WTI (July) $73.25 -97c, Brent (Aug) $77.52 -84c, Diff -$4.27.

USNG (July) $2.59 -17c, UKNG (July) 81.0p -6.27p, TTF (July) €34.045 -€1.16.

Oil price

Oil fell again just under a dollar yesterday, the next inventory stats will be of interest.

Jersey Oil & Gas

Jersey has provided the following update on the Buchan redevelopment project ahead of today’s Annual General Meeting.

Following the announcement of an earlier than expected UK General Election in July 2024, the Buchan joint venture partners have assessed the implications and their plan for progressing the project.  While activities continue in order for the Buchan project to be ready for Field Development Plan (“FDP”) approval by the end of this year, the exact timing for achieving this key milestone and enabling project sanction is naturally linked to securing fiscal clarity from the next government and ensuring that the project remains financially attractive. 

The Buchan Operator, NEO Energy, continues to make good progress on advancing the work programme required to enable project sanction.  Completion of the necessary engineering work is on track and the first offshore survey was completed in May, obtaining the geophysical data used for the subsea and drilling rig contract tendering process.  A second survey to obtain geotechnical data is scheduled to commence this month.  Work is also advancing on completion of the other two key remaining workstreams, being the subsurface studies required to finalise the drilling programme and operational verification and preparation for the handover of the “Western Isles” floating production, storage and offloading vessel (“FPSO”) to the Buchan joint venture.  Alongside these activities, engagement on the Buchan FDP and associated regulatory consents is progressing to plan with the North Sea Transition Authority (“NSTA”) and the Offshore Petroleum Regulator for the Environment and Decommissioning.

Following the receipt of fiscal clarity and subject to FDP approval, the major contract awards and capital commitments for the project are now expected in 2025, which leads to Buchan first production being targeted for late 2027.  Under the current fiscal policy, the Company’s valuation of the Buchan redevelopment project does not materially change as a result of the later first production date.

JOG remains fully funded with a current cash position of over £13 million and a forecast annual base cash spend of £3 million. The Buchan project remains fully carried to FDP with a further $20 million payment due following approval by the NSTA of the Buchan FDP and receipt of the associated regulatory and legal consents. The Company also has a full carry to first oil for its 20% equity interest in the Buchan field development costs, which are to be approved in the FDP.

Andrew Benitz, Chief Executive Officer, commented:

“With a UK General Election now announced, we are hopeful that fiscal clarity will be forthcoming in short order so that the industry can continue to do what it does best, namely investing in major capital projects that deliver vital low carbon homegrown energy and highly skilled jobs.  In the case of the Buchan field, we have a project that will deliver a meaningful contribution to the energy transition process through our electrification strategy, which helps facilitate investment in cutting-edge floating offshore wind.”

I can fully understand what the GBA partners are doing here, they see a potential road block and are wisely ensuring that they are not trapped in its political fall-out if that is not mixing too many metaphors. FID is at present scheduled for later this year and I remember talking to Andrew Benitz about that at the last announcement, now with the calling of an early election the political situation has become more uncertain and so the wait begins for news on what the new Government’s policy is likely to be.

This has meant a possible delay as stuff like orders etc may be held back and the company are being slightly pragmatic with regard to the first oil date which looks like being 2027 now although new fiscal policy may change things. What shouldn’t change is the project NPV and with a sensible approach to a major UK based engineering project, whoever is making the calls should remember that economics should trump ideology. 

San Leon Energy

San Leon has provided the following corporate update.

Refinancing update

The Company is pleased to announce that it has been made a beneficiary of a €500 million German government bond.  Under the proposed terms of the agreement with the legal owners of the Bond, San Leon will be able to utilise the Bond for a period of three years by applying it as security to obtain finance from a third party, although the legal ownership of the Bond will remain with the owners.  In this regard, the Company is now in negotiations in respect of the terms of such a third-party finance arrangement (the “Expected Refinancing”) with a well-known international financial services institution and expects to announce further details within the next two weeks.  This further announcement is anticipated to include both the contractual terms for San Leon receiving such finance, as well as the terms for San Leon utilising the Bond as security for such financing.

