WTI $104.70 +$1.72, Brent $107.93 +$1.29, Diff -$3.23 -43c, NG $4.86 -13c, UKNG 230.0p -26.3p

Oil price

Friday’s rally has continued today and the weeks loss of just under 5 bucks is already overtaken. The reason is that the IEA has gone out on a limb suggesting that the market is going to be incredibly tight once the Russian shortfall starts to bite and is madly looking around for places to find the oil.

Aren’t we all as they say and there are obvious and less obvious ways of finding the missing 5 million lost barrels but first we have to agree that is the right number. So far Russia, in my view, is hardly hurting at all and some of that ain’t going to change, after all China and a number of other buyers are not only still taking Russian crude but enjoying the huge discounts that are being offered.

Let’s say that it’s 3m b/d we are really short of and see what people are talking about to replace it. Starting with Sleepy Joe who came to office on a green ticket of closing pipelines, stopping Federal leases and hating the Saudis. His position now is not only high gasoline prices at home but a war that has changed the nature of energy supply around the world and without the ability to drop in on the Saudis as previous US Presidents would have. His answer is to lean towards the hated Iran and with a very short memory of US relations there it seems he is going to, in return for sanctions abolition tolerate the enhanced uranium, with all that that can produce…

Boris is the leader that has so far been seen in the Middle East and in an area where probably 2-3m b/d could be found he would do well to keep the business cards he picked up. Whilst I don’t normally get involved in politics I couldn’t help noticing two interviews from the weekend. Liam Halligan with Kwasi Kwarteng the Energy Secretary was most interesting as he had clearly done his homework and is looking carefully at UK Oil & Gas from offshore to onshore which is a pleasant change. The next interview was Rachel Reeves, Shadow Chancellor on the BBC and in a strongly anti domestic energy stance said ‘there will be no new drilling in the North Sea under labour’ as well as a windfall tax on North Sea Oil & Gas companies.

So, there you have it, split thoughts around the world on who to call on and in the UK any oil industry under current Labour politics will be destroyed.

Even the rig count isn’t offering any succour, overall unchanged at 663 and in oil down 3 at 534.

Chariot

Renewable Energy for Mining Operations in Zambia

Aiming to develop one of the most ambitious renewable energy projects in Africa

Chariot  announce that Chariot Transitional Power, a division of Chariot Limited, along with Total Eren, a leading France-based renewable energy Independent Power Producer (“IPP”), has entered into a newly established partnership with First Quantum Minerals (“FQM”), a global mining and metals company, to advance the development of a 430 MW solar and wind power project for its mining operations in Zambia.

This flagship project would complement and expand Zambia’s existing renewable energy capacity and would provide FQM with competitive and sustainable power for its Zambian mining operations, delivering on FQM’s commitment to decarbonisation as it seeks to reduce its carbon footprint by 30% by 2025, and underline its responsible mining credentials.

FQM’s Kansanshi Mine General Manager Anthony Mukutuma, commented:

“The project will offer significant benefits to Zambia, by unlocking some of its world-class renewable potential. It will help the country realise some of its untapped solar and wind resources by attracting large-scale foreign investment and adding significant renewable energy capacity. In line with Zambia’s Vision 2030, the project will further contribute to improving Zambia’s energy-mix, reducing expensive regional power imports and exposure to fuel prices.

Major projects such as this underline First Quantum’s responsible mining credentials and are a critical part of its plan to reduce its carbon footprint by 30% by 2025.”

Fabienne Demol, EVP and Global Head of Business Development at Total Eren, commented:

“Together with our partner Chariot, we are pleased to bring our global expertise in solar and wind generation to power FQM’s operations. The combined solar and wind capacity will offer strong complementarity and power generation around the clock, with solar produced during the day and wind mainly at night.

The project also represents a natural fit with Zambia’s hydropower resource seasonality; the project’s energy mix reaches its production peak during the dry season when the country is most exposed to droughts. Increasing the share of renewables will improve the country’s carbon footprint and address current and future challenges related to climate change.

