WTI $79.01 +65c, Brent $81.24 +96c, Diff -$2.23 +31c, NG $4.90 +8c, UKNG 225.76p -11.67p

Oil price

Oil has fallen again today after Joe Biden tries to get a group of countries to release strategic stocks, I can’t see it working long term but it is like throwing a weak punch knowing that is all you have left.

Wentworth Resources

Wentworth Resources has announced that it has entered into a Memorandum of Understanding with Vitol SA  regarding the supply of carbon credits to partially offset the impacts of its emissions footprint at Mnazi Bay.   

Highlights: Wentworth and Vitol will jointly develop new community-focused carbon credit programmes in Tanzania, with Wentworth committing to offtake a material portion of the carbon offsets between 2022 and 2030;

Wentworth and Vitol will co-design the projects with stakeholders, local implementation partners and Government, thereby ensuring the co-benefits of the projects are aligned to the UN Sustainable Development Goals and creating immediate, positive outcomes for the partnering communities associated with Wentworth’s working interests and operations; 

The immediate objective is for Wentworth to offset all Scope 1 and 2 emissions and partially offset Scope 3 emissions from 2022;Vitol and Wentworth will be co-financing the programmes, demonstrating a united commitment to deliver tangible impacts to the communities and country in which Wentworth supplies natural gas;

All credits will be registered with international accreditation bodies, such as VERRA or Gold Standard; The carbon offsetting programmes and emissions reporting will be independently audited from 2022.

Katherine Roe, CEO of Wentworth, commented:

“Emerging economies, particularly in Africa, are disproportionately impacted by climate change, despite having contributed the least in terms of global warming – yet the threat of energy poverty to a country like Tanzania is very real and a just transition is critical. Whilst COP26 has elevated climate to the very top of the corporate and global agenda, we hope it also paves the way for a more inclusive conversation with emerging economies to ensure the energy transition places them at the centre too.

Our gas plays a critical role in addressing the energy access gap in Tanzania, but we must endeavour to do more to mitigate the impacts from fossil fuels. Whilst investments are made to achieve a global net zero ambition, we must be responsible in playing our part to offset the negative impacts from our production right now. Whilst being a non-operating partner at Mnazi Bay, we are working actively with Maurel et Prom to reduce our operational emissions but in the interim we do not want to be complacent.

We are proud to be working with Vitol, an expert in the carbon offsetting industry, to identify credible, high-quality, and impactful programmes with UN SDG-aligned benefits in Tanzania. Our communities are critical to maintaining our licence to operate, and we are committed to removing, avoiding and offsetting emissions as much as we can that are potentially damaging to their livelihoods.

We recognise that carbon offsets are not the single solution to climate change and will continue to prioritise abatement where possible. We look forward to updating our stakeholders on our ongoing progress as we strive to be a responsible partner for Tanzania”.

Michael Curran, Head of Carbon Emissions Matrix, Vitol, added:

“We are pleased to be working with Wentworth on these projects.  Across our carbon business we are committed to only developing high quality projects that combine environmental benefits with a strong alignment to the UN SDGs. This is a great example of cooperation with a responsible in-country producer where we co-design a purpose-built carbon offset programme together”.

Wentworth has been ahead of the game with regards to ESG and energy transition so this creative and exciting deal comes as no surprise to me. Also it will make them a better partner to the Government in Tanzania who will also benefit from having a carbon offset partnership here between Wentworth and Vitol. WEN has yet again delivered an innovative deal and deserves a much higher rating. 

SDX Energy

SDX has announced the commencement of the second phase of its 2021 drilling campaign in Morocco, with the spud of the KSR-19 well. KSR-19 will be followed by the SAK-1 well which, if successful, will open a new exploration area for SDX in the Company’s Lalla Mimouna Sud concession.

Mark Reid, CEO of SDX, commented:

“I am pleased to announce that the Company has commenced the second phase of its 2021 drilling campaign in Morocco. This second phase will consist of two wells with the objective of adding reserves to allow us to continue to deliver gas to our customers in line with their contractual requirements. Furthermore, with SAK-1, we hope to open a new exploitation area at Lalla Mimouna Sud to the west of our core producing area. I look forward to updating the market in the coming month on the results of these wells.”

