WTI $105.17 +48c, Brent $107.58 +44c, Diff -$2.41 -4c, NG $7.48 +24c, UKNG 144.02p -13.98p

Oil price

A better week for oil but still only modestly better, as the BP CEO said this morning only 1m b/d of Russian crude is off the market right now. With the stock data to come it looks like the market is still tight and likely to remain so for the time being, absent anything else the price won’t change much for the time being and I don’t expect anything from Opec on Thursday either.

Retail gasoline prices in the USA are still rising, last week a gallon was $4.182 which is up 7.5c, down 1.2c m/m and up $1.292 y/y.

In the smoke today, anything I have missed will be covered tomorrow.


IOG has provided a full operational update ahead of its Annual General Meeting today.

Blythe & Elgood

Facilities, Infrastructure & Reservoirs

Over the initial seven weeks of production, the Bacton terminal operator Perenco, IOG and its Pipeline and Facilities Duty Holder ODE Asset Management have been jointly establishing the full functionality of the end-to-end Saturn Banks infrastructure. Offshore, the chemical injection fault on the Blythe topsides has been temporarily addressed, giving an aggregate production capacity of 75 mmscf/d, which will increase to design capacity once modifications are installed over coming months.

Onshore, the first Saturn Banks hydrocarbon liquids were received on 7 April. The Bacton terminal operator has been working to integrate these efficiently into existing Bacton liquid streams. This entails processing the liquids through the dedicated Saturn Banks slugcatcher (reception vessel) and modifying the terminal condensate stabilisation unit’s operation to suit this transient composition of fluids.

As previously noted, reservoir data from the early months of production will be required to make a reliable assessment of subsurface performance and inform forward guidance on Blythe and Elgood. Subject to operations, this guidance is therefore expected to be provided by late Q2, approximately three months from First Gas.


The PUK, ODEAM and IOG teams are working jointly to optimise onshore liquids handling and improve offshore reliability to maintain stable production rates. Currently, stable gas production from Elgood and Blythe has been established in the 55-65 mmscf/d range on a gross basis. Over the final week of April, aggregate production averaged 60 mmscf/d, with a maximum daily rate of 64 mmscf/d and 100% uptime on both assets. Since First Gas from both wells in mid-March to end of April, overall average aggregate gas production was 37 mmscf/d, with average uptime of 68% at Elgood and 33% at Blythe. This primarily reflects the chemical injection fault outage before the Blythe well was reopened in mid-April, among other shorter temporary outages.

Under its gas sales agreement with BP Gas Marketing Ltd, IOG receives pricing closely linked to the UK National Balancing Point (NBP) day-ahead price. The volume weighted average realised gas price was 232 p/therm for March and 161 p/therm for April. Amid very high LNG imports and limited UK storage capacity, temporary constraints on the UK-Belgium interconnector pipeline pulled prompt NBP prices in April significantly lower than European gas benchmarks (which are usually highly correlated to NBP).

Average aggregate condensate arrivals into Bacton have been in the 800-1,000 bbl/d range since first liquids flowed onshore on 7 April. Condensate production was well above 1,000 bbl/d in the final week of April but is expected to be largely front ended with a relatively rapid decline rate. Condensate is sold to a petrochemical offtaker at prices linked to naphtha and gasoil.


Drilling of the two development wells, Southwark east and west, is scheduled to continue into Q4 2022. Final hook-up and commissioning is then expected to deliver Southwark first gas later that quarter. Upon resumption in mid-April after seabed remediation, the Southwark east well remained in good condition with no further rig stability issues encountered, enabling drilling to continue as planned.

Clearance of the 6km 24″ pipeline extension route from the Saturn Banks Pipeline System to the Southwark platform is expected in May, followed by laying and trenching by Subsea7’s Borealis vessel in June. All regulatory consents are in place for these key remaining Phase 1 subsea works.

Southwark accounts for the majority of 2022 net capital expenditure, which is currently expected to be within the £70-85 million range. This figure incorporates projected Goddard, Kelham North/Central and Nailsworth expenditure.

 Further Phase Activities

 The appraisal wells at Goddard and Kelham North/Central are planned to be drilled in direct continuation from the Southwark east and west development wells, using the Noble Hans Deul rig and with Petrofac continuing as Well Operator. The purpose of these wells to prove up two incremental gas hubs and obtain sufficient subsurface data to fully optimise the developments.

The geophysical site surveys for both appraisal wells were completed in March, with the Nailsworth area also incorporated in the same campaign. Geotechnical surveys are planned for later this quarter.

Basis of designs for the two appraisal wells are complete and detailed well planning, contracting and long-lead procurement is well underway in preparation to execute the appraisal wells in Q4 2022.

Andrew Hockey, CEO of IOG, commented: 

“I am pleased to provide an update on the initial weeks of Blythe and Elgood production. As we address early facilities issues and control liquids handling onshore, production is currently stabilising at 55-65 mmscf/d gas and 800-1,000 bbl/d condensate, with steadily improving uptime rates. Meanwhile, drilling progress continues at Southwark while we prepare for the two follow-on appraisal wells at Goddard and Kelham North/Central.”

A detailed and useful update from IOG today with a good explanation of production and pricing as well as an idea about the short and medium term operational activity. Together with firm forecasts on capex, investors can now get a very good idea about the excellent progress that IOG is making in its journey as a key provider of natural gas into the UK market and doing that as a low carbon, ESG leading player.

