A flash blog today as I’m in meetings all day, any further comments on these stories in due course.
Union Jack Oil
Union Jack, a UK focused onshore conventional oil and gas production, development and exploration company, is pleased to announce its unaudited results for the Half Year ended 30 June 2022.
- Maiden profit of £2,034,086 for the six-month period ended 30 June 2022
- Revenue of £4,384,254 for the six-month period ended 30 June 2022
- Cash balances, receivables and liquid investments stand at approximately £10,500,000 as at 6 September 2022
- Company remains debt free
- Approvals for the Wressle Field Development Plan and licences for the production phase through to 2039 received from the North Sea Transition Authority (“NSTA”)
- Wressle currently amongst the most productive conventional producing UK onshore oilfields and poised to become second ranked only to the prolific Wytch Farm
- To date, our flagship project at Wressle has produced over 225,000 barrels of high-quality oil (gross) with zero water cut
- GaffneyCline Reserves and Resource Report, Illustrative Production Profile and Upside Potential of the Wressle Field are expected be published during September 2022
- Planning granted at West Newton for both A and B site works and three-year permit extension
- Joint Venture partners progressing with a conceptual development plan for West Newton, predominantly as a major gas producer
- First horizontal appraisal well at West Newton planned for 2023
- Completion of Competent Person’s Report, compiled by RPS Group covering West Newton and other significant prospects within PEDL183 expected by end of Q3 2022
- In March 2022, a cash payment of £2,083,333 was made to Calmar LP in respect of the early settlement of the deferred consideration for the past purchases of an additional 25% of interest in PEDL180 and PEDL182 containing the Wressle development, bringing the Company’s economic interest to 40%
- In August 2022, the High Court approved a Capital Reduction creating additional distributable reserves to the value of £21,553,557, providing the Company with flexibility to deliver future shareholder returns in the form of dividends and/or share buybacks
David Bramhill, Executive Chairman, commented: “I am very proud to present a transformative set of Half Year results containing our maiden profit that reflects the years of determined effort by the Board of Directors, advisers and valued technical consultants with an unwavering objective to grow Union Jack into a mid-tier company.
“Our Operators also deserve great credit for their commitment in progressing our principal projects with the support of their Joint Venture partners.
“Union Jack is currently in a strong financial position with a combination of consistent cash flows, principally from our flagship asset at Wressle, plus significant future upside potential from our balanced portfolio, giving Union Jack the confidence to support a forward drilling and development programme on our key projects that is being planned for the remainder of 2022.
“Union Jack continues to be cash flow positive covering all G&A, OPEX and contracted or planned CAPEX costs, including any drilling activities for at least the next 12 months.
“We look forward to the remainder of 2022 and reporting on a number of fronts, including our dividend and share buyback policy, the GaffneyCline Report and RPS Competent Persons Report for Wressle and West Newton respectively, both of which I am confident will confirm the future operational and financial strengths of these two flagship projects.
“The future of Union Jack remains bright.”
CEO David Bramhill is right to describe this set of results as transformative as they deliver pretty much across the board. £2m of first profits on revenues of £4.4m ✓, cash balances of £10.5m at 6/9/22 and debt free ✓ and included paying off the Calmar deferred consideration ✓.
Indeed they have ticked a number more boxes such as the Wressle FDP approval, as well being highly productive having sold some 225/- barrels of gross oil to date ✓. The GaffneyCline report on Wressle reserves and resources is iminent and will include field potential which I am excited about.
West Newton planning was granted and a three year permit extension means that a horizontal well should be drilled next year and the CPR is expected by Q3 2022 ✓.
Finally the Capital reduction was approved and with distributable reserves of some £21.5m all options remain open for future shareholder returns ✓. This makes the shares a highly attractive investment and although the stock has tripled in less than a year so much has happened that I can confidently expect another tripling of the stock when the assets continue to deliver and the shares carry the advantage of total and income return…
Chariot Limited (AIM: CHAR), the African focused transitional energy company, is pleased to announce it has signed a Pipeline Tie-In Agreement with the Office National des Hydrocarbures et des Mines (“ONHYM”) securing access to the major Maghreb Europe Gas Pipeline (“GME”) in Morocco. The GME, owned and operated by ONHYM, runs from eastern Morocco through to Tangiers in the north and subsequently across to Spain. This agreement will enable the gas produced from the Anchois Gas Project, offshore Morocco, to be transported via the GME to different potential offtakers.
