WTI (July) $74.07 +82c, Brent (Aug) $78.41 +89c, Diff -$4.34 +7c.

USNG (July) $2.76 +17c, UKNG (July) 79.64p -1.36p, TTF (July) €33.4 -€0.645.

Oil price

Oil has perhaps overreacted to the Opec+ meeting and the Opec+ Chief gave a press conference try and explain that demand is better than markets are giving them credit for. There is however a noticeable drop off in gasoline demand in the USA and Memorial Day weekend seems to have been low and with high refinery rates stocks are higher than they should be.

Zephyr Energy

Zephyr has provided an update on drilling operations on the State 36-2R LNW-CC well at the Company’s flagship project in the Paradox Basin, Utah, U.S.  

Drilling operations have been completed safely and successfully, with the well drilled to a total depth of 10,290 feet (measured depth).  

Zephyr’s operations team is now preparing to set a production liner across the Cane Creek reservoir section, after which the Helmerich & Payne Rig 257 will rig down and demobilise from the site. Over the coming weeks, Zephyr will mobilise equipment for completion and production testing of the naturally fractured reservoir zone that was successfully intersected during drilling operations.

Initial results indicate that the well, like the State 36-2 LNW-CC well (the “original well”), penetrated a folded and naturally fractured section of the reservoir. It intersected the top of the reservoir approximately 15 feet from the original well bore and its natural fracture network. The well encountered drilling mud gas shows of a similar magnitude to the original well and pore pressure analysis suggest formation pressures estimated at approximately 9,300 pounds per square inch (which is broadly consistent with previously drilled offset wells).

The well further confirms the presence of hydrocarbons within a large structural compartment, within Zephyr’s acreage and 3D seismic coverage.  During the upcoming production test, the well will be flowed and production tested to determine reservoir pressure, fluid composition, well flow rate, bulk reservoir permeability and deliver an early estimate of the overall potential recoverable resources.

Colin Harrington, Zephyr’s Chief Executive, said:

“I am delighted to have concluded drilling operations safely and in line with our plans. We have intersected the reservoir remarkably close to the original well and early indications imply confirmation of hydrocarbons – and that we’ve likely been successful in hitting our natural fracture target with precision. 

“Our next step is to commence the well production test in the coming weeks, subject to service availability.  We look forward to keeping the market apprised as testing operations commence and a more fulsome evaluation of the well result becomes available.”

Things are going well for Zephyr, they have drilled into the formation smoothly and precisely and hydrocarbons have been found. Right now it is testing time and we can wait while that process takes place with a great deal of excitement.

Echo Energy

Echo has announced it has entered into a £500,000 unsecured conditional convertible loan note agreement with an institutional investor. The proceeds of the CLN, when drawn, will provide general working capital for the Company as it progresses with a review of a potentially transformational gold project opportunity in Latin America. The drawdowns on the CLN will be conditional upon mutual agreement by the Lender and the Company.

The Details of the CLN are as follows:

·    Principal amount: £500,000

·    The Company’s obligations in respect of the CLN shall be unsecured

·    Subscription price: 94% of the principal amount being issued

·    Maturity: 24 months

·    Coupon: zero interest

·    Conversion price: the lower of 150% of the Company’s closing share price on the day prior to a drawdown; or 90% of the Company’s lowest closing bid price from the five days prior to a drawdown

·    Conversion rights: the Lender has the right to convert the loan into Ordinary Shares in Echo at any time whilst any portion of the loan is outstanding

·    Redemption rights: Echo has the right to redeem the loan in cash at any time at par plus an additional 10% of interest. The Lender has the right to one final conversion in the 24 hours after a redemption notice for the outstanding balance has been served by the Company

·    Funding schedule: all drawdowns are subject to mutual agreement of the Company and the Lender

·    The Company will pay the legal fees for the implementation of the CLN, capped at £8,000 plus VAT

·    An arrangement fee of 3.5% of the CLN is payable by the Company

Pursuant to the CLN, the Company has agreed to grant £50,000 of warrants to the Lender over 1,136,363,636 Ordinary Shares with a conversion price of 0.0044p, valid for a period of three years (the “Initial Warrants”). Up to an additional £150,000 of warrants will be issued to the Lender proportionate to the total amount of the CLN drawdown by the Company (“Additional Warrants”). The conversion price of the Additional Warrants, which will be valid for a period of three years, will be 150% of the Company’s share price on the date of the signing of the CLN. The Initial Warrants and the Additional Warrants will be issued following the Company receiving the required share authority to allot shares at its forthcoming AGM on 26 June 2024.

The Company and the Lender have agreed on the first subscription request to draw down an initial £80,000 under the CLN, providing a capital injection of £64,400 after deduction of all fees.

It looks to be an interesting move by Echo to take a look at a ‘potentially transformational gold project opportunity in Latin America’ and the early stage funding shows that new CEO Stephen Birrell is making a go of Echo in somewhat limited circumstances.

I would have preferred a comment from him to try and add a bit of flavour but I guess its secret squirrel at the moment, keeping schtum is good sometimes but not wise when always done. Worth keeping an eye on, Birrell is a smart, well informed and experienced guy, this might be interesting.

Predator Oil & Gas

Predator has announced a corporate update.

Morocco

Commencement of Sandjet rigless testing programme

The early stages of the Sandjet rigless testing programme have commenced with the arrival of some well services equipment at the MOU-3 well site and the preparation of the well for re-entry and perforating.

Extensive operations at MOU-3 are anticipated to last for at least five weeks before moving to the next well in the Sandjet testing programme.

As a reminder to shareholders, the primary objective of the Sandjet is to effectively reach beyond the zone of formation damage caused by the requirement for over-balanced drilling during drill operations, which prevented the well from flowing gas.

MOU-3 perforating procedures

Up to three intervals will be separately perforated. Each interval will be isolated with a retrievable plug after testing to prevent cross-flow of any produced gas at different pressures between deeper and shallower reservoir sands. Pressure data will be collected and analysed for each interval to determine the extent of any connected potential gas volume compared to pre-test volumes estimated to be in place in the 13.9 km2 MOU-3 structure (the “Moulouya” structure).

Several Sandjet perforating runs may or may not be required to perforate additional sands depending on the outcome of the initial perforating results.

Interval objectives for MOU-3

·    TGB-6 and Ma Sand (“middle sequence”) will be perforated over a gross interval of 80 metres with initially 13 perforating points. 

·    Estimates of potential gas resources for this interval are as previously defined in the Independent Technical Report (“ITR”) dated 24 January 2024 by Scorpion Geoscience Limited.

·    Subject to successful gas flow at commercial gas flow rates and confirmation of connected volumes, the middle sequence may potentially support a CNG gas profile of between 10 to 20 million cf/day.

·    TGB-4 (“lower sequence”) will be perforated first over a gross interval of 24 metres with 4 perforating points. 

·    Estimates of potential gas resources for this interval were previously defined in the SLR Consulting Limited Competent Persons Report dated March 2019 and have not changed.

·    This is a higher risk perforating target as the potential stratigraphic trapping mechanism defined by stronger seismic amplitudes supported by recent seismic inversion modelling has yet to be validated by a successful gas flow test in MOU-3.

·    Subject to a successful commercial gas flow rate and confirmation of connected volumes this lower sequence may potentially support future scaling up of the CNG gas profile to 50 million cf/day facilitated by the Collaboration Agreement with Afriquia Gaz.

Following completion of the MOU-3 rigless well testing a decision will be made to move to either MOU-1 or MOU-4 next to perforate the TGB-2 Sand and the Moulouya Fan sequence respectively.

A carbonate interval in MOU-4 has also been selected for possible perforating with Sandjet in order to calibrate the NuTech petrophysical log interpretation over this interval which is located at the extreme edge of the Jurassic structure to be tested by MOU-5.

Jurassic MOU-5 well (“Titanosaurus structure”)

·    The MOU-5 well will now commence drilling as soon as practical after entry into the First Extension Period following the unforeseen delay to the scheduling of the Star Valley rig 101 programme due to other commitments.

·    The Titanosaurus structure covers an area of up to 187 km2 and has up to 289 metres of vertical relief. Estimates of potential gas resources for this interval are as previously defined in the Independent Technical Report (“ITR”) dated 24 January 2024 by Scorpion Geoscience Limited. These are likely to be increased based on new seismic inversion modelling to evaluate a potentially thickened reservoir sequence.

·    The prospective reservoir fairway is an Early Jurassic carbonate sequence and different from the sequences of sands for the Moulouya MOU-3 structure. The primary reservoir target and structural setting has never before been tested in Morocco.

·    The gas source is interpreted as thermogenic dry gas and not biogenic gas as found in the Moulouya structure.

·    Average well depths to penetrate the entire prospective interval are in the range 800 to 1100 metres Measured Depth. Estimated drilling time is 12 to 14 days.

·    The Company determines that there is a better than 50% chance of success based on the fact that MOU-5 is immediately updip from MOU-4, which helped define the target for MOU-5.

·    Potential development scenarios are being considered in the event of a successful outcome to drilling.

·    The MOU-5 pre-drill well location is located only 2.3 kilometres from a valve station on the Maghreb Gas Pipeline (“MGPL”) to Europe.

·    A fixed pipeline development option is likely to be an attractive investment proposition if MOU-5 encounters material gas volumes and is subsequently tested at commercial flow rates.

·    Based on an anticipated dry gas reservoir, development costs are expected to be significantly reduced given the short length of new pipeline, 2.3 kilometres, necessary to connect to existing MGPL infrastructure with significant spare throughput capacity.

·    For the purposes of verifying the costs to construct a tie-in pipeline from the MOU-5 well location to the MGPL,  the Company is planning a desk