SDX Energy

SDX has announced a gas discovery at the SD-12_East well that targeted a separate compartment in the Sobhi Field, within the Ibn Yunus North development lease.

SD-12_East (SDX Working Interest: 67%) spudded on 17th April and reached TD at 7,295ft MD on 26 April 2022. The primary basal Kafr El Sheikh target was encountered at 6,567ft MD and discovered 70.2ft of net pay gas sand with an average porosity of 24.1%. A secondary target gas sand in the upper Kafr El Sheikh was also encountered at 4,838ft MD and discovered 9.1ft of net pay gas sand with 30.7% porosity. SD-12_East will now be completed, tested in the primary target area and tied-in to the CPF via the SD-12X flow-line and it is estimated that the well will be on production in July 2022. An announcement concerning the results of the testing of SD-12_East will be made in due course.

With the completion of SD-12_East, the rig will now move to the final well in the three well campaign, MA-1X, which is targeting the Mohsen prospect and which has a planned spud date in late May.

Mark Reid, CEO of SDX, commented:

“I am very pleased to announce a second successful well in the South Disouq 2022 drilling campaign.  SD-12_East is expected to be contributing to production by July 2022 and I look forward to updating the market further on the results of the well-test when this completes in the coming weeks.”

A good find by SDX which adds to the South Disouq campaign but that in itself probably isn’t the news that shareholders want to hear right now. The shares are still well down from the 18.9p peak at today’s 8.6p a very disappointing performance made worse by the fact that I am still sure that there is corporate activity going on in the background. 

Trinity Exploration & Production

Trinity has provided an update on the Galeota farm down process and the imminent resumption of drilling.

 Galeota Farm Down Process

The Company has engaged with a range of potential partners as part of the Galeota farm down process. Whilst initial feedback has been encouraging, a number of participants have informed the Company that they are unable to fully assess the economics of the opportunity at Galeota without clarity on the expected reforms to Supplemental Petroleum Tax (“SPT”), which are currently being considered by the Government of Trinidad and Tobago (“GORTT”) and which were initially expected to have been confirmed sooner than now appears likely.

Pending SPT reform, which management still expects to happen, the Company has decided to pause the Galeota farm down process. This will enable the Company to seek the best value proposition for Galeota when the GORTT’s fiscal reforms have been confirmed.

The Company is hopeful that the GORTT will conclude its deliberations and provide further details on reforms to SPT in the near term and this, along with potential stabilisation of the macro environment, will enable participants to fully assess the economics of the opportunity when the farm down process recommences.

In the interim, the Company will continue to refine its plans for Galeota. In particular, it will advance preparations for exploiting the 11.66mmbls of 2P reserves remaining in the Trintes field.

Drilling Programme

The Company is pleased to confirm its intention to resume drilling activities early in H2 2022 (the “2022 Drilling Programme”). The 2022 Drilling Programme is expected to involve the drilling of a number of low angle conventional wells, and also several high angle to horizontal wells, along with deeper wells to test structures below our current producing horizons, which could lead to a step change in reserves and production. With an increasing focus on high angle, horizontal and deeper wells, the 2022 Drilling Programme is expected to yield significantly higher volumes per capital invested, and materially increased cash returns, when compared to the Company’s 2018 and 2019 drilling programme. The 2022 Drilling Programme is fully funded and is expected to commence in July 2022, with first oil shortly thereafter.  Further, the Company has commenced the procurement of long lead items such as; casing, tubular and production equipment.

In addition, Trinity’s subsurface teams have made good progress in working up additional locations for infill drilling for all well types in subsequent years.  The Company’s drilling hopper includes numerous new wells, at various stages of readiness, having greatly benefitted from the 3D seismic over the Company’s operating areas, and therefore continues to increase further in both number and types of wells.

Jeremy Bridglalsingh, Chief Executive Officer: 

Whilst it is frustrating to have to temporarily pause the Galeota farm down process, we believe that this decision is necessary if we are to unlock the significant value of this asset. With our focus firmly on shareholders’ best interests we strongly believe that this approach will, ultimately, ensure we optimise value for shareholders. We remain confident in the prospects for Galeota and, once the GORTT’s fiscal reforms have been confirmed, we will resume discussions and seek to drive towards a successful conclusion of the farm down process as soon as practicable.    

“Management’s near-term focus is now on maximising the significant opportunity afforded by the imminent resumption of drilling. The significant subsurface work which we have undertaken since purchasing the 3D seismic data covering our onshore assets, and the scrutiny of that work by our Technical Committee, now allows us to confidently target a combination of conventional, high angle, horizontal and deeper wells in the drilling campaign and we are excited by the potential for meaningful production growth and returns. By including higher risk/reward opportunities in our drilling campaign the Company and its shareholders can expect to benefit from a much higher set of economic returns. Furthermore, we believe that by operating a range of well-types, a number of which are not typical to the region, the Company will be hold a considerable advantage over other participants in forthcoming licensing rounds.

“The strength of Trinity’s balance sheet and our capital efficient business model enables us to fully fund the 2022 Drilling Programme from existing cash resources. We believe that the upcoming drilling activity has the potential to be transformational for the Company and look forward to updating shareholders as we progress operations.”

This is a terrible disappointment for Trinity and the poor share price performance this year won’t be made any better by the delay. Having said that when the company does decide to return to drilling there should be considerable upside. 

And finally…

In the Prem it’s still the Noisy Neighbours and Liverpool who both won this weekend. It is  equally as tight at the bottom after Burnley and Everton both won.