WTI (July) $77.74 +$2.21, Brent (Aug) $81.63 +$2.01, Diff -$3.89 -20c.

USNG (July) $2.91 -1c, UKNG (July) 80.0p +1.75p, TTF (July) €34.85 +€2.325.

Oil price

The market was spooked a bit by its own stupidity, I mentioned yesterday that there would be a shortfall if the Opec+ quotas remained but until it dawned that they were not necessarily going to up production. There is also quite a mix between views on products, I think that the refineries are on full blast (95.4%) and with a modest only driving weekend that means a bit of stock around but retail prices are drifting.

Deltic Energy

Deltic Energy Plc, the AIM-quoted natural resources investing company with a portfolio of operated and non-operated exploration assets in the UK North Sea, provides the following update in relation to Pensacola and the wider portfolio. 

Licence P2252 – Withdrawal from the Pensacola Discovery

Further to the Company’s announcement of 3 June 2024, and despite an exhaustive process, deteriorating sentiment towards the oil and gas industry as a result of ongoing fiscal volatility and negative political rhetoric in the run-up to the July election have resulted in Deltic being unable to secure a farm-out or an alternative funding solution which would allow the Company to commit to its future commitments with respect to the Pensacola appraisal well. Therefore, the only appropriate course of action available to Deltic is to withdraw from the licence prior to further liabilities being crystallised following the Operator’s issuance of the Authorisation for Expenditure (‘AFE’) for the well cost, expected tomorrow.

In the course of this process, Deltic rigorously examined a wide variety of funding solutions which included potential industry partners, including our existing Joint Venture (‘JV’) partners, via traditional farm-out or asset sale, the equity capital markets (both traditional and non-traditional sources of capital), strategic investors, debt providers and commodity trading houses which can pre-pay for future gas deliveries.

Accordingly, Deltic has formally notified the JV partners of Licence P2252 of the Company’s intention to withdraw from the licence and begin the process of transferring its equity in the licence to the remaining partners in line with the Joint Operating Agreement.

Regardless of Deltic’s intention to withdraw from the licence, it is expected that Deltic may be required to honour certain expenditure in relation to the appraisal well which was approved by the JV prior to the withdrawal notice being issued. The value of the committed expenditure, which may potentially be material to the Company, will be established with the Operator following the formal withdrawal process, and it is expected that these costs may not become fully payable until H1 2025.

Licence P2437 – Selene Drilling Update

Very good progress continues to be made on the Selene exploration well which remains on track to commence drilling operations in the first half of July 2024, with operations expected to last approximately 90 days. Following a farm-out to Dana Petroleum earlier this year, Deltic retains a 25% working interest in the licence and has no cost exposure to the imminent well up to a gross success case well cost of USD$49M.  The successful farm-out of the Selene project demonstrates that significant appetite remains for certain types of exploration assets within the SNS.

In contrast to Pensacola, the 318 BCF (Gross P50 Prospective Resources) Selene prospect is a simple Leman Sandstone structure in an established, well understood play and located close to existing production infrastructure.  In a successful outcome, it is considered unlikely that Selene will require further appraisal prior to field development planning commencing and could therefore be brought into production relatively quickly following discovery given the proximity of existing infrastructure.

Licence P2542 – Syros Update

Deltic is in the process of bringing the farm-out in relation to its 100% working interest in the Syros prospect to a close. While discussions are ongoing, there is no guarantee that these will be concluded successfully or result in a transaction. The Company will provide a further update once these discussions have been concluded.

The Syros prospect is a modestly sized, low risk exploration target located in the Central North Sea which is in close proximity to established production infrastructure on the Montrose-Arbroath high.

33rd Licensing Round Update

As previously announced, Deltic was provisionally offered two licences in Tranche 3 of the 33rd Licensing Round. In light of interest in and success of the Selene farm-out process, the Company has decided to focus its efforts on the licence award which contains the Pharos-Blackadder discovery. The Pharos-Blackadder discovery, located adjacent to production infrastructure associated with the West Sole field, is highly analogous to Selene and is considered by Deltic to be a better option with respect to attracting a partner and supporting future drilling activity in the current fiscal and political environment.

