A flash blog this morning as I’m travelling in Colombia and off early to visit installations all day today. As always I will make a brief comment if I have anything to add and will hopefully add more tomorrow or when time permits.

Savannah Energy

Further to the Company’s announcement on 14 December 2023, the Company confirms that it remains suspended from trading on AIM, with a revised cancellation date of 2 April 2024, whilst it continues to advance the various workstreams, including receipt of in-country approvals, required to complete the acquisition of PETRONAS International Corporation Limited’s energy business in South Sudan. Further updates will be provided as and when appropriate.

Just an update here as the amount of work to complete this acquisition is clearly substantial and will require more time.

Serica Energy- Oh no, Mitch is going…..

Serica has announced a Chief Executive Officer change and Succession Plan. After some forty years in the industry, including six years as CEO of Serica, Mitch Flegg will step down from this role and as a director of the Company. This change is expected to take place after publication of the Company’s 2023 full year financial results. Mitch Flegg will remain as an adviser to Serica until after the Company’s 2024 AGM, expected to be held in June 2024. David Latin, the current Chairman of the Board, will take on the role of Interim CEO until a long-term successor is appointed.  

Mitch Flegg has been highly instrumental in growing the Company to be one of the UK’s leading independent oil and gas companies. Having successfully led Serica through the integration of the Bruce/Keith/Rhum  assets acquired in 2018, and the acquisition and integration of Tailwind Energy Limited in 2023, Mitch Flegg leaves the Company in its best ever health, very well positioned to deliver full value from its assets and exploit opportunities in the UK and beyond.

The Board has commenced the search for a successor with the appropriate skillset to lead the Company through the next phase of its development. The search for a new CEO will be led by Malcolm Webb, Chairman of the Nominations Committee and SID, supported by external advisers.  

Serica will release an operational trading update on 5th February and is hosting an event for sell-side analysts in Edinburgh on 7th and 8th February with David Latin and Mitch Flegg attending together with Martin Copeland, the incoming CFO, and members of the management team who will be providing greater detail on the Company’s operations and planned activity program.

Mitch Flegg, Chief Executive Officer, commented:

“It has been a great privilege to lead Serica since 2017 and to be part of building a strong platform with a great team. Serica is firmly established as a leading listed UK E&P Company and in a strong position following the Tailwind acquisition and planned changes to executive and Board positions. Now is the right time for me to help support the handover to a CEO to lead the next phase of Serica’s growth and development and I believe there is an exciting future ahead.”

David Latin, Chairman, said:

“Mitch Flegg will leave with the profound thanks of the Board and our employees for his outstanding services over two periods at the Company, firstly between 2006 and 2015, and latterly as CEO at Serica over the past six years. Mitch has helped build and lead the Company through its recent evolution and has created a very strong platform of significant scale with a solid balance sheet. Serica is now well placed for further growth in service of increased shareholder value, to which the Board is committed as its top priority. With the executive team strengthened by the appointment of Martin Copeland as CFO and a depth of talent both within the management team and on the Board, we have an enviable platform for growth and delivery of value to shareholders and all stakeholders.”

Malcolm Webb, SID and Chairman of the Nominations Committee, said:

“The Board is pleased that David Latin has agreed to lead the Company as an interim CEO after the annual results. He brings highly relevant experience, including having led the original formation of BKR and its safe and reliable operations for more than five years while at BP. While at OMV David led growth of an international portfolio through major capital projects and acquisitions in the UK, Norway and elsewhere, with more than 500 staff producing over 100 kboed.”

Mitch Flegg is one of the most experienced, high quality CEO’s in world energy not least in the UK and it is a serious blow to Serica that he has decided to move on after two spells at the company. This news is to me a shock but not a surprise as they say, in one sense with the deals he has done in recent years and the one he fought off he has a 100% track record and Serica rightly sits at the top of the new Bucket List.

Also, having met with him very recently, whilst he said nothing about this I get the impression that firstly SQZ is so well run that it runs itself very well, not a criticism but he has assembled a highly professional, experienced team that deliver time and again and secondly, frustration with the rating, something shared by other CEO’s may have contributed to his decision. 

