Another holiday flash blog from sunny Spain. As usual a short comment where I have been able to listen to the call, Serica’s was in-person only just when you wanted a telephone link there wasn’t one.
In the three sets of results I have included the summary details, fuller versions are obviously in the RNS statements.
WTI (Oct) $91.48 +71c, Brent (Nov) $94.43 +50c, Diff -$2.95+31c.
USNG (Oct) $2.73 +9c, UKNG (Oct) 86.4p -0.1p, TTF (Oct) €34.85 -€0.355.
Diversified Energy Company
Diversified Energy Company PLC (LSE: DEC), announced on 09 May 2023 a dividend in respect of the first quarter ended 31 March 2023 of 4.375 cents per share (“Q1 2023 Dividend”). The Company will pay the Q1 2023 Dividend on 29 September 2023 to those shareholders on the register on 01 September 2023.
The Company announces that Shareholders who have elected to receive their dividends in GBP sterling will receive an equivalent payment of 3.52 pence per share, based on the 15 September 2023 exchange rate of GBP 0.80436=US $1.00.
Adding this as when you yield north of 15% these currency adjustments matter…
Chariot has announced its unaudited interim results for the six-month period ended 30 June 2023.
Adonis Pouroulis, CEO of Chariot commented:
“We continued to progress all workstreams across the business throughout the period and further enhanced our portfolio with the award of the Loukos licence onshore Morocco and the acquisition of our water desalination business. In each pillar of transitional gas, renewable power and green hydrogen, we have the opportunity to deliver a range of tangible benefits and drive real value. Long term scalability is a shared theme across all of our projects, but we are fully focused on executing our core objectives to de-risk the business, enable further growth and deliver near term production.”
Anchois is making good progress and with the FEED Design phase completed and the ESIA and other documentation seemingly in the approval process are going well. The farm-out also appears to be nicely up with events, we might hear something quite soon on that front.
The Loukos onshore drilling project is moving fast and will start drilling next year and maybe production if successful could even be within the year. Finally the renewables side is making slower but meaningful progress and has an enviable roll-out programme.
I remain fully committed to Chariot where I see substantial and profitable developments over the short, medium and long term and stays in the Bucket List.
Highlights during and post period
Transitional Gas: Developing a New Gas Province in Morocco
· Front End Engineering and Design phase completed for the Anchois gas development project
· Progress made across all Anchois development workstreams, including the project Environmental Social Impact Assessment (“ESIA”) and submission of the necessary documentation into the approval process in Morocco
· Negotiations on partnering for Anchois and the wider Lixus and Rissana Offshore licences in final stages
· Partnership agreed with Vivo Energy to develop the Moroccan domestic gas-to-industry market
· Award of the Loukos Onshore licence (“Loukos”) in Morocco – fast-track drilling project initiated with opportunity for near-term production
Transitional Power: Building a Substantial Renewable Energy pipeline across Africa
· In partnership with TotalEnergies progressing developments at three key projects in Africa:
o Tharisa – 40MW solar project in South Africa
o Karo – 30MW solar project in Zimbabwe
o First Quantum Minerals – 430MW solar and wind projects in Zambia
· Operational Essakane 15MW solar project at IAMGOLD’s gold mine in Burkina Faso continues to perform well
· Acquisition of water desalination business a strategic fit for both the power and hydrogen pillars – first project in Djibouti commissioned
· Shareholding in Etana Energy opening up route to develop further large-scale renewable energy projects and trading through South Africa’s national grid
Green Hydrogen – Focused on early stage production and future scale up
· Feasibility studies in Mauritania progressing well with partner TEH2 (80% owned by TotalEnergies and 20% owned by the EREN Group) and their in-house ‘OneTech’ engineering unit
· Extended collaboration with Oort Energy and University Mohammed VI Polytechnic (“UM6P”) on green hydrogen proof of concept projects in Morocco
· Ongoing evaluation of further opportunities
Corporate and Financial
· Well capitalized business, with cash position as at 30 June 2023 – $2.7million, supplemented by a successful and oversubscribed fundraise completed in July 2023 raising circa US$19 million
· No debt with minimal licence commitments
Serica has today announces its financial results for the six months ended 30 June 2023.