Our approach to acceptance of 33rd Licensing Round awards is part of a conscious transition by the Company away from large scale, greenfield exploration projects like Pensacola and towards those infrastructure-led opportunities which are lower risk and have an accelerated cycle time from identification to first gas.

Further information with respect to the Pharos-Blackadder opportunity will be provided once the formal award of the licence is made.

Graham Swindells, Chief Executive of Deltic Energy, commented:    

“Recent history in relation to large scale discoveries such as Cambo and Rosebank has demonstrated the difficulties associated with progressing major offshore developments on the UKCS as damaging political rhetoric and fiscal instability continue to undermine the sector. Although we have been unable to secure Deltic’s future involvement in the Pensacola project, it does not detract from the achievements of the team in identifying the opportunity, attracting a partner like Shell and raising the necessary capital to drill the initial discovery well.

Despite our disappointment at not remaining involved in Pensacola, the technical and  commercial skills and experience demonstrated on the asset will be critical as we now focus on the Selene opportunity and similar infrastructure-led projects such as Syros and Blackadder.  We believe these can be brought onstream more quickly, help maintain the viability of existing infrastructure and defer decommissioning of key production hubs which continue to generate interest despite the general malaise affecting the UK E&P industry.

While the current situation is clearly disappointing, this is where the diversity and quality of the Deltic asset base demonstrates its value and we will be working tirelessly on behalf of our shareholders to ensure that we capitalise on those foundations starting with the imminent drilling operations on the Selene gas prospect. This, on its own, we estimate to be worth multiples of the Company’s current market value and can play an important role in the maintenance of the UK’s security of domestic energy supply when it has never been more important.”   

So Deltic has announced that it has had to finally quit the Pensacola process, this has been an increasingly likely prospect as the existing tax burden, added to by the uncertainty of the future offered by the Labour party in the current election has made everything unclear at best. 

As the company say, fiscal volatility, negative political rhetoric and such has meant that any of the multiple solutions to the problem have been taken off the desk and left Deltic with no place to go. Uncertainty is the biggest enemy of investment and whilst we can understand that Deltic has tried every possible route we know that recent stoppages in developments, temporary of permanent have led to this. 

Of course, with the clock ticking and the imminent arrival of the AFE from Shell ahead of the Pensacola well, Deltic are in a corner not of their own making and again as they say, have to take the only action left available to them and withdrawn from the process. Having spoken to Graham Swindells, every possible financing known to man, and a few not, have been tried recently to avoid this. 

It is worth noting that Deltic has made a point of building a portfolio of opportunities to provide diversification and ensure their eggs are not all in one basket, indeed, unlike Pensacola which was a new play, Selene is a simple structure in an established well understood play fairway (Leman Sandstone) and the proximity to existing infrastructure means lower risk and accelerated timeline to first gas.

So investors should remember that Deltic is not just about Pensacola, notwithstanding the loss of the licence, Pensacola was nonetheless a significant discovery which exceeded expectations and the company is going into Selene with a 100% success rate.

Whilst the shares have taken a big hit since this was first announced, the company has other, significant assets in the portfolio to consider. With drilling on Selene imminent, understood to be next month for what might be described as an appraisal well, the future, despite what has happened today has significant upside. 

The shares have clearly lost some of the unrisked upside from the price but with a portfolio that now includes Selene, with drilling on the way and already farmed-out to Dana Petroleum to the tune of $49m for an asset with substantial potential as it could possibly be brought onstream quite swiftly as it is close to infrastructure.

With Syros and a portfolio of 33rd Round acreage looking quite prospective there is still plenty to get excited about in Deltic and I feel that a Target Price of around 100p is not unrealistic, in which case the future does actually look very promising after the harsh fall in the share price this morning. 


Chariot has announced its audited final results for the year ended 31 December 2023.