I missed the con call yesterday as I was travelling back from Houston but I will speak to Mark early next week and add whatever is necessary to yesterday’s announcement. Indeed I am beginning to get more excited by SDX as things, like this Moroccan news show that the shares have been oversold, more shortly then…

Pharos Energy

Pharos Energy announced yesterday that the Hoang Long Joint Operating Company has successfully completed its 2021 TGT well intervention and development drilling campaign. Further to the statement made on 11 November 2021, the company is pleased to announce that the fourth well in the programme came on stream at an initial rate of 2,200 bopd.

The initial flow of the four development wells of 8,800 bopd exceeded the predicted combined initial oil rate of 5,650 bopd by 3,150 bopd. Importantly, the drilling programme was completed circa $20 million below the JV gross budget, in line with capex guidance.

Well interventions and a gas lift optimisation programme earlier in the year resulted in an initial TGT production gain of 3,200 bopd. The six wells with additional perforations showed a gain of 1,800 bopd, the four wells with water shut off gained 900 bopd and eight wells where demulsifier injection was applied gained 500 bopd.

The TGT field gross production rate on 17 November 2021 was 14,800 boepd, but would have been approximately 19,800 boepd without the impact of the compressor fault mentioned below. The results of the drilling and intervention activity support additional opportunities as set out in the Full Field Development Plan (e.g. nine contingent wells and an extensive well intervention programme), which could support a TGT license extension request to December 2031.

The Hoang Long Operating Company Management Committee approved two additional TGT wells and 13 well interventions (ten firm additional perforations and three water shut-offs) in the budget for 2022 on 17 November 2021. The two wells are planned to be drilled from cashflow in Q3 next year.

The GTC-A compressor, one of the two compressors on the FPSO, was stopped on Monday 15 November to prevent any potential damage due to excessive temperature and vibration. The exact cause of the problem is under investigation but will require the compressor to be airfreighted to the manufacturer in the US for inspection and repairs. It is currently anticipated that the GTC-A will be back in service by end of January 2022.

The TGT field gross production rate was 14,800 boepd on 17 November 2021 as ~5,000 boepd is temporarily shut-in while we investigate the compressor fault. Our net production guidance of 5,500 – 6,000 boepd remains unchanged and we will keep the market updated on the progress of the compressor investigation.

Ed Story, President and Chief Executive Officer, commented:

“I am delighted to announce that the first phase of the infill development drilling programme in TGT has finished, with all four wells testing at rates in line with or ahead of pre-drill expectations. The campaign was completed ahead of schedule and under budget. The well intervention programme conducted earlier in the year also delivered rates above expectations. Together, these two operational campaigns have increased production capacity and will ultimately improve recovery from the field. They also support the further activity set out in the Full Field Development Plan designed to optimise field oil & gas recovery and a submission request for a five-year contract term extension.

We are very excited to see our expectations of these Vietnam resources being further developed and realised at a time of higher oil prices. Moreover, they provide a cleaner energy source to fuel the economic growth of Vietnam whilst enabling a reduction in coal consumption. We continue to take our responsibility to the people of Vietnam and their environment very seriously.”

It’s back to good news again for Pharos in Vietnam and whilst the compressor might have been a very slight disappointment it doesnt really alter my valuation and the better than expected well results more than offset  that. Accordingly I really don’t think that the market has by any means captured the value clearly on view with all guns firing on the portfolio, seeing this share three times the current price would still leave them a bargain. 

And finally…

‘Tearful Tim’ Paine steps down as Ashes Captain after imminent publication of ‘explicit’ text messages made life rather, uncomfortable…

The F1 Qatar GP is on Sunday and Bottas is fastest so far in practice while Mercedes lost their appeal after last week’s shenanigans with Max.

It’s the last weekend of the rugby autumn internationals and Scotland host Japan, South Africa visit headquarters where Jamie George and Owen Farrell are out for months with injuries. Wales entertain Australia and the Pumas visit Dublin on Sunday.

Racing sees fine cards at Ascot and the Betfair Chase at Haydock.

And footy fans will be delighted that after the international break most games are actually being played on a Saturday afternoon. The Foxes host Chelski, the Seagulls visit the Villa, Burnley entertain the Eagles, The Magpies host the Bees, the Red Devils are at the Hornets, Wolves host the Hammers and the game of the weekend is at fortress Anfield where the Gooners are the visitors. Sunday sees the Noisy Neighbours hosting the Toffees at the Emptihad and Spurs host Leeds.