On the road still, indeed today I’m in the classroom for day 2 of the Serica Capital Markets event, details below. Yesterday we were at the Grangemouth refinery courtesy of Ineos which was incredible for the scale of it and the quality of the Ineos and Serica teams was amazing.

It is also worth noting the significant purchase of shares by CEO Mitch Flegg yesterday.

Serica Energy

Serica has announced that a presentation to be given at an event for sell-side analysts on 8 February 2024 is now available on the Company’s website.

Just a courtesy, all the stuff we are going to hear today…

Touchstone Exploration

Touchstone has announced an operational update, highlighted by the drilling results of the Cascadura-2 delineation well.

Highlights

·     The Cascadura-2 delineation well was drilled to a total depth of 7,132 feet.

·     Drilling of the well was suspended prior to the planned total depth of 8,300 feet to preserve the substantial pay section observed in the well after high pressure gas zones were encountered.

·     Cascadura-2 openhole logs and drilling data indicated a total sand thickness of approximately 525 feet in the targeted Herrera formation.

·     The Cascadura-2 well is currently being cased and production testing is scheduled to commence in the third quarter of 2024 directly into the Cascadura natural gas facility.

·     Spudding of the Cascadura-3 development well is scheduled to commence within the next two weeks.

·     Flow line procurement has commenced to tie-in future production from the Cascadura C surface location to the Cascadura natural gas processing facility.

·     Completed the first stage of additional perforations at Cascadura Deep-1 where we are currently monitoring initial increased pressure and production rates.

·     Drilling at our CO-1 block is scheduled to commence prior to the end of February, with two wells to be drilled from a single surface location.

·     Achieved average net sales volumes of 8,504 barrels of oil equivalent per day (“boe/d”) in the fourth quarter of 2023 and annual 2023 net sales volumes of 3,981 boe/d.

Paul Baay, President and Chief Executive Officer, commented:

“The encouraging Cascadura-2 delineation well drilling results represent a great start to 2024. Cascadura-2 has proved up the concept of highly productive sands extending significantly to the east of our initial Cascadura discovery. We estimate that the well was drilled for under $6 million on a gross basis, which further enhances the economics of this prolific hydrocarbon fairway. With this new data point we can design a multi year drilling program to fully develop the structure. This well has not defined the eastern most edge of the structure, which warrants further delineation through future drilling.”

Obviously I will be catching up will Paul Baay over the next day or two to try and get some more detail on the well but to be fair, for a well result this is a very detailed release. The well has produced a highly successful result and bodes very well for the future at Cascadura particularly as the eastern edge of the structure, more later.

Cascadura-2 Drilling Results

The Cascadura-2 delineation well was spud on January 6, 2024 from our Cascadura C surface location and reached a total depth of 7,132 feet on February 4, 2024. While we planned to drill the well to a total depth of 8,300 feet, the gas sands encountered proved difficult to manage, and we ceased drilling to preserve the substantial pay section observed in the well.

Drilling samples and openhole wiring logs indicated over 525 feet of sands in the targeted Herrera formation with hydrocarbon shows observed in samples and at surface throughout the primary intervals. The top of the key Herrera formation was detected at a measured depth of 6,186 feet, with sand and shows observed throughout the section to the total depth of the well. Based on these encouraging results, we are currently installing casing for future production.

We expect to test the well directly into the Cascadura natural gas facility in the third quarter of 2024.

Cascadura-3 Development Well

The Star Valley #205 drilling rig will be walked to the Cascadura-3 development well location on our Cascadura C site when casing installation at Cascadura-2 is complete. We expect to spud the well within the next two weeks, which will target the same Herrera formation as the existing Cascadura producing wells.

