WTI (July) $77.57 -$1.69, Brent (July) $81.90 -98c, Diff -$4.33 +11c.

USNG (June) $2.84 +17c, UKNG (June) 82.55p +3.3p, TTF (June) €34.255 +€0.565.

Oil price

A bad day for crude, sundry Fed speakers have been kicking the rate cut further and further down the road, it will change on a dime but not yet. The inventory stats were disappointing, crude added 1.825m and while gasoline drew by 945/- it wasn’t enough to arrest the fall. 

Pharos Energy

Pharos Energy plc, an independent energy company, issues the following Trading and Operations update in advance of the Company’s annual general meeting (AGM) today at 14.00 BST. The information contained herein has not been audited and may be subject to further review and amendment.

Jann Brown, Chief Executive Officer, commented:

“The Company has entered 2024 in a strong operational and financial position. Production for the first four months of the year is in line with guidance, with both Vietnam and Egypt contributing as expected. A significant milestone for Pharos was the receipt of $13.8m from EGPC, over $10m of which was paid in USD, 37% of our year-end receivables balance. These payments are a testament to the strength of our relationships with key stakeholders and our persistence in lobbying. Together with the strong cash generation from operations, this has enabled us to pay down $21m of our outstanding debt, leaving our total Group debt as at 23 May at $13m and net cash position at $8.7m.

“We remain committed to the on-going share buyback programme and, subject to shareholder approval at today’s AGM, expect to pay the final dividend for 2023 of 0.77p per share on 19 July, having paid the interim dividend of 0.33p per share on 24 January.

“In Egypt, we are preparing to drill in both El Fayum and NBS later this year, while in Vietnam, preparations are well advanced for our 2H two-well drilling programme on TGT. I am pleased with the recent progress made on the licence extension discussions on both TGT and CNV, while in Egypt we are pursuing a consolidation of our two concessions into one to deliver a number of benefits. On Blocks 125 & 126 in Vietnam, we are progressing options to secure a drilling slot for Prospect A, the key catalyst for parties interested in farming in to these licences.

“Finally, I announced my intention to retire as CEO of Pharos at the Preliminary Results in March and will remain in the post until my successor has been appointed to ensure a smooth transition. The Company will inform the market once that appointment has been made.”  

All is going well at Pharos as production is in line with guidance and operationally all is well. As I wrote after the results presentation the receipt of $13.8m from EGPC, over $10m of which was paid in USD, 37% of the company’s  year-end receivables balance. As a result $21m was paid down leaving Group debt at $13m and net cash of $8.7m.

Pharos has rallied quite well since the cash injection in March but in my view deserves a higher ranking, the market are I suspect, waiting to find out the identity of the new CEO. 

 

Operational Highlights

·      Group working interest production for the four months to end of April 2024 was 5,755 boepd net. Group working interest 2024 production guidance of 5,200 – 6,500 boepd net remains unchanged from the Preliminary Results announcement on 27 March 2024:

 Vietnam production 4,347 boepd. Vietnam 2024 production guidance 3,900 – 5,000 boepd net

 Egypt production 1,408 bopd. Egypt 2024 production guidance 1,300 – 1,500 bopd net

·      In Vietnam:

 TGT RFDP approved by the Ministry of Industry and Trade (MOIT) on 9 January 2024. CNV RFDP submitted to partners for approval

 Significant progress on TGT and CNV licence extensions discussions with regulators

 Planning underway for a two-well TGT drilling programme, expected to commence 2H 2024

 On Blocks 125 & 126, several interested farm-in parties awaiting confirmation of timing of rig slot and clarity on well cost

·      In Egypt:

 On El Fayum, preparation underway to drill a further commitment exploration well in 2024 following success of the well in July 2023

 Processing and interpretation of c.130km2 of 3D seismic data on NBS underway and expected to be completed in 2H 2024

 Multi-well development drilling programme in the NBS SW field planned to commence in 2H 2024

 Evaluation of conventional deep exploration and unconventional AR-F potential

 Egypt consolidation project initiated and proposal sent to EGPC

Financial Highlights

·      Group revenue for January to April 2024 was c.$39m

·      Cash balances as at 30 April 2024 of c.$49m (Dec 2023: $32.6m)

·      Net cash as at 30 April 2024 of $15m (Dec 2023: net debt $6.6m)

·      Egypt balance sheet receivable position at $31.0m (Dec 2023: $37.4m), having received $12.4m in the four months to 30 April 2024

·      Forecast cash capex for the Group for full year of $32m ($27m after Egyptian carry by IPR), with costs in Egypt mainly settled in EGP

Corporate Highlights

·      Continuation of share buyback programme, with a further $3m committed in December 2023

·      Interim dividend in relation to the financial year ending 31 December 2023 of 0.33 pence per share, amounting to $1.7m, paid out on 24 January 2024. Final dividend of 0.77 pence per share for the year to be paid on 19 July 2024, subject to shareholder approval at the 2024 AGM today

·      Recent changes in Board composition and governance:

 Appointment of Dr Bill Higgs as a new independent Non-Executive Director in January 2024 and his appointment, effective today, as the initial Chair of a newly created Reserves Committee of the Board

 Retirement of Marianne Daryabegui as an independent Non-Executive Director at the conclusion of the 2024 AGM

 Retirement of Jann Brown as Director on 30 April 2024, following which she remained in office as full-time CEO and will continue to do so until a successor is in place; search process underway

·      Appointment of Ernst & Young to succeed Deloitte as external auditor, subject to shareholder approval at the 2024 AGM today

·      Publication of a Trading and Operations Update scheduled for 18 July 2024, ahead of the Company’s Interim Results announcement in September

San Leon Energy

San Leon, the independent oil and gas production, development and exploration company focused on Nigeria, is pleased to announce that further to the Company’s notification on 21 May 2024 the hearing of the petition by Ocean Pearl Maritime SA (“Ocean Pearl”) to wind up one of its subsidiaries, San Leon ELI Limited, has been adjourned by mutual agreement. The final hearing is now expected to take place in July 2024 or shortly thereafter.

As previously announced, San Leon will take all actions to defend the petition and prevail upon Ocean Pearl to work constructively with the Company towards an expedient completion of the acquisition of its 13.5 per cent interest in Energy Link Infrastructure (Malta) Limited.

Nothing to add here, the adjournment being the best way of sorting this one out. With a great deal at stake that can’t be worked through Ocean Pearl that seems to be the best route forward.

Afentra 

Afentra has announced the completion of the acquisition of a 12% non-operating interest in Block 3/05 and a 16% non-operating interest in Block 3/05A offshore Angola (the “Azule Acquisition”) . This is pursuant to the sale and purchase agreement between Azule Energy Angola Production B.V. (‘Azule’) and Afentra’s wholly-owned subsidiary, Afentra (Angola) Ltd, announced on the 19 July 2023.

·      The Azule acquisition increases Afentra’s interest in Block 3/05 to 30% and in Block 3/05A to 21.33%

·      Payable cash consideration at completion of $28.4million. Initial cash consideration of $48.5m reduced by impact of cash flow adjustments as of the transaction effective date of 1 October 2022

·      Company inherits crude oil stock ~480,000 bbls

·      Financial position at completion:

 Net Debt is expected to be $46.2m

 Crude oil stock of around 840,000 bbls

A short presentation has been uploaded to the Afentra website: https://afentraplc.com/investors/

Production Update

Combined gross production for the first four months of 2024 ending 30 April 2024 for Blocks 3/05 and 3/05A has averaged ~23,000bopd (Net: ~6,800, bopd). The Light Well Intervention programme, commenced by the joint venture during 2023, continues into 2024 with a further 45 interventions planned over two campaigns.

Lifting Update

The Company expects to sell its next cargo of crude oil (~450,000 bbls) in June 2024. 

Annual Results 2023

The Company and it’s auditor, BDO, continue to review and audit the appropriate accounting treatment relating to the INA and Sonangol acquisitions completed in 2023. The Company expects this work to be completed and the annual results issued in early June.

Investor Webinar Presentation

Afentra’s management team will host an investor presentation via the Investor Meet Company platform on Tuesday 11 June 2024 10:30 BST. During the presentation management will provide more details of the significant upside potential of Block 3/05 and 3/05A assets and the Company’s plans to realise that potential.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 10 Jun 2024, 09:00 BST, or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet AFENTRA PLC via:

https://www.investormeetcompany.com/afentra-plc/register-investor

The investor presentation and webinar playback will be made available on the company website on 11 June: https://afentraplc.com/investors/

Commenting on the update, CEO Paul McDade said:

“The completion of the Azule Acquisition is the final step in the complex process of acquiring a material equity position in both Block 3/05 (30%) and Block 3/05A (21.33%) through three separate transactions. We have now achieved our first goal of having significant exposure to these world-class production and near-term development assets. The next step, working closely with our Joint Venture partners, is to deliver the full potential of these assets for the benefit of all of our stakeholders while also reducing the carbon footprint of the assets.

As with the previous two transactions the acquisition structure ensures that Afentra benefits from the net cash flow from the assets while working through the completion process, significantly reducing the cash payment at completion. I would like to thank Azule, ANPG and all the other parties involved for their pragmatism and support through this complex process.

The Block 3/05 asset continues to perform strongly following the successful implementation of an ongoing work programme designed to optimise production from the existing wells. The completion of this transaction presents a strong growth platform for Afentra to capitalise on further compelling opportunities in Angola as well as in target markets in West Africa as we seek to build Afentra into a leading African focused independent.”

Although we already know the background to this deal it is still very good news for Afentra who have worked hard and long to identify this great opportunity and then go through the very long process to deliver it. I’m sure that they are not the only deals that Afentra will do as it has a highly respected management team that knows its way around the continent and has big ambitions. 

Afentra has been one of the strongest stocks in the Bucket List and has increased by around 135% year on year and I think that Paul and his very strong team would still maintain the shares are worth a great deal more, as I do. 

United Oil & Gas

United Oil & Gas has announced that it has agreed a settlement with its debt provider, for the final outstanding sum of $839,200. The detail terms of the settlement will remain confidential.

In addition, the Company can now complete the necessary paperwork to fully withdraw from Egypt and will update shareholders on this in due course.

This leaves the Company free to concentrate its efforts on advancing its other assets, particularly the Jamaican work program and farmout process.

United Chief Executive Officer, Brian Larkin commented:

“We’re delighted to have reached a settlement agreement with our debt provider and express our gratitude for their longstanding support, particularly during the recent challenging period in Egypt.

We look forward to collaborating with them again in the future.

In the meantime, we will focus on the momentum that we are gaining with the Jamaican farmout process. We look forward to updating the market on this in due course.”

Nothing to add to this, UOG can now concentrate on Jamaica and the farm-out process. But without another leg to the business it is somewhat high risk. 

And finally…

Last night’s T20 cricket at Headingly was washed out without a ball being bowled, the next match is Saturday afternoon at Edgbaston.