Adonis Pouroulis, CEO commented:

“Since our last set of results we have progressed all of the assets that sit within our natural gas, renewables and green hydrogen pillars and, importantly, we have further de-risked each division of the business.  In Morocco, we secured a highly experienced partner for our offshore Anchois gas project, secured new acreage and successfully drilled in the contiguous Loukos Onshore licence. We have materially increased our exposure to renewable energy generation and electricity trading in South Africa, furthered our financing and development plans for our power business and advanced our green hydrogen projects in both Mauritania and Morocco.

We are excited about the ongoing activities and catalysts ahead of us with our forward plans for Loukos, drilling at Anchois in August and moving into the next phases of evolution for Power and Hydrogen. Going forward, we are focused on generating near-term cashflows from our gas business with our overriding ambition to return capital to shareholders from these revenues. While we will continue to pursue new opportunities, we see great scale and value across our current asset base and are fully focused on delivery throughout 2024 and beyond.”

Clearly nothing new in the figures but it has been busy post the period end in what is a great and balanced portfolio. At Anchois the excellent farm-out to Energean will mean, apart from the $10 up front fee, a great deal of activity and Chariot is well placed to take advantage of the race for gas and as we know in Morocco prices are high and fiscal policy welcoming. This is equally good for the Loukos onshore assets where the company drilled two wells one of which will be testing later in the year.

The huge renewables business is under strategic review but that doesn’t mean that activity is not ongoing in a number of key areas and as such I would expect to see more action in South Africa and Mauritania. The overall positive nature of the Chariot business means that there appears to be a huge ‘backlog of good news’ building in what has been a disappointing share price. With so much of that news about to be seen in the market one way or another I believe that Chariot is poised to deliver for shareholders.

Key Highlights throughout 2023 and post period:

Transitional Gas

Offshore Morocco:

·      Completion of Front End Engineering and Design (“FEED”) for the Anchois gas development project (“Anchois”) in the Lixus licence offshore Morocco

·      Partnership agreed with Vivo Energy to develop a gas to industry market in Morocco

·      Environmental Impact Assessment approval received for Anchois development

·      Partnership agreements signed and completed with Energean plc (“Energean”) on the Lixus and Rissana licences offshore Morocco

 Focused on expansion and delivery of Anchois

 Formal approvals duly received from the Moroccan authorities

 Rig contract signed with Stena Drilling for Stena Forth drill ship

 Appraisal and development well to be drilled in Q3 2024 with option for an additional well

Onshore Morocco:

·      Award of new licence Loukos Onshore (“Loukos”) in July 2023

·      Environmental Impact Assessment approval received for drilling on Loukos and construction activities and permitting conducted within 10 months of licence award

·      Initial drilling campaign commenced and successfully completed in May 2024 safely, efficiently, on time and on budget

 The RZK-1 well drilled on the Gaufrette prospect confirmed good quality reservoir and multiple gas shows, though was sub economic

 Gas discovery confirmed from drilling the OBA-1 well at the Dartois prospect – gross interval approximately 70m of primary interest identified

 OBA-1 well has been cased and cemented with a Christmas tree installed for rigless flow testing and potential use as a future producer

Transitional Power

·      Strategic Review underway to secure financing and enable ongoing growth and development of the portfolio

Power to Mining projects:

·      Operational Essakane 15MW solar project at IAMGOLD’s gold mine in which Chariot has a 10% share in Burkina Faso, continues to perform well

·      Progressing development of three key renewable projects in Africa:

 Tharisa – 40MW solar project in South Africa

 Karo – 30MW solar project in Zimbabwe

 First Quantum Minerals – 430MW solar and wind projects in Zambia

Electricity Trading:

·      Increased stake in South African Electricity Trading joint venture Etana Energy (Pty) Limited to 49%

 Enables Chariot’s participation in large renewable generation projects – 400MW of gross wind generation capacity identified

 Focused on securing multiple electricity offtake agreements with a range of consumers – supply deals signed up with Growthpoint Properties and Autocast with others under negotiation

 Renewable energy wheeled for the first time through Cape Town’s grid


·      Successfully commissioned the proof of concept water project in Djibouti in June 2023

·      Evaluating other opportunities within Africa

Green Hydrogen

·      Feasibility study completed on Project Nour in Mauritania alongside partner TEH2 (80% owned by TotalEnergies and 20% owned by the EREN Group)

 Confirms world class scale, outlines first phase pathway for domestic and export development

·      Partnership agreements extended with UM6P and Oort Energy on proof of concept projects in Morocco

·      Other green hydrogen projects under evaluation and development


·      Placing and oversubscribed open offer successfully raised US$19.1 million in June 2023

·      Cash position as at 31 December 2023 $6.0 million

·      US$10 million received on completion of Energean deal in April 2024

·      No debt and minimal work commitments

Union Jack Oil

Union Jack has announced the acquisition of a 45% working interest in the Rogers Enhanced Oil Recovery Project and associated leases located in Seminole County, Oklahoma, USA  from Reach Oil & Gas Company Inc.

  • Acquisition of a 45% WI in the Rogers Project containing two production wells (Rogers and S&M) and one injector well (Coker)
  • Transaction structured to provide Union Jack with a comparable WI to neighbouring West Bowlegs area of interest, including the producing Andrews 1-17 well
  • Union Jack to pay US$105,000 cash consideration for its 45% WI, with no promote or back-costs payable
  • Rogers Project activity scheduled to commence July 2024
  • Budgeted Rogers Project capital expenditure (“CAPEX”) of c.US$133,000 (net to Union Jack) to occur through the remainder of the current financial year
  • The acquisition and all CAPEX will be paid from Union Jack’s existing cash resources
  • The Operator’s base case scenario indicates that up to a further 124,000 barrels of oil (gross) can be recovered from the Rogers and S&M wells in aggregate

The Rogers Project is located approximately two kilometres from the Andrews 1-17 discovery well and includes plans to significantly enhance deliverability from Rogers and S&M, two legacy production wells.

Base case secondary recovery volumes calculated by the Operator suggest that up to a further 124,000 barrels of oil (gross) can be recovered. Project economics are highly attractive and indicate future gross revenues at prevailing oil prices of c.US$7.5 million (gross), an IRR approaching 80% and a c.18 month payback period post-CAPEX.

Water production sourced from nearby wells will be injected using a third well (Coker) to rebuild reservoir pressure and increase oil and gas production.

David Bramhill, Executive Chairman, commented: 

“I am delighted to announce Union Jack’s further expansion in Oklahoma, alongside our partner Reach, with our acquisition of a 45% WI in the Rogers Project.

“Noting the low capital cost associated with this new venture, we see strong potential for incremental production gains and timely payback on our investment.

“The Rogers Project offers an excellent strategic and locational fit with Union Jack’s existing participation at the Andrews 1-17 well, helping to provide operational synergies and increase production and revenue by building critical mass in the vicinity of this existing commercial producer.

“I look forward to updating the market on stabilised production rates from Andrews 1-17 in due course, once a permanent electricity supply and upgraded pump jack have been installed. These site upgrades are expected to materially enhance current flow rates, with up to 100 barrels per day of high quality (46 º API gravity) oil having already been recorded at Andrews 1-17 during May 2024.

“Planning for the follow-on Andrews 2-17 well, also targeting Oklahoma’s prolific Hunton limestone, continues prior to anticipated spudding over the coming weeks.”

Call me old fashioned but I like what I see here, ie buying into a low regulated swift return play with an existing partner which gives very strong potential for increased production gains and ‘timely payback’. I mean…

So for $105/- UJO get a 45% WI in the Rogers project in Oklahoma and is near the Andrews 1-17 well. With significant operational synergies by way of increased production and revenue through building critical mass ‘in the vicinity of existing commercial producer’. 

In the meantime work goes on at the 1-17 well as site upgrades to the power supply and pumping kit is installed and which will ‘materially enhance current flow rates, with up to 100 barrels/day having already been recorded recently.

It must make the other UK onshore players feel unwell as the strategy in the USA is, for a modest outlay return a good return and very quickly, even UJO must be thinking of increasing the investment. Union Jack shares do look incredibly attractive at the moment and with this adding to an already prospective portfolio is most pleasing.