Laurent Coche, Chariot Transitional Power Executive Director, commented:

“We are very excited to be partnering with FQM and Total Eren on this ground-breaking 430 MW project in Zambia. This project further demonstrates Chariot’s commitment to assisting mining companies in Africa transition to renewable energy sources for their operations, with Zambia having an abundance of wind and solar potential. We are delighted to get started on the project, ahead of construction commencing in 2023, and we look forward to providing further updates in due course.”

This is another piece of good news for Chariot where the build-up of the transitioning business is adding new clients across Africa and here, where FQM is the partner of the Total Eren/Chariot partnership adds another good  name to the roster. It is also important to be in Zambia where the country’s Vision 2030 is attempting to improve their energy-mix, reducing expensive regional power imports and exposure to fuel prices.

The future for Chariot is in my view looking very rosy as the size of the prize in Morocco opens up with not only the Lixus licence but the recent award of the Rissana Offshore Licence in country and with the natural gas market there growing by the day. Add to that the mining companies transition to renewable energy which is making business for those such as Chariot who are without doubt market leaders in that crucial sector. The share price has started to rise but their is significant upside and I mean by a factor. 

Eco (Atlantic) Oil & Gas

Eco has announced the publication of an updated NI 51-101 compliant Competent Person’s Report on its assets Offshore Guyana, Offshore Namibia and Offshore South Africa. The CPR was compiled by WSP USA Inc., of Boulder Colorado, USA, an independent third-party auditor and can be found on the Company’s website.

The new CPR incorporates the increased interests in its Namibian assets and the additional two blocks offshore South Africa resulting from the acquisition of Azinam Group Limited as announced on 11 March 2022. All contractual and legal conditions required for completion have occurred save for final approval from the TSX Venture Exchange, which is expected to be received imminently. The CPR has been prepared on the basis that the acquisition of Azinam has completed.

Summary of Unrisked Prospective Resource Estimates

 

Gross

Net attributable to Eco’s Interest

Asset

Country

Low Estimate

Best Estimate

High Estimate

Low Estimate

Best Estimate

High Estimate

Operator

Oil & liquids Prospective Resources (millions of barrels)

Lower Risk

Orinduik

Guyana

2,315

4,537

8,179

347

681

1,227

Tullow

Cooper

Namibia

151

245

398

128

209

339

ECO

2B

South Africa

209

491

984

104

246

492

ECO

3B/4B

South Africa

973

3,088

7,138

195

618

1,428

Africa Oil

Higher Risk

Cooper

Namibia

283

507

843

241

431

717

ECO

Guy

Namibia

1,671

4,924

10,937

1,421

4,185

9,297

ECO

Sharon

Namibia

702

2,212

5,518

597

1,880

4,691

ECO

Total for Oil & Liquids

6,304

16,004

33,998

3,033

8,249

18,189

Gas Prospective Resources (billions of standard cubic feet)

Lower Risk

Orinduik

Guyana

1,798

3,626

6,811

270

544

1,022

Tullow

Cooper

Namibia

141

240

407

120

204

346

ECO

2B

South Africa

31

73

149

15

37

74

ECO

3B/4B

South Africa

426

1,360

3,136

85

272

627

Africa Oil

Higher Risk

Cooper

Namibia

264

496

868

224

422

738

ECO

Guy

Namibia

1,625

4,812

10,869

1,381

4,090

9,239

ECO

Sharon

Namibia

668

2,176

5,466

568

1,849

4,646

ECO

Total for Gas

4,952

12,782

27,706

2,663

7,417

16,692

Source: Letha C. Lencioni, WSP USA Inc

Gustavson Associates LLC, who completed the last CPR in January 2020, is now a part of WSP USA.

Note: Assets designated as “Lower Risk” have probability of success (POS) estimated at 16%-81%, while those designated as “Higher Risk” have POS estimated at 2%-3.5%. “Operator” is name of the company that operates the asset. “Gross” are 100% of the reserves and/or resources attributable to the licence whilst “Net attributable” are those attributable to Eco. 

