WTI (Jan) $75.39 +$2.22, Brent (Feb) $80.68 +$2.69, Diff -$5.29 +47c.

USNG (Jan) $6.93 +34c, UKNG (Jan) 331.0p -5.0p, TTF (Jan) €132.74 -€5.10

Oil price

Oil has regained some five dollars from the low as we wait for the Fed decision on rates this afternoon. Following the CPI number which was in line at 6.0% the whisper is for a hike of 50bp’s which would be less that the earlier guesses of 75bp’s.

The Opec report didn’t change much taking a touch off demand numbers in the short term and unchanged supply growth next year. China will add plenty if it takes off, up to 3m b/d but no one is predicting that yet.

Good to see Sam Bankman-Fraud locked up in the Bahamas and as it comes out that he was using client money he will surely get a monster spell in the penitentiary…

Savannah Energy

On 13 December 2021, Savannah announced that it had entered into a Share Purchase Agreement (“SPA”) with PETRONAS (E&P) Overseas Ventures SDN. BHD. (“PETRONAS”) to acquire PETRONAS’ upstream and midstream asset portfolio in Chad and Cameroon. Completion of the proposed acquisition remained subject to satisfaction of certain conditions precedent which have not yet been satisfied, and Savannah and PETRONAS have, therefore, mutually agreed to terminate the SPA with immediate effect.

I will be able to comment in detail after I have spoken to the company about all the recent announcements.

Afrentra

Afentra has provided the following update regarding the previously announced Angolan acquisitions.

Sonangol Acquisition

On 28 April 2022, the Company announced that its wholly-owned subsidiary, Afentra (Angola) Ltd, had signed a sale and purchase agreement with Sonangol Pesquisa e Producao S.A. (‘Sonangol’) to purchase non-operating interests in Block 3/05 (20%) and Block 23 (40%), offshore Angola (the ‘Sonangol Acquisition’). As set out in the admission document published by the Company on 10 August 2022, the Sonangol Acquisition is subject to a number of conditions precedent (the ‘CPs’), including the receipt of governmental approvals and the extension of the Block 3/05 Production Sharing Agreement (‘PSA’) until at least 31 December 2040.

The Company remains in discussion with all relevant parties and is continuing to make good progress on the transaction.  An important CP for the transaction is the PSA extension process; ANPG and the Block 3/05 contractor group continue to progress this matter. Nevertheless, the PSA extension is now unlikely to be finalised before 31 December 2022 and the Company, together with Sonangol, are working on extending the long stop date for the Sonangol Acquisition in order to facilitate satisfaction of the remaining CPs to enable completion in Q1 2023.

INA Acquisition

On 19 July 2022, the Company announced that its wholly-owned subsidiary, Afentra (Angola) Ltd, had signed an SPA with INA – Industrija Nafte d.d. (‘INA’) to purchase a 4% interest in Block 3/05 and an up to 5.33% interest1 in Block 3/05A offshore Angola (the ‘INA Acquisition’). As set out in the admission document published by the Company on 10 August 2022, the INA Acquisition also remains subject to a number of CPs.

Good progress has been made with INA and the relevant authorities. The transaction is now with the Ministry awaiting Governmental approval, and formal completion is anticipated to occur in early 2023. Given the progress made to date, there is not considered to be any requirement to extend the long-stop date pursuant to the INA Acquisition at this time, as set out in the Company’s admission document.

Block 3/05 operational update

Block 3/05 production for the first nine months of 2022 has been stable and in-line with expectation at 19,160 bopd gross. This is equivalent to ~4,600 bopd net to Afentra upon completion of the Sonangol and INA Acquisitions. The Company looks forward to continuing to guide the market on operational performance.

Finally, we have made good progress in our search for a further independent Non-Executive Director and are in the final stage of this process, which will ensure a further strengthening of the Afentra Board as we expand the Company’s portfolio. We hope to be in a position to finalise this appointment around the time of completion of the Sonangol Acquisition.

The Company looks forward to providing shareholders with further updates in due course.

Commenting on the update, CEO Paul McDade said:

“We expect governmental approval of the INA Acquisition shortly which will allow us to complete this acquisition, marking our entry into Angola in early 2023 and the inception of our partnership with Sonangol in Blocks 3/05 and 3/05A with whom we intend to work closely with to optimise production and to extend the life of this quality, long-life asset. We are pleased that significant progress has been made on the award of the license extension and look forward to this being completed so that we can proceed with the Sonangol Acquisition in the near future.”

No problem here I think as we know that these things do take time to get final approvals and that whilst it is frustrating for the company they are benefiting from cash flow since the transaction was announced. 

We also know that the asset is also performing well and production is in-line with expectations and that a great deal of progress has been made in country as well as with both Sonangol and the regulator. 

As CEO Paul McDade states the company are keen to build out this asset and get on and ‘extend the life of the asset’ which I’m sure they will do in no time, either way at 25p the shares are standing at a huge discount to potential fair value. 

IGas Energy

IGas, the UK onshore energy company, provides the following operations update.

Conventional Assets

The Company remains on track to deliver its full year production forecast of 1,900-1,950 boepd. In early October a production drive was initiated to ensure wells, plant and equipment had the maximum uptime, going from 3 to 5 fully operational rigs, returning 18 offline wells to production, converting 2 wells from jet pump to beam pumps, lowering operating costs and significantly increasing water injection capacity across our asset base.

The planning application for the Glentworth project has now been submitted to Lincolnshire County Council and we await validation. Phase I has the potential to add c.200 bbls/d and development of c.1.0 mmstb 2P reserves.

Geothermal

The joint application with SSE to the Green Heat Network Fund is now under consideration by the scheme managers, Triplepoint, and BEIS and we await a decision in early 2023.

A total of five tenders have been submitted through the Carbon Energy Fund to conduct detailed feasibility studies into supplying renewable heat to five NHS Trusts.  If successful, these could result in five long term renewable heat supply contracts.

Chris Hopkinson, Interim Executive Chairman, said:

“I am pleased to report that we remain on track to deliver our expected production forecast of 1,900-1,950 boepd, given the challenges in the first half of the year and would like to thank everyone in the business for their hard work in achieving our goal.

When I stepped into the role of Interim Executive Chairman, I indicated that there were changes in the business required to make it more efficient to ensure operational excellence in our conventional assets, expedited growth in our geothermal business and we have a structure that appropriately reflects the size and shape of the current business. 

After a thorough review of the business, there has been a restructuring and rightsizing of the Executive Committee that will enable improved strategic planning and more efficient decision making, as the business looks to create a strong and relevant future for its investor base. 

We are focused on putting cash generated during high commodity prices to work into maximising recovery from our existing assets and developing near term incremental production opportunities as well as growing our nascent geothermal business into a material enterprise.”

It is difficult to see quite where IGas is going right now and how it is going to get there although it seems that the company is retreating back to its old portfolio of assets and by growing the geothermal business although other projects previously in vogue are not mentioned. 

There is no detail of by how much the Executive Committee is being reduced but since the previous CEO was removed three months ago, when a new CEO was promised, the shares have fallen by 86% and no such appointment has been made.

The company has been dealt a bad hand by Government flip-flopping over fraccing and the excitement of the change of heart was short lived but there doesn’t seem to be a consistent policy under the -interim- new management nor do we know who will be at the helm going forward.

And finally…

The first place in the World Cup final was claimed yesterday by Argentina, this evening France and Morocco will battle it out to join them.