Should documentation in relation to this Expected Refinancing be agreed within the next two weeks, as anticipated by the board of San Leon (the “Board”), then the Company expects funds to be received during June 2024. Receipt of funds pursuant to the Expected Refinancing will allow the Company to: i) undertake its further investment in Energy Link Infrastructure (Malta) Limited (“ELI”), as detailed in the announcement made on 10 October 2023; and ii) settle, in full, the Company’s outstanding creditors. Importantly, the Expected Refinancing, if completed, is expected to enable San Leon to use the funds received towards all of the proposed actions originally contemplated within the announcement of the proposed funding from Tri Ri Asset Management Corp. (“TRAM”) on 10 October 2023.  Furthermore, San Leon notes that, since October 2023, ELI’s funding requirements have increased, and the Expected Refinancing has been negotiated with that in mind.  At this time there can be no certainty that Expected Refinancing will be concluded or as to its final terms.

San Leon also previously announced that it was in discussions with other potential financing partners and had received acceptable commercial terms from two of these prospective funders.  Although negotiations remain ongoing, it is apparent that the timetable to completion of either fundraising is far longer than the Company had previously expected. Consequently, the Board considers the Expected Refinancing, supported by the Bond, to be the most likely outcome now. 

As announced on 11 March 2024, the Company also concluded that funds will not be forthcoming from TRAM (details of which were announced on 10 October 2023) and, following completion of the Expected Refinancing, San Leon will explore its options in relation to TRAM’s breach of contract.  

Possible revised transactions with Midwestern Oil &Gas Company Limited 

On 9 October 2023, San Leon announced the termination of its proposed transactions with Midwestern Oil & Gas Company Limited (“Midwestern“) and the Company’s further conditional investments in ELI (together the “Proposed Transactions“).  The Proposed Transactions were announced by the Company on 8 July 2022 and full details were set out in an admission document published by the Company on the same date. The Company also announced on 9 October 2023 that, notwithstanding this termination, it remained in discussions with Midwestern regarding a revised transaction in relation to Midwestern Leon Petroleum Limited (“MLPL“) and Midwestern’s indirect shareholding in ELI.  The Company currently owns 40% of MLPL’s issued shares with Midwestern owning the remaining 60%.  Since 9 October 2023 the Company and Midwestern have sought to align their interests, noting the approximate US$140 million of outstanding loan notes (the “MLPL Loan Notes”) due from MLPL to San Leon (which are guaranteed by Midwestern).  San Leon has agreed a number of conditional payment waivers with Midwestern which expire on 30 June 2024. The Board does not currently intend to extend these conditional payment waivers beyond 30 June 2024.

San Leon announces that these discussions with Midwestern are at an advanced stage.  The Company anticipates that a revised agreement with Midwestern will involve swapping a proportion of the MLPL Loan Notes for a cash payment, the Company receiving a greater holding in MLPL and the Company receiving certain of Midwestern’s interests in ELI.  At this time the Company anticipates that the revised agreement with Midwestern would have two stages:

1.    Stage 1 would involve Midwestern reorganising parts of its holding in MLPL and paying San Leon a cash deposit, pending full completion of the Expected Refinancing.  Stage 1, if entered into, would enable San Leon to receive funding in the short term which, should the Expected Refinancing not complete, would be utilised to prepare the Company’s outstanding accounts (of which further details are outlined below) as part of the process to restore trading in the Company’s ordinary shares of €0.01 each (“Ordinary Shares”) on AIM.

2.    Stage 2 (which would be anticipated to occur in the following months) would allow Midwestern to transfer certain of its interests in ELI to the Company, subject to any regulatory requirements (including any obligations that the Company has under the AIM Rules for Companies).

At this time there can be no certainty that any such agreement will be concluded with Midwestern.  Should no agreement be reached on a revised transaction with Midwestern, San Leon will seek the repayment of the outstanding approximate US$140 million of outstanding loan notes from MLPL (which, as stated above, have been guaranteed by Midwestern) in full. 

