WTI (Jan) $75.96 -$1.90, Brent (Feb)* $80.86 -$3.13, Diff -$4.90 -34c.

USNG (Jan) $2.80 u/c, UKNG (Jan) 107.8p +4.3p, TTF (Jan) €43.005 +€2.06.

*Brent January contract expiry.

Oil price

Oil fell after the Opec meeting at which as suggested here there and everywhere saw a fall in output of some 2.2m b/d and even announced that Brazil had been invited to join the cartel as from next year. But, and there is always a but, it was the old ‘better to travel than to arrive’ scenario as the market decided to sell the news. It wont last, the first signs of China or Germany picking up will see the shorts closing.

And actually the PMI data from China and the EU was better than expected although nothing to write home about. 

In other oily developments this week Equinor has withdrawn from Nigeria selling the business to Chappal Energies, not a surprise as it has been exiting some geographies but still investing in the UK, through its Suncor deal as well as in Libya and Angola. Elsewhere Occidental is buying Crownrock for some $10bn and Phillips 66 has noticed Elliott IM on the share register.

San Leon Energy

San Leon has noted the announcement made on 30 November 2023 by Decklar Resources Inc. in Canada.  San Leon has a 11% shareholding in Decklar Petroleum Limited, the local subsidiary of Decklar operating in Nigeria, and has also made a US$5.5 million loan to DPL, via 10% per annum unsecured subordinated loan notes.

As stated in its announcement on 1 March 2023, San Leon continues to explore a potential sale of its non-core investments in DPL, although any completion remains subject to the proposed purchaser finalising its own funding arrangements. A further announcement will be made in relation to this at the appropriate time.

Part of the text of Decklar’s announcement is set out below:

“• Decklar Resources Inc.  and its co-venturer Millenium Oil & Gas Company Limited announce that the final approval required to commence exports through the Trans Niger Pipeline (“TNP”) to the Bonny Export Terminal has been received. The granting of approval for the recertified fiscal metering unit allows access and injection of production from the Oza Oil Field into the TNP for transport to and export from the Bonny Export Terminal.

• Decklar and Millenium have commenced export of crude oil production from the Oza Oil Field through the TNP for transport to the Bonny Export Terminal and sale to Shell Western Supply and Trading Limited.

Calgary, Alberta — Decklar and its co-venturer Millenium are pleased to announce receipt of all necessary permits and approvals required to transport oil through the TNP to the Bonny Export Terminal and the commencement of crude oil production from the Oza Oil Field. The initial production rates have been averaging 750 barrels of oil per day.

Sale of Crude Oil from the Oza Oil Field

As previously announced, Decklar and Millenium obtained the necessary permits required to sell and export crude oil from the Oza Oil Field and have now received approval for the re-certification of fiscal metering equipment required from Nigerian government agencies to allow for access and production into the TNP.

Millenium, as operator of the Oza Oil Field, has signed a Crude Handling and Terminaling Agreement (“CHTA”) with the Shell Petroleum Development Company of Nigeria Limited (“SPDC”) whereby crude oil produced at the Oza Oil Field will be delivered through the TNP to the SPDC Bonny Export Terminal. The CHTA provides for initial available throughput capacity of 1,200 bopd. Oil currently held in storage tanks at the Oza Oil Field will also be injected into the TNP, and arrangements are being finalized to have the approximately 8,000 bbls previously delivered to Umugini Pipeline Infrastructure Limited (“UPIL”) and held in storage at the Forcados export terminal tank farm lifted and sold.

Re-Establishing Pipeline Access

The TNP flows into the SPDC-operated Bonny Export Terminal and had been shut down for over one year due to damage, vandalism and high line losses. The TNP was reopened in April 2023, with efforts and support from the Nigerian government credited to a great degree for the resumption of operations.”

This is very good news for San Leon as the Oza crude will now flow through the TNP to the SPDC Bonny Export terminal. This will lead to increased efficiencies and higher netbacks all down to the 11% holding in Decklar held by San Leon as well obviously of higher volumes.

Reabold Resources

Reabold has noted that the Italian Government has approved a decree to boost the country’s renewable energy production and energy security at the meeting of the Council of Ministers held on 27 November 2023.

The Decree provides incentives to build plants for energy production from renewable sources, such as the liquefaction of natural gas; the release of new licences for the exploitation of gas fields aimed at providing gas to industries with high gas consumption, at competitive prices; incentives for LNG terminals and incentives for carbon dioxide storage programmes. The Decree is already in force and Italy’s Parliament has 60 days to ratify it into a definitive law.

Reabold holds an 18.4% in interest in LNEnergy Limited, whose primary asset is an exclusive option over a 90% interest in the Colle Santo gas field. The Colle Santo gas field is a highly material gas resource with an estimated 65Bcf of 2P reserves[1], with two production wells already drilled and flow-tested, making the field development ready. LNEnergy believes that the field has the potential to generate an estimated €11-12m of gross post-tax free cash flow per annum.

The Company retains the right, at its sole discretion, to invest a further £1,650,000 in LNEnergy under the Second Option, as announced on 9 May 2023 and 12 September 2023, in share capital of LNEnergy which, if exercised, would result in the Company holding a 26.1% interest in the enlarged share capital of LNEnergy.

Reabold has published a competent person’s report in relation to Colle Santo, which can be found on its website at the following hyperlink: www.reabold.com/investors/reports-presentations.

Stephen Williams, Co-CEO of Reabold, commented:

“The regulatory environment in Italy is looking increasingly promising. With the Colle Santo gas field, we have an asset that can help Italy improve its energy security and provide a much needed domestic energy supply to the country. We look forward to updating shareholders with our progress.

The Italian Government is very much on the move with regard to domestic hydrocarbon production and no surprise given the hit that the country took post Ukraine. Accordingly the Italian authorities are really pushing to encourage domestic supply, much more so than even we see in the UK. 

When I met with Reabold Co-CEO’s a few months ago, and in the following Core TV interview, (link below) I was particularly keen to ask about the attitude of the Italian Government given that in the future they were not the fastest in terms of approving oil developments, this has clearly changed and Reabold along with other in-country operators are seeing a definite change in attitude. Accordingly Colle Santo looks like a very exciting prospect at the very least in terms of Italian domestic gas supply.

Sound Energy

Sound has advised that it has received conversion notices to issue 11,111,110 new Ordinary Shares at a conversion price of 2.25 pence per Share under an existing Convertible Loan Note Agreement, the terms of which were announced on 13 June 2023. The Partial Conversion reduces the amount owing on the Convertible Notes by £250,000, with £250,000 remaining.

An application has been made for the Shares to be admitted to trading on AIM. The Shares will rank pari passu with the existing ordinary shares in issue and it is expected that Admission will occur on or around 8.00 a.m. on 6 December 2023. 

Following Admission, the Company’s enlarged share capital will comprise 1,963,122,679 ordinary shares of 1p each, each with voting rights. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, securities of the Company under the Financial Conduct Authority’s Disclosure and Transparency Rules.

Nothing to add, this does what it says on the tin.

Ithaca Energy

Ithaca has announced the successful completion of its acquisition of the remaining 30% stake in Cambo from Shell U.K. Limited taking Ithaca Energy’s stake in Cambo to 100%, as announced on 12 September 2023. The acquisition will provide Ithaca Energy with control over the progression of the future development of Cambo.

The acquisition has minimal near-term cost exposure, with the consideration payable on the earlier of (i) first oil; and (ii) the receipt of proceeds of any subsequent sale of a working interest in Cambo by Ithaca Energy; and is subject to Ithaca Energy proceeding with FID and/or the NSTA providing development consent.

Alan Bruce, Chief Executive Officer, Ithaca Energy, commented:

“We are pleased to announce the completion of this acquisition, taking our ownership of Cambo to 100%. Following completion, we are now in a stronger position to engage with potential farm-in partners to enable the future progression of the project to Final Investment Decision. As the second largest undeveloped oil and gas discovery in the UK, we believe that Cambo has an important role to play in providing critical energy security to the UK, while reducing the UK’s overall emissions intensity.”

All systems go for Ithaca at Cambo now and it makes it possible for the company to control its own destiny. Ithaca has the critical mass to remain one of the leading players in the industry going forward and with its commitment to paying out a huge amount to shareholders it comes with a 20+ % yield, what’s not to like?

And finally…

Racing at Newbury this weekend actually starting as I write…

Footy this weekend starts tomorrow with the Gooners hosting Wolves, the Hatters go to the Bees, Burnley host the Blades, the Toffees go to Forest and the Bar Coders host the Red Devils.

On Sunday the Cherries host the Villa, Chelsea entertain the Seagulls, the Cottagers go to Anfield, the Hammers host the Eagles and the Noisy Neighbours entertain Spurs.