Report Highlights – Attributable Best Estimate, Prospective Resources

 ·   Guyana (Orinduik Block) – Net to Eco 681 mmbbls Oil and 544 BCF Gas

·   South Africa (Blocks 2B & 3B/4B) – Net to Eco 864 mmbbls Oil and 309 BCF Gas

·   Namibia (4 Blocks) – Net to Eco 6,705 mmbbls Oil and 6,565 BCF Gas 

Colin Kinley, Co-Founder and COO of Eco Atlantic commented:

 “With our current strategy for increasing our stakeholder asset base, we have focused solely on strategic acquisitions that can add material and near-term growth and catalysts for the company. The addition of the Azinam assets in Namibia and South Africa have quickly added prospective resources to our portfolio. As we work towards the completion of our recently announced binding term sheet to acquire JHI’s 17.5% interest in the Canje Block offshore Guyana plus the maturation of additional resources currently being interpreted from ongoing 3D processing in Block 3B/4B we expect to see even further growth of the portfolio from here in the coming months”.

Importantly our acquisitions and strategy to deliver mature drillable prospects in the near term is driven in part by the current heated energy market, the reduction in worldwide exploration, and the marked cycling we anticipate through energy transition in the coming years. Eco has the capacity to participate and provide strategic value accretion through the drill bit. Our planned well for Q3 this year on Block 2B in South Africa is being quickly followed by work on the potential to drill on Block 3B/4B in the Orange Basin, directly adjacent to the recent discoveries announced by TotalEnergies and Shell. We are also confidently progressing towards drilling in Orinduik block offshore Guyana, subject to available funding, and look forward to confirming a drill target and timing with our partners in the coming months. Assuming the acquisition of JHI completes as planned in the coming months, this acquisition will also provide us with the opportunity to participate in a number of targets on the Canje Block as prospects are matured by ExxonMobil and ourselves in the Guyana basin.”

Eco are powering ahead with this CPR in which the numbers are truly stupendous, even shareholders may have blinked when they saw best estimate prospective resources of some 8.2bn barrels of oil and 7,417 BCF of gas. The report has everything in it except the recent JHI deal which includes the Canje block in Guyana which would provide icing on the top of this exceedingly good cake.

Clearly Namibia takes the kudos with its huge structures containing massive potential but actually if you look at existing portfolio it is carefully assembled with differing profiles and geographies. Recent drilling in every single area that Eco can be found has already started the de-risking programme and Gil and Colin have put together what is rightly been described as ‘the biggest small cap in the E&P world’. Indeed normally if you saw such a sizeable portfolio you wouldnt expect it to be in a company with a market cap of only £70m. 

Last time I wrote about Eco I suggested that it might even be the ‘go-to’ exploration company in the energy mix, this CPR only confirms what a gem this is in the E&P sector, with funding available through canny deals, enormous strength from partner companies and investors who know a good thing when they see one. As they say on the stage, this one will run and run…

And finally…

The 2nd test in Barbados meandered to another draw so we go to Grenada on Thursday with all to play for. With no idea what that pitch might be like up there will there be a result? England have batted well but are short in the bowling department although Jeremy Fisher and Saqib Mahmood performed ok on debut. It is worth noting that much as I like Andrew Strauss his call to not take both of Anderson and Broad was plain wrong as much as it was to take Woakes on tour, never, ever again.

The 6 Nations finished in style for Italy who won in Cardiff, how we laughed. Ireland beat Scotland some of whom had been punished for being in the pub after the France game and Ireland won as they liked. France beat England as per the rankings but if England had won games where players had been sent off the match might have had more bite.

In the FA Cup the Eagles beat the Toffees easily and Chelsea won at Boro setting up an all London Semi final. With the Noisy Neighbours easily beating the Saints and Liverpool winning 0-1 at Forest the top two in the table meeting the other semi.

In the Prem Leeds came back from 2-0 at Wolves to win 2-3, Villa lost 0-1 to the the Gooners, the Foxes beat the Bees 2-1 and Spurs beat a very tired Hammers 3-1.

Finally all guns blazing in the F1 in Bahrain, with the new regs expected to change things Ferrari have turned up with good engines and took P1 and P2 as Max blew up and out then with Cheka failing at the death Sir Lewis nipped in for the 3rd podium with George right behind him.