions League where Chelski visit Malmo FF and the Red Devils are at Atalanta. Spurs confirm the appointment of Antonio Conte as new Manager.

And tonight its game 6 of the World Series which the Astros have to win to take it to game 7.