Next week a group of Serica followers are gathering in Scotland for a Capital Markets event, it will be difficult for it not to become a Mitch tribute extravaganza. Nevertheless, it will not be easy for the nominations committee to step up and find a replacement, after all, how do you replace the best in the business….?

Deltic Energy

Deltic Energy Plc, the AIM quoted natural resources investing company with a high impact exploration and appraisal portfolio focused on the Southern and Central North Sea, is pleased to announce that it has been provisionally awarded two licences over three part blocks covering approximately 226 km2 by the North Sea Transition Authority in Tranche 2 of the UK’s 33rd Offshore Licensing Round. 

The blocks provisionally awarded to the Company in Tranche 2 are as follows:

REGION

SUB-AREA

BLOCKS

AREA

(km2)

Central North Sea

Dewar

22/24f (part) & 22/25e (part)

80

Central Graben

29/4b

146

All blocks are being provisionally awarded to the Company on a 100% equity position. 

Blocks 22/24f (part) & 22/25e (part) – Dewar

This provisional award contains the Dewar Prospect, which has previously been licensed and matured by Deltic. Dewar is seen as a low-risk prospect in the Forties Sandstone, located close to existing and proposed new infrastructure associated with the redevelopment of the Murlach Field (formerly known as Skua).

The work programme associated with the initial phase of the licence is restricted to upgrading the seismic data sets held by the Company at relatively low cost and is focussed on providing greater confidence around prospect volumetrics and risk. 

Block 29/4b – Central Graben

Block 29/4b represents the residual part of a larger application which included the contiguous Block 29/3b.  Block 29/3b, which was provisionally awarded to Shell U.K. Ltd in Tranche 1 of the 33rd Round, was considered the most prospective part of the application area and the Company will now consider if there is sufficient technical justification to accept Block 29/4b in isolation. 

33rd Licensing Round – Tranche 3

The NSTA has advised that there will be a further tranche of awards which will include licences in the Southern North Sea Gas Basin which was the focus of the Company’s licence application efforts in the 33rd Round. Firm guidance from the NSTA on the timing of Tranche 3 awards has not yet been communicated.

Graham Swindells, CEO of Deltic, commented:

“These provisional awards are a direct result of the hard work that our technical team put into the application process and we look forward to announcement of Southern North Sea Tranche 3 awards in due course. The blocks awarded to date have the potential to further diversify our asset base and provide optionality within our portfolio. Deltic is committed to exploration within the UK and a regular, predictable licensing process remains critical to maintaining domestic gas production, supporting jobs and delivering energy security.”

This one I will need to come back to after I’ve spoken to Graham, not difficult I know but the 29/4b bit in particular I need to get my head around…

Trinity Exploration & Production

Trinity has announced updated guidance for 2024 and provides an operational update.

2024 Guidance

Trinity provides the following update on guidance for 2024:

·    Sales guidance of between 2,600-2,700 bopd (Q4 2023: 2,736 bopd, FY 2023:  2,790 bopd)

 Supported by workovers, recompletions and extensive swabbing operations

 Reflects low field declines resulting from a strong operational focus on maximising production uptime

·    Capex expected to be US$7-8m to fund a programme of recompletions and production-related expenditure, minor sustaining capex, and growth projects such as Buenos Ayres environmental clearance and maturing Trintes 2P reserves

Operational Update

Buenos Ayres Block

As announced on 13 June 2023, Trinity was successful in its bid for the Buenos Ayres block, offered in the 2022 Onshore and Nearshore Competitive Bid Round. We expect an official award of this licence to occur in Q1 2024 and anticipate being awarded Operatorship of the block with an 85% interest, as previously announced. In the meantime, the Company continues to progress the Environmental Impact Assessment and is on track to complete this in H1 2024. The data acquired from the Jacobin-1 well has provided significant insight into the geology of the Buenos Ayres block and technical work is underway to identify a prospect to be drilled in H1 2025.