Commenting on the results, Mitch Flegg, Serica’s CEO stated:
“The completion of the Tailwind acquisition in March represented a step change in the scale and diversity of Serica, achieving a longstanding strategic goal. We have stated consistently our intention to continue investing in the enlarged portfolio, to add to it in a disciplined fashion if the right opportunities arise and to make further cash returns to shareholders. Accordingly, we look forward to near continuous well and drilling activity across the Bruce and Triton hubs during the next eighteen months and are pleased to announce today an interim dividend of 9 pence per share. This is up from 8 pence per share for the interim dividend in 2022, following the full year dividend of 22 pence per share last year.
Serica’s current circumstances and optimism reflected in its investment plans should not mask the fact that we share the widespread concerns within the sector about the health of the UK’s offshore upstream industry given the current fiscal regime and future uncertainties. We welcome the UK government’s recent Call for Evidence regarding long term fiscal policy. However, the problems we see need to be addressed urgently in order to restore confidence in the sector.”
Serica is in blooming health and would have been much higher if it had not been for the hit taken by the EPL. The cash generation is very solid and enables the company to announce a 9p dividend which at current run rate will be higher going forward. Tailwind was a stroke of genius, the oil price looks set fair and so add another high yielder to the list.
First Half 2023 Highlights
· Completed acquisition of Tailwind Energy Investments Limited on 23 March 2023 increasing 2P reserves to 130 million boe (pro forma as at 31 December 2022).
· Combined portfolio produced 49,350 boe per day on a pro forma basis (1H 2022: 38,100 boe per day) balanced between gas (55%) and oil (45%).
· Carbon intensity (kg of CO2 per boe) of production from Bruce and Triton hubs lower in 1H 2023 than 1H 2022.
· Profitability maintained with higher sales volumes largely offsetting lower gas prices.
· Highly cash generative portfolio of assets. Cash flow from operations of £266 million (1H 2022: £267 million) contributing to gross cash of £444 million as at 30 June 2023 after tax payments of £141 million, net cash outflow of £44 million arising from the acquisition of Tailwind Energy and reduction of £48 million in debt acquired with Tailwind.
· Net cash of £234 million as at 30 June 2023.
· Average realised gas price of 96 pence per therm (1H 2022: 136 pence per therm) and realised average oil price of US$64 per barrel (1H 2022: US$108 per barrel).
· Average operating cost per boe of US$17.5 (1H 2022: US$16.1 per boe).
· Operating profit £159 million (1H 2022: £196 million).
· Interim dividend of 9 pence per share (2022: 8 pence per share) announced today following the full year dividend of 22 pence per share for 2022. The interim dividend is payable on 23 November to shareholders registered on 27 October 2023 with an ex-dividend date of 26 October 2023.
· Work on multiple Bruce and Keith wells being undertaken during remainder of 2023 and in 2024 to boost production performance.
· Four-well Triton hub drilling campaign sanctioned for execution in 2024. Rig option exercised for 5th well in 2025.
· Progress towards development of Belinda field with submission of draft FDP to NSTA. Decision not to undertake further drilling on North Eigg.
· Production guidance for 2023 amended to 40-45,000 boe per day due to slower than expected ramp up of production from Bruce and Triton hubs following planned summer shutdowns. Group operating costs expected to remain below US$20 per boe.