Cascadura Infrastructure

The Company has commenced clearing the road from the Cascadura C surface location to the Cascadura natural gas facility. A flowline network will be installed to tie-in development wells drilled at the Cascadura C surface location, which is located approximately 1.6 kilometres northeast of the Cascadura facility. We are also planning to install an additional gas separator at the Cascadura facility to increase gross natural gas production capacity from approximately 90 million cubic feet per day (“MMcf/d”) to 140 MMcf/d. The flowline and infrastructure upgrades are anticipated to be completed in the third quarter of 2024.

Cascadura Optimization

Touchstone continues to optimize Cascadura Deep-1 and Cascadura-1ST1 well production. The first stage of additional perforations was completed in the Cascadura Deep-1 well on January 27, 2024. We continue to monitor production as the well stabilizes, and we are currently evaluating deeper sands for additional perforations to further optimize production from the well throughout 2024. Currently, Cascadura-1ST1 production is restricted based on surface choke size. Prior to the end of the month, we intend to replace the current surface choke with a larger unit, which will enable increased natural gas production.

CO-1

As previously announced, Touchstone intends to drill two wells from one surface location on the CO-1 block. Drilling operations remain on schedule, with the spudding of the first well expected before the end of February 2024.

2023 Sales Volumes

In the fourth quarter of 2023, we achieved average net sales volumes of 8,504 boe/d as follows:

· Cascadura field contributed average net sales volumes of 6,854 boe/d (8,566 boe/d gross) consisting of:

– net natural gas sales volumes of 37.4 MMcf/d or 6,232 boe/d (46.7 MMcf/d or 7,789 boe/d gross); and

– net natural gas liquids volumes of 622 barrels per day (777 barrels per day gross);

· net average natural gas sales volumes from Coho were 3.1 MMcf/d or 517 boe/d (3.9 MMcf/d or 646 boe/d gross); and

· average net and gross daily crude oil sales volumes were 1,133 barrels per day.

On a 2023 annual basis, Touchstone averaged net sales volumes of 3,981 boe/d, consisting of 35 percent crude oil and liquids and 65 percent natural gas volumes.

Cascadura-2 Drilling Results

The Cascadura-2 delineation well was spud on January 6, 2024 from our Cascadura C surface location and reached a total depth of 7,132 feet on February 4, 2024. While we planned to drill the well to a total depth of 8,300 feet, the gas sands encountered proved difficult to manage, and we ceased drilling to preserve the substantial pay section observed in the well.

Drilling samples and openhole wiring logs indicated over 525 feet of sands in the targeted Herrera formation with hydrocarbon shows observed in samples and at surface throughout the primary intervals. The top of the key Herrera formation was detected at a measured depth of 6,186 feet, with sand and shows observed throughout the section to the total depth of the well. Based on these encouraging results, we are currently installing casing for future production.

We expect to test the well directly into the Cascadura natural gas facility in the third quarter of 2024.

Cascadura-3 Development Well

The Star Valley #205 drilling rig will be walked to the Cascadura-3 development well location on our Cascadura C site when casing installation at Cascadura-2 is complete. We expect to spud the well within the next two weeks, which will target the same Herrera formation as the existing Cascadura producing wells.

Cascadura Infrastructure

The Company has commenced clearing the road from the Cascadura C surface location to the Cascadura natural gas facility. A flowline network will be installed to tie-in development wells drilled at the Cascadura C surface location, which is located approximately 1.6 kilometres northeast of the Cascadura facility. We are also planning to install an additional gas separator at the Cascadura facility to increase gross natural gas production capacity from approximately 90 million cubic feet per day (“MMcf/d”) to 140 MMcf/d. The flowline and infrastructure upgrades are anticipated to be completed in the third quarter of 2024.

Cascadura Optimization

Touchstone continues to optimize Cascadura Deep-1 and Cascadura-1ST1 well production. The first stage of additional perforations was completed in the Cascadura Deep-1 well on January 27, 2024. We continue to monitor production as the well stabilizes, and we are currently evaluating deeper sands for additional perforations to further optimize production from the well throughout 2024. Currently, Cascadura-1ST1 production is restricted based on surface choke size. Prior to the end of the month, we intend to replace the current surface choke with a larger unit, which will enable increased natural gas production.

CO-1

As previously announced, Touchstone intends to drill two wells from one surface location on the CO-1 block. Drilling operations remain on schedule, with the spudding of the first well expected before the end of February 2024.

2023 Sales Volumes

In the fourth quarter of 2023, we achieved average net sales volumes of 8,504 boe/d as follows:

·     Cascadura field contributed average net sales volumes of 6,854 boe/d (8,566 boe/d gross) consisting of:

–     net natural gas sales volumes of 37.4 MMcf/d or 6,232 boe/d (46.7 MMcf/d or 7,789 boe/d gross); and

–     net natural gas liquids volumes of 622 barrels per day (777 barrels per day gross);

·     net average natural gas sales volumes from Coho were 3.1 MMcf/d or 517 boe/d (3.9 MMcf/d or 646 boe/d gross); and

·     average net and gross daily crude oil sales volumes were 1,133 barrels per day.

On a 2023 annual basis, Touchstone averaged net sales volumes of 3,981 boe/d, consisting of 35 percent crude oil and liquids and 65 percent natural gas volumes.

Zephyr Energy

Zephyr has updated on its operated project in the Paradox Basin, Utah and on its non-operated project in the Williston Basin, North Dakota.

Paradox Project

Zephyr’s operations team continues to progress planning for the forthcoming “twinned” and fully-funded redrill of the State 36-2 well (the “State 36-2R well”). The Company retains full well control insurance and expects to recover substantially all costs associated with the redrill.

In late 2023, to ensure an optimal drilling outcome for the State 36-2R well, Zephyr’s team commenced detailed internal well-planning processes (supplemented by multiple high-pressure/high temperature specialist service providers) and continued its extensive interaction with the Company’s well control insurance providers. This process has now concluded and resulted in an updated drilling plan which has been submitted to state and federal regulators for approval.

Recently competed operational work has included:

•     Completion of the State 36-2R well geologic programme;

•     Completion of the well basis of design, and completion of all third-party reviews thereon;

•     Completion of the site water plan;

•   Bid processes for major services, including the rig contract, which are ongoing with bids in hand and selection underway;

•    A sundry notice has been submitted to the State of Utah and the U.S. Bureau of Land Management (the “BLM”) to amend the existing drilling permit at the well site; and

•    Gas and Natural Gas Liquids (“NGL”) processing and sales and marketing contracts (including gas transportation) are at an advanced state.

The sundry notice to the existing permit is expected to result in an expedited approval process from the State of Utah and the BLM and once approved, the Company plans to move rapidly to execute a rig contract and finalise timing of the drilling.

Although dependent on weather conditions and rig availability, it is management’s intention to commence drilling as soon as possible once permits are received.

Williston Project

As widely reported in the media, the Company notes this winter’s historically cold conditions in the Williston Basin which, combined with certain gas processing constraints, resulted in temporary shut-ins to various portions of the basin’s overall oil production primarily during the month of January.

Zephyr is in contact with its operating partners to assess the impact of any temporary disruptions as related to its own working interests, and expects to provide further updates as part of its fourth quarter 2023 trading update on the Williston project which will be released by the end of February 2024.

Colin Harrington, Zephyr’s CEO, commented: 

“Our team continues its intensive and robust planning process for the State 36-2R well and once the sundry amendment to the drilling programme is approved, we will seek to expedite operations at site to commence drilling operations as soon as possible.

“The team has done excellent work in progressing major contracts and infrastructure solutions, and we look forward to providing continued news flow over the coming weeks and months.”

Zephyr is moving swiftly to the redrill of the State 36-2 well and is fully funded for it and has been refunded by the insurance company. Despite some weather delays at both the Paradox and the Williston which has temporarily shut-in production during January. More later…