Creditor update

With the ongoing delay in obtaining funding, the Company has numerous outstanding trade creditors (around US$25 million in aggregate) and these creditors have continued to exert increasing pressure on the Company which includes, in some cases, sending legal letters before action and, as announced in respect of Ocean Pearl Maritime SA on 11 April 2024 and 23 May 2024, commencing a petition to wind up one of the Company’s subsidiaries, San Leon ELI Limited (which has since been adjourned to take place in July 2024 or shortly thereafter).  San Leon continues to liaise with its creditors, especially given the anticipation of funds from the Expected Refinancing.

Pending conclusion of the Expected Refinancing, the US$5.0 million loan to the Company from funds managed by Toscafund Asset Management LLP (“Toscafund“), which was announced by San Leon on 8 August 2023, also remains outstanding and continues to accrue interest at 10 per cent. per annum. San Leon is in regular correspondence with Toscafund in relation to the timing of repayment of this loan and Toscafund, which own 75% of the Ordinary Shares, continues to be supportive of the Company’s progress. 

If, as expected, the Expected Refinancing is completed then as outlined above, the Company will settle, in full, the amounts owed to its outstanding creditors.

Ongoing suspension

The Company’s Ordinary Shares remain suspended from trading on AIM, pending San Leon publishing, inter alia: i) its audited accounts for the year ended 31 December 2022 (the “2022 Accounts”), as required by Rule 19 of the AIM Rules for Companies; ii) its unaudited interim results for the six months ended 30 June 2023 (the “2023 Interim Accounts”), as stipulated by Rule 18 of the AIM Rules for Companies; and iii) an AIM admission document in relation to the further investment in ELI (the “Admission Document”), details of which were announced by San Leon on 10 October 2023.  The Company intends to pursue all of these requirements following the conclusion of its Expected Refinancing.

If, as expected, the Expected Refinancing completes during June 2024, the Company expects to publish the 2022 Accounts and the 2023 Interim Accounts around two months after receiving funds and the AIM Admission Document around a month following the publication of these accounts.  The Company has already put plans in place to progress all of these requirements following the conclusion of the Expected Refinancing.

Without jumping to conclusions it looks as if with this Bond SLE can get on and finance the deals it has going in Nigeria. Should it refinance the company can get on and do the ELI investment and hence the ACOES system. As is the case through this series of investments they tend to be complicated and time consuming.

There may be a chance that the shares can return from suspension but there are a number of hoops to get through first, the company details what is required such as 2022 accounts, 2023 interim accounts and the admission document. All this could mean that the deal goes through and the shares are possibly not far from returning to the market.yesterday 

Eco (Atlantic) Oil & Gas

Eco has announced the Farm-In into Block 1 Offshore South Africa Orange Basin. Through its 100% owned subsidiary Azinam South Africa Limited (“Azinam”), the Company will farm-in and acquire a 75% Working Interest (“WI”) from Tosaco Energy (Proprietary) Limited (“Tosaco”) and will become Operator of a new Exploration Right (the “Acquisition”). Tosaco intends to transfer its remaining 25% Interest to OrangeBasin Oil and Gas (Proprietary) Limited – a newly formed South African entity with a Broad-Based Black Economic Empowerment (“B-BBEE“) rating.

About Block 1 Acquisition:

Block 1 is 19,929km2 in area and is located on the Namibian Border in South Africa. The triangular shaped block is located offshore in the Orange Basin. The Eastern side of the block is approximately 174km off the South African shoreline, and the block reaches out some 263km West into deep water in the Orange Basin. 

Terms of the 75% WI Farm-in Acquisition are as follows: US$150k payable upon signing, US$225k payable upon issuance of Section 11 (Government title transfer) and US$375k payable upon a TSX-V/AIM compliant Resource Report to be commissioned by Eco. The Company will carry the remaining 25% Interest through the Budget and Work Program for the first three years up to an agreed sum of US$2.3 million of a total work program.