Jadestone has reported its unaudited condensed consolidated interim financial statements, as at and for the six-month period ended 30 June 2023.
l Akatara development project on track to be 65% complete by end-September and remains on budget and schedule for first gas in H1 2024.
l The first well in the four well East Belumut infill drilling programme offshore Malaysia has been drilled successfully and was brought onstream at 2,800 bbls/d gross, significantly ahead of expectations. The second well in the programme is now underway.
l Montara production has averaged 6,250 bbls/d since early September, benefitting from the return to service of the second production separator and additional wells on the Montara field.
l 2023 production guidance from April to December narrowed to 13,500 – 15,000 boe/d from (13,500 – 17,000 boe/d) reflecting year-to-date production trends and the recent one month shut in at Montara.
l 2023 underlying operating costs guidance expected to come in at lower end of US$180.0 – 210.0 million range, reflecting year-to-date trends and close monitoring of activity levels.
l 2023 capital expenditure guidance is narrowed to US$110.0 – 125.0 million, (from US$110.0 – 140.0 million), primarily reflecting the Akatara development project and East Belumut drilling being on budget.
l US$59.9 million loss after tax for the first half of 2023, consistent with earlier disclosures and reflective of Montara being shut in to late-March 2023 and the subsequent impact on first half liftings.
l Net cash of US$7.8 million at 30 June 2023 reflects c.US$118.8 million of consolidated Group cash balances and US$111.0 million of debt drawn at 30 June 2023 under the Group’s reserves-based lending (“RBL”) facility.
Paul Blakeley, President and CEO commented:
“The first half of 2023 was impacted by the ongoing shut-in of Montara until late March, with few liftings and softer Brent pricing, coincident with a period of heavy investment at Akatara and elsewhere. We therefore acted decisively to maintain a robust balance sheet by finalising the RBL in May and by raising an additional gross $53 million of new equity in June. As a result of these actions, we ended the first half in a strong liquidity position which will support the business through Akatara first gas, followed by a rapid return to net cash, likely within the following 12 months period. Notwithstanding the more recent shut in at Montara, we expect a significantly better financial performance in the second half of 2023, based on our planned lifting schedule, the benefit of recent acquisitions and improved prevailing oil prices.
It was disappointing to see Montara shut in again in July, although we quickly identified the source of the defect in one of the FPSO’s tanks and restarted production, having implemented a key change to our inspection processes. This was an important step forward, correcting a small gap in our procedures and giving far greater confidence in the work we are doing to restore the FPSO’s condition, resulting in higher uptime reliability at Montara. It is also important that we take no short cuts, thereby ensuring that safety and structural risks and any potential for a hydrocarbon leak to sea are absolutely minimised. The provision of a small storage tanker in the near-term enables us to safely continue steady production operations during a period of limited tank capacity on the Montara FPSO, thereby sustaining current production from Montara at around 6,250 bbls/d.
I am very proud of the way in which the teams offshore and onshore have worked so tirelessly to restore the condition of the Montara Venture. We have chosen to adopt inspection levels and processes that are far above industry standards and we will never take short cuts on maintaining asset integrity.
The Akatara project has maintained progress to plan, with an acceleration in recent months as most civil works are now completed, storage tanks are well advanced and many of the long-lead items now arriving at site. We are on track to be 65% complete by the end of September, for commissioning activities to begin in the first quarter next year, and first gas to be delivered in first half of 2024, as promised.
The East Belumut infill drilling campaign commenced in August with pre-drill expectations that the four wells combined will deliver 2 – 2,500 bbls/d of gross production and an IRR of c.90%. The results of the first well have significantly exceeded our expectations, coming on stream in recent days at c.2,800 bbls/day of dry oil. We do expect water cut to develop soon and for rates to stabilise nearer 1,000 bbls/d of oil, but the early results are very encouraging.
While it has been a difficult few months, we are working hard to restore confidence in our operating model at Montara as well as deliver the growth projects in our portfolio for 2024 and beyond. The addition of new assets such as CWLH and Sinphuhorm, and new production at Akatara, will increasingly insulate us from one-off events at Montara, but I do believe we have significantly advanced the case for greater reliability across the whole portfolio into the future. We continue to assess further acquisition opportunities that are consistent with our ambition of delivering growth, ensuring we live within our means of cash flow and debt, and believe we are at a turning point to restore reliability, growth and a strong balance sheet.”
There is much to like about Jadestone going forward a great deal of work all across the portfolio. Share price wise the Montara catastrophe will take a long time to heal but I am confident that they will do it and that this is no time to run.