Errata

In Zephyr piece, it’s when not if!

Apologies and thanks to all who spotted it!

Malcy

WTI (Sep) $ 79.63 +89c, Brent (Sep) $83.64 +90c, Diff -$4.01 +1c. 

USNG (Sep) * $2.73 +5c, UKNG (Aug) 83.75p +8.16p, TTF (Sep)* €34.4 -€2.26

*Expiry August contract

Oil price

Another good day for oil as the market concentrated on the good news being extracted from fairly average data from China, it was property, where the Government has decided to start by backing that encouraged investors. In Germany the data gets worse and it is indeed the sick man of Europe but still carries strong historic growth around on its back. 

The IMF, for what they are worth has ironically and probably through clenched teeth, increased world GDP by 2 ticks to 3.0% and even admitted that the UK no longer has a Brexit problem….

The API stats were mixed for choice, crude oil added 1.319m barrels agains the teenage scribblers guess of a draw and gasoline drew by 1.979m. 

And a snippet from a conversation with the former Fund Manager Adrian Collins yesterday in which we discussed an idea that BP, or any energy company should take over the water sector. I reminded him that the Water Companies were all very badly managed and apart from dumping sewage into rivers and never fixing pipes, that they lost around 50% through leakage, this in a product that they harvested free from the sky. I used to joke about what would happen if an oil company lost a spoonful of oil from a pipe not this travesty.

So imagine our surprise when I saw the CEO of Italgas on CNBC this morning, they have just bought French gas utility Veolia and he said that they want to move into the water business…He said that they would use their gas technologies and existing data to cut leakage. In gas it is less than 0.1% whilst it is over 40% in water. (Just like I said)

So what might the opprobrium that is normally heaped on the fossil fuels companies be should the energy companies take over water, stop leaks, avoid sewage leaks and use their pipeline technology keep even Feargal Sharkey onside… imitation Adrian is the sincerest form of flattery.

Zephyr Energy

Zephyr Energy will hold its Annual General Meeting at 11am today, at the offices of Memery Crystal, 165 Fleet Street, London, EC4A 2DY.

At the AGM today, Rick Grant, Zephyr’s Non-Executive Chairman, will make the following statement:

During the 2022 financial year and in the period since, Zephyr made significant and material progress towards unlocking the substantial potential value from its flagship project in the Paradox Basin, Utah, U.S. As a result of opportunistic acquisitions during 2022, the Paradox project is now made up of a 100 per cent working interest across an enlarged 45,000-acre position, with a newly acquired pipeline system and related infrastructure assets now under our control.  Thanks to our recent drilling successes (which achieved flowing hydrocarbons from both wells we have drilled on the Paradox project to date), we have also been able to book our maiden proved reserves and a large contingent resource base for the Paradox project.

“In addition to our substantial progress on the Paradox project, we have also delivered remarkable growth from our non-operated asset portfolio resulting in revenues of US$41.1 million for the year ended 31 December 2022 – a near seven-fold increase in revenues from the prior year – and we anticipate further growth to support the next stage of the Paradox project development as our newly acquired wells operated by Slawson Exploration Company come online in the next few months.

“Looking ahead, with a diverse portfolio of cash-flowing assets, potential for substantial future organic growth, a solid financial footing, and a talented and growing team, we continue to be extremely optimistic about Zephyr’s future. Our key goals for the remainder of 2023 are to move the Paradox project towards commercial production while continuing to grow the non-operated asset portfolio.

“Most importantly, on the occasion of our 2023 Annual General Meeting, I would like to thank our Shareholders and partners for their continued support.  The Zephyr team remains committed to the delivery of long-term value creation while upholding our core values of being responsible stewards of our Shareholders’ capital and responsible stewards of the environment. The Board is looking to the future with a high degree of confidence as we continue in our pursuit of building a group of which all our stakeholders can be proud.”

At the risk of just quoting the whole of Chairman Rick Grant’s words I think that I should at least paraphrase in order to try and see off those bears who feel that the current price is justified. So, ‘significant and material progress towards unlocking the substantial potential from the flagship project in the Paradox Basin, now 100% WI and a 45/- acre position with the pipeline and infrastructure under our control’. 

I could go on, the company has booked maiden reserves and has a large contingent resource base, it has an excellent and growing non-operated asset base which has been skilfully put together to support the Paradox Basin, in my view there are many companies that are not as good as this ‘secondary’ part of the portfolio in its own right. 

At a time when Brent crude is around $83 and even Natural Gas profitable, I genuinely think that it is when and not if that Zephyr delivers for its shareholders with a significant success at the Paradox Basin. 

Molecular Energies

Molecular Energies has issued an update on its Paraguay exploration.

Tapir well, Pirity Concession, Chaco, Paraguay

Mobilisation of the rig to site has commenced, together with the full 60 bed rig camp. The process involves some 200 truckloads as well as four cranes and is expected to take approximately 21 days, subject to weather as part of the journey includes non-paved roads.  

The rig will be fully erected at the Tapir site and tested in situ. Then, subject to satisfaction and acceptance, the short lead time services will be mobilised. In the meantime, the long lead time services are also in the process of mobilisation.

Subject to the above, spudding is targeted to occur at or around the end of August or beginning of September.

Exploration Licence

The exploration licence for the Pirity Concession has now been extended by one year to September 2024, providing ample time for drilling of the exploration well and review of the results.

Having followed Molecular Energies, at least the energy side of it for a very long time, it is good to be report that the Paraguay is now within touching distance of spudding. Whilst no thoughts are given about its potential result it shares with other wells the opportunity if it were to come in and for President from way back when. 

The Group is probably considered a green investment incubator and investor in alternative energies such as the success of Atome and Green House which is proving to be a significant success. As a result whatever the result in Paraguay the company is a rare beast and one that should be growing in the rarified atmosphere in which it dwells.