Galeota Development

As announced on 27 June 2023, Trinity appointed Petrofac to undertake a Concept-Screening study for the development of further reserves in its Galeota Block offshore the East Coast. The Galeota Block contains estimated 2P+2C reserves and resources of 46.1 million barrels of oil equivalent and is the Company’s largest asset. The initial results of this study are encouraging, and a third-party technical review of Trintes infill wells is now in progress, alongside facilities assurance planning.

Capital allocation policy

Trinity is committed to pay a dividend of GB £0.01 once the Company’s 2023 results are finalised in Q2 2024. An interim dividend can be expected in Q4 of this year.

Jeremy Bridglalsingh, Chief Executive Officer of Trinity, commented:

“2024 is an important year for Trinity as we look to build on our opportunities in the Buenos Ayres block and wider Miocene play using data gained from Jacobin, and also progress our planning for Galeota. Operationally we will be highly focused on offsetting natural production decline through a very active programme of workovers, recompletions and swabbing operations. With the benefit of recently enacted SPT reforms, we anticipate strong cashflow from our production base which will help support our future drilling plans. Operations continue across our portfolio, including at the Jacobin well and we will update the market in further detail in our next quarterly update.”

With guidance for this year below the 2023 outcome, which itself was disappointing due to Jacobin in particular, the natural decline wins the race and growth at Trinity is difficult to find. 2024 will be tough going and the company is still paying a dividend which I still don’t understand given the circumstances.

Longboat Energy

Longboat has announced the completion of the acquisition of a 4.80% unitised interest in the Statfjord Øst Unit and a 4.32% unitised interest in the Sygna Unit by its Norwegian joint venture Longboat JAPEX Norge AS.

Production from the Statfjord Satellites averaged net 254 boepd in 2023 and is currently at net 370 boepd from Statfjord Øst and Sygna. Drilling operations have been completed and the operator, Equinor, is currently in the process of commissioning the remaining new wells in Statfjord Øst which are expected to be brought on stream during the coming months. 

Longboat anticipates a significant increase in production during the first quarter of 2024 and production guidance will be provided following the ramp-up of the new production wells.

The acquisition of the Statfjord Satellites has been funded by a combination of the investment by JAPEX into Longboat JAPEX announced last year and a drawing of approximately US$15 million on the Acquisition Bridge Facility provided by JAPEX to the Joint Venture. The drawing is greater than originally forecast due to negative working capital movements related to delays in bringing new wells on-stream during 2023.

Helge Hammer, Chief Executive of Longboat, commented:

“We are pleased to have reached completion of our first production acquisition in Norway. Albeit a relatively small acquisition, it is an important step and the Statfjord Satellites are long-life assets and have just undergone a significant infill drilling and redevelopment project.. 

“We are now focused on adding further assets to our portfolio to build a full cycle E&P company with material production interests. We would like to thank our new joint venture partner, JAPEX, with whom we have worked in close cooperation to execute this transaction.”

Just a completion of previously announced deal. 

Longboat Energy has announced the completion of the farm-down of two exploration licenses on the Norwegian Continental Shelf by Longboat JAPEX Norge AS as announced on 8 December 2023.

Longboat JAPEX has completed the farm-down transactions of the following interests to Concedo AS:

·    The Company has farmed down its interest in PL1182S from 30% to 15% in return for a full carry of the Kjøttkake/Lotus exploration well, up to an agreed cap above the dry well budget. The well is expected to spud in Q3 2024

·    In PL1049 which contains the Jasmine and Sjøkreps prospects, Longboat JAPEX has farmed down its interest from 40% to 25% in return for Concedo carrying an element of the Company’s 2024 exploration expenditure, which mainly consists of seismic costs and studies.

For further information about these transactions and the exploration licenses, see press announcement on 8th December 2023.

Helge Hammer, Chief Executive of Longboat, commented:

We are pleased to have completed the farm down of two Norwegian exploration licences and look forward to the drilling of the Lotus exploration well later this year, the cost of which will be fully carried. 

This farm down is in line with our strategy to retain exposure to high quality exploration wells but at minimum use of the Company’s equity capital.

We are also pleased to have reached completion of our first production acquisition in Norway, which we also announced today and which is an important first step in building a full cycle E&P company with material production.”

Again a completion of a previously announced deal.