The block has significant 2D and 3D seismic data already completed and no additional seismic acquisition or drilling of wells is planned in the three-year carried period. During this period, Eco will complete the interpretation and analysis required for its planned Work Program with its in-house exploration team. The Farm-in is subject, inter alia, to normal Governmental approvals and no field activity is currently planned that requires environmental permitting.

Block 2B Relinquishment:

Further, the Company confirms that it is relinquishing its 50% WI Operated offshore Block 2B in South Africa where it drilled its 2022 Gazania-1 well offsetting the AJ-1 oil discovery. The Company has completed all necessary documentation, and environmental audits, and has informed the Petroleum Agency of South Africa (“PASA”), being the regulator for the Government of South Africa. Eco’s board considers Block 2B a non-core asset in the portfolio given the Company’s interests in Namibia, Block 3B/4B and Block 1 in SA and in Guyana.  Following acceptance by the PASA of this relinquishment, the Company will have no further liability in respect of Block 2B.

Colin Kinley, Co-founder and Chief Operating Officer of Eco Atlantic, commented: 

“The Orange Basin continues to prove to be one of the newest and most prolific plays in the world and is running similar statistics to our Guyana play. Following completion of this Farm-in, Eco will have one of the largest blocks in the entire Orange Basin. This is a strategic play for Eco that we have worked on over the past year, focussing on both Oil and Gas potential, and where we believe there are significant near shore prospective gas resources. There are inboard gas discoveries on the block, Kudu to the North, and multiple discoveries in the Ibhubesi field to the South. With the reach of the block some 250km out into the Atlantic, this puts the West end of the Block into highly prospective opportunities for oil being just South and on trend with Shell’s Graff discovery and Galp’s Mopane discoveries, and North of our 3B/4B Block oil targets recently farmed out to TotalEnergies and QatarEnergy.”

 

A map of a large area Description automatically generated

Figure 1: Eco Atlantic’s South Africa Acreage

 

 

So look what Eco Atlantic is doing this week, and yes it’s another idea out of left field, ie something that most of us wouldn’t have expected at least not quite yet. This is a big block, think as the map shows on the Namibia/South Africa border with 2D and 3D seismic already done and not needed in the three year carried period. 

As part of the deal Eco is relinquishing the 50% interest in Block 2B in South Africa (think of the Gazania-1 well) which is now non-core. As Colin Kinley says, Block 1 exhibits similar stats to Guyana and Eco are building a strategic play here and one that is surrounded by oil and gas discoveries, one for the longer term book I feel.

I think that the company is building a portfolio which is going to look like a fine starter pack of exceptional but assets of a similar play type. With Blocks 1 and 3B/4B in South Africa, 4 blocks in Namibia and of course what they believe is a seriously large play in Guyana. 

Eco can never be accused of not thinking big, this move whilst not on my or others’ radar screens could be a masterstroke, have they gone a long way to creating a portfolio of assets that look perfect to take over…Good luck to them, I’ll toast that, Lechaim!

Angus Energy

Angus has announced that, further to the Company’s declared strategy of restarting production at Brockham, at Angus’s Brockham Oil Field in Surrey, the workover of the Brockham 2Y well to reinstate production from the field was successfully concluded in late May. A new pump was installed in the well and repairs and upgrades made to the surface equipment. After a period of flow to clean-up the well, it is back online producing c. 120 bbls/day of total fluid, of which 40% is currently oil. The well will be monitored over the coming days to determine future production potential. All produced water is reinjected at the site into the reservoir for pressure support. Further updates on oil production from Brockham in which Angus has an 80% interest and other potential developments will be shared over the coming months.

Richard Herbert, the Company’s CEO commented: 

“As we stated in our last strategic update, Angus intends to expand production through organic and inorganic growth. This is the first step of that journey. We are very pleased with our progress at the Brockham Field to resume production. The workover was completed safely and on schedule and budget, with the new pump starting up on the 28th May. The well is now producing oil in excess of management’s predicted flowrates and with the present surface configuration is expected to sustain 30-40 bbls/day of oil, with potential to increase further with operational improvements.”

Angus is getting on with the start of an interesting and potentially exciting organic and inorganic strategy and at Brockham where production more than expected and could do more. There is nothing in the share price for this and investors could do a lot worse than consider looking at Angus.

Star Energy

The Board of Star Energy announces that it has today appointed Ross Glover to the role of Chief Executive Officer (CEO), with the intention of appointing him to the Board of Directors with effect from the conclusion of the Company’s Annual General Meeting (AGM) on 12 June 2024. Chris Hopkinson will step down from the Board and his CEO position with immediate effect.

The Board of Star Energy recognises the significant contribution that Chris has made during his tenure at the Company since 2022, including charting a course through a period of internal group reorganisation, raising the sustainable level of production in its conventional oil and gas activities and taking a number of important steps to position the Company for the Energy Transition. 

Chris Hopkinson will not be standing for re-election at the Company’s AGM to be held on Wednesday 12 June 2024. As the Company’s Notice of AGM has already been issued, the Company confirms that the resolution to re-elect Chris Hopkinson as a Director of the Company (Resolution 3) is now withdrawn.

The withdrawal of Resolution 3 does not otherwise affect the validity of the Notice of AGM, the proxy form or any proxy votes already submitted on other proposed resolutions. The numbering of all other proposed resolutions at the AGM will remain unchanged.

After the successful €25 million refinancing of the Group announced in April 2024 the Company is entering a new phase. Over the past 18 months, oil and gas production has been stabilised and the focus will now pivot towards improving the efficiency and increasing the profitability of the oil and gas business.  The Company optimises the use of all its assets within its existing businesses and will actively re-purpose them as appropriate to maximise returns as part of the energy transition. We are well positioned to capitalise on our geothermal growth opportunities in both the UK and Croatia.

Commenting Non-executive Chairman, Philip Jackson said: 

“During his time at Star Energy, Chris has made a significant contribution to the development of the Company and I wish him all the best for the future.

I am delighted to welcome Ross both as a new board member and to his new role as CEO. We are looking forward to working closely with him and the wider team to deliver the next chapter of Star Energy’s development. Ross has been with the Company since 2017 and has been its Chief Operating Officer since September 2022. He has great drive and commitment to continue growing the Company’s profitability and future successful transition.” 

Chris Hopkinson added: 

“I have enjoyed my time at Star Energy and am proud of the changes over which I have been able to preside. We have raised production substantially since I took over in September 2022. The time has however come for me to pass on the reins to Ross in whom I have great confidence to carry on what I have started.”

To say that this came out of the blue is a significant mis-estimation, my cries of help on behalf of the shareholders had I thought landed on fallow soil. Whatever has happened here is of significant and may be a reason to rejoice, to paraphrase a certain lady.

But these are early days, the good news is that I hear very good things about Ross Glover and I have already made plans to catch up with him, I understand that he is driven, hard working, knows the business well and has been around through the shale years so Igas as we know it may still have some scope in a geothermal world, who knows eh….?

Longboat Energy

As part of the ongoing review of its cost base, Longboat Energy, an emerging full-cycle E&P company currently active in Norway and Malaysia, yesterday announced the following changes to its board and management team, as detailed in its Notice of Annual General Meeting posted to shareholders today.

The net result of the changes will reduce the Company’s board to four members (from seven at the end of April) and is one of the cost reduction actions resulting from the Company’s ongoing review.

Existing Board

As previously announced, Brent Cheshire and Jorunn Saetre will be retiring at the AGM. Additionally, Katherine Roe has notified the board of her intention to step down at the AGM to focus on new executive opportunities, following the recent acquisition of Wentworth Resources plc, where she was CEO .

In addition, Jonathan Cooper, currently Chief Financial Officer, has agreed to leave the Company on 30 August 2024 after a short transition period. Therefore, he will be step down from the board at the AGM and will not be putting himself forward for re-appointment.

Jon, one of the original founders of Longboat, has been instrumental in helping successfully build and manage the Longboat business over multiple jurisdictions with boundless energy and enthusiasm. It is intended that the finance function will be managed among the remaining members of the team with some additional part-time support.

All four of the individuals have served on the Company’s board of directors since inception in late 2019 and have provided invaluable support and advice during this period.

Proposed Board

A resolution will be proposed at the AGM for James Menzies to be appointed to the Board of Directors as Executive Chairman. James has been working for Longboat since late 2023 in a senior role focused on building the Company’s South East Asian presence where he has extensive experience having founded and built Salamander Energy plc into a FTSE 250 company before its sale to Ophir Energy plc in 2015. Previously, James was the Senior Partner at Lambert Energy Advisory and has also held executive roles at Asian-focused Coro Energy and TAP Oil. James has an MSc in Geophysics and Planetary Physics from University of Newcastle, BSc (Hons) in Geology from London University and currently sits as a non-executive director on the board of Trinity Exploration & Production plc.

A second resolution will be proposed at the AGM for Geraldine Murphy to be appointed to the Board of Directors as an independent non-executive director. Geraldine brings a wealth of financial and transactional experience with over 35 years of energy investment banking and M&A advisory roles. Geraldine currently serves as a Senior Adviser at TPH&Co., the energy business of Perella Weinberg Partners where she was a partner and head of TPH International since 2017. She has worked in the energy departments of Standard Chartered Bank, CIBC World Markets and Harrison Lovegrove amongst others. Geraldine holds a BSc. (Hons) degree in Geology and a MSc. in Petroleum Geology from University College Dublin. Geraldine was previously a non-executive director on the board of privately-held Impact Oil & Gas, a partner in the giant Venus discovery offshore Namibia.

Graham Stewart has agreed to step down from his role as Non-Executive Chairman but will remain on the board as a Non-Executive Director providing important continuity and support to the new directors.

Subject to the outcome of the AGM to be held on 27 June 2024, the new composition of the Longboat Energy plc board will be as follows:

·    Chief Executive:                                               Nick Ingrassia

·    Executive Chairman:                                       James Menzies

·    Non-executive Director:                                               Graham Stewart

·    Independent Non-executive Director:   Geraldine Murphy 

It is anticipated that Geraldine Murphy will chair the Audit Committee and Graham Stewart will chair the Remuneration Committee going forward.

Nick Ingrassia, CEO of Longboat, commented:

“I would like to express a huge debt of gratitude to Brent, Jorunn, Katherine and Jon who have all served Longboat tirelessly since its inception in 2019. Their contributions during the past five years have helped the business navigate its initial listing, the challenges of COVID, successful launch of a Norwegian business, creation of a joint venture with JAPEX and new country entry into Malaysia.

“They should all be proud of their significant contributions to the business through these challenging times and I am grateful they have been so understanding of Longboat’s need to streamline the business and cut costs. On a personal level, I will miss working with them as colleagues and wish them all success in their future endeavours.”  

Things have moved on swiftly at Longboat and after a couple of long conversations with the Executive Chairman-elect James Menzies I can fairly confidentially predict that things are going to change at Longboat. The realisation that has dawned over the company in recent months that progress in Norway was not a nailed-on certainty and that despite the new partnership, unlikely to come without serious setbacks.

In recent years, probably even months, the realisation that a really exciting business could be created in South East Asia and under the auspices of James Menzies who has very decent form in the area, has dawned on the board at Longboat. So this announcement is pretty much step one in the process as the new board is announced and the downsizing of the Norway portfolio underway.

The company has been in the process of building the SE Asia portfolio already and if it hadn’t been for the Norway problems then I suspect Mr Menzies would have a bit more already. But the first asset that he has bought for the company has been something of a success already as Longboat, at the APAC Energy Assembly in Singapore has been awarded the ‘New entrant of the year award’ for the acquisition of the 2A block offshore Sarawak, Malaysia something that James Menzies is very proud of. 

I can go into more detail at a later stage as it is laden with excitement and I reckon that they have been awarded, at no cost, the hottest block in the area, hence the award. With plenty more to come there is something to keep an eye on and a number of exciting opportunities which are made for the E&P sector and companies of Longboat’s size. Add to that the appointment of industry legend Geraldine Murphy to the board and the resurrection of  Longboat is much closer than I had expected it to be.