Pierre Raillard, Head of Gas Business & Morocco Country Director at Chariot, commented:
“I am very pleased to announce the signing of this Pipeline Tie-In Agreement with our partner on the Lixus licence, ONHYM. This moves Chariot a step closer towards delivering first gas from the Anchois gas field to potential customers using the GME pipeline. The Anchois Gas Project is a highly strategic asset given the continued volatility of global energy markets and combined with its proximity to the international GME pipeline, we are well placed to bring gas online as quickly as possible.”
A good additional piece for Lixus today, keeps the pressure on.
Sound Energy, the transition energy company, announces its unaudited half-year report for the six months ended 30 June 2022.
Development of the Tendrara Production Concession (the ”Concession”)
· Phase 1 Micro LNG project (”Phase 1”)
o Signing of the Notice to Proceed in February 2022
o Initial drawdown of the Loan Note subscription with Afriquia Gaz in February 2022
o Site preparation activities at the Tendrara TE-5 Horst commenced in March 2022
o Phase 1 first LNG delivery expected year end 2023
· Phase 2 (pipeline) development (”Phase 2”)
o Announced Gazudoc-Mahgreb Europe (”GME”) pipeline interconnection agreement with ONHYM in March 2022
o Appointed Attijariwafa Bank, Morocco’s largest bank, as exclusive lead arranger for the senior debt financing in June 2022
Post period end
· In August 2022, the Company launched a farm-out process in both the Concession and in the underexplored but prospective surrounding exploration permits in the Tendrara basin
· The purpose of the farm-out process is to secure an ambitious strategic partner for the Concession, and further exploration and appraisal of the Company’s exploration permits in the Tendrara basin
· Identification and high grading three potential near term subsalt drilling opportunities where, importantly, any future discoveries have the potential to be commercialised through the planned infrastructure of Phase 2
· Successful equity raise of £4 million (before expenses) in June 2022
· Company considering its options following rejection by Moroccan tribunal of Sound Energy Morocco East Ltd’s request for approximately $2.55m tax claim to be dropped
Graham Lyon, Executive Chairman said:
“I am extremely proud of what we have achieved in the first half of 2022, with limited resources: making significant progress on Phase 1 which is targeting first LNG delivery year end 2023 and advancing debt financing for Phase 2, which is planned to fund the majority of the Phase 2 development costs. The Company continues to be ever prudent with our G&A as we also evaluate a range of new business development opportunities in order to grow and diversify the Company both in Morocco and further afield. Post period end, we commenced a farm-out process to secure participation of a strategic partner in both the development of the Concession and exploration and appraisal of the Company’s exploration permits in Eastern Morocco. The committed Sound Energy team is diligently pursuing its ongoing development activities targeting production and revenue in 2023 and will continue to be focused on creating shareholder value whilst taking bold decisions to enable us to respond to the challenges (and opportunities) which continue to impact the wider global economy as world events unfold.”
As I said last time on Sound I think that management are doing a fine job and should be rewarded by a much higher share price. The value that is being created on Phase 1 LNG delivery next year whilst financing is moving ahead swiftly.
Kistos (LSE: KIST), the low carbon intensity gas producer pursuing energy opportunities in line with the energy transition, is pleased to provide its interim results for the period to 30 June 2022.
Strong cash generation in H1 2022 supported by increased production and high gas price
· Net daily production from the Q10-A gas field averaged 6.1 kboe/d, 5% higher than H1 2021
· On a pro forma basis, the acquisition of the GLA assets more than doubled daily production to 12.4 kboe/d
· Materially higher average pro forma realised gas price of €82.65 per MWh (H1 2021: €20.71 per MWh)
· Pro forma EBITDA for the period was €261.0MM, with cash balances on 30 June 2022 of €148.4MM
· Unhedged since 1 April 2022
Proforma1 unaudited 6 months ended 30 June 2022
Average realised gas price2
1. Pro forma figures include the GLA as if it had been acquired on 1 January 2022. The acquisition completed on 10 July 2022. Pro forma figures for H1 2021 include six months of Kistos NL1 and Kistos NL2 and 37 weeks of Kistos plc since incorporation.
2. Non-IFRS measure. Refer to the definition within the glossary.
3. Adjusted EBITDA is calculated on a business performance basis. Refer to the definition within the glossary.
4. Comparative figures for production, unit opex, Adjusted EBITDA and average realised gas price have been restated to align with the production reporting methodology and classification of operating costs as presented in the audited full year 2021 annual report.
Operational excellence intertwined with Kistos’ sustainability objectives
· Successful drilling and workover programme conducted between July 2021 and February 2022
· Unit operating expenditure remained very low during the period at €2.28 per MWh or €5.56 per MWh on a pro forma basis
· Industry leading Scope 1 emissions from the Q10-A platform were estimated at 1 gram of CO₂/boe in the first half of 2022 – operations powered by wind and solar energy
Focused on delivering returns to shareholders through both organic and inorganic growth
· GLA development and exploration programmes to commence imminently, utilising the investment allowance under the terms of the UK Energy Profits Levy
o Glendronach development on track to be sanctioned by year-end 2022, with production anticipated to commence by end 2024
o Preparations underway to drill the 638 Bcf Benriach prospect in 2023
· Further Q10-A drilling and workover programme due to get underway in the fourth quarter of 2022, minimising production decline.
Andrew Austin, Executive Chairman of Kistos, commented:
“Our strong cash generation for the first half of the year has been driven both by operational excellence across our assets in the Netherlands, and the high demand for natural gas across Europe. This has further strengthened our already robust balance sheet and will allow us to continue to capitalise on the exploration, appraisal, and development opportunities within our portfolio.
With the recent addition of our interest in the GLA assets in the UK North Sea, our forecasted daily production rates are set to more than double. Moreover, the GLA assets offer substantial development and exploration upside in the form of Glendronach and Benriach.
“The Kistos Board and Management Team continues to assess opportunities that align with our existing portfolio. Our recent Proposed Combination with Serica Energy was a clear demonstration of our ambition, and while this proposal did not progress, our appetite for M&A remains core to Kistos’ ethos of delivering material value for our stakeholders.”
These results are historic but speak for themselves and Kistos goes from strength to strength. I expect more of the same from AA and the exceptional management team both in terms of organic delivery and of course further deal flow.
Arrow has announced the results of the East Pepper well testing on the Pepper Block in the Alberta, Canada.
The 100 per cent working interest East Pepper well (100/14-21-052-22W5/3) was tested before tie-in activities began on August 30, 2022. The East Pepper well is a horizontal multi-stage fractured well producing from the Montney zone on the Pepper block. The well was drilled (originally in 2014) to a total measured depth of 15,269 feet with a horizontal leg of 2,917 feet.
Specific data for the production test for the Montney zone were as follows:
· The production test was run over a 27.8-hour period.
· Natural Gas production tested at a peak rate of 21,206 mcf/d (3,534 boe/d), a stabilized rate of 9,220 mcf/d (1,537 boe/d) and an average rate of 10,921 mcf/d (1,820 boe/d).
· Condensate produced over the test period was 24.27 bbls.
· The well had an average well head pressure of 3,276 psi over the test period.
Test results are not necessarily indicative of long-term performance or ultimate recovery.
Arrow expects that the tie-in facilities will be completed and the well will be put on production by the end of October 2022. The company expects typical production declines in the first few months and is accordingly sizing tie-in equipment for 7,000 mcf/d (1,167 boe/d).
Marshall Abbott, CEO of Arrow commented:
“We’re encouraged by the better-than-expected East Pepper production test, the second well on the Pepper block. We are particularly encouraged by the material flow rate and the strength and speed of pressure recovery after shut in. Arrow holds a 100 per cent interest in approximate 22,000 acres of undeveloped land at Pepper. This is our second well in the Montney formation on the Arrow asset.”
“The well is expected to be put on production to take advantage of the typically higher natural gas prices that the winter brings.”
“The next project that Arrow is focusing on is the recompletion of the RCE-1 and RCS-1 wells at the Tapir block in Colombia. Both recompletions involve bringing on additional zones in combination with existing production. This is an exciting time for Arrow, and we look forward to providing further updates on our progress.”
Continued strong production rates from existing tied-in wells combined with the encouraging results from new drills in Colombia support the Company’s objective of achieving a production rate of 3,000 boe/d within 18 months of its AIM listing (completed in October 2021).
Readers will know that I am very keen on the Arrow team and in the short space of time between arriving on the London market and know have shown that they can deliver successful well results and although the shares have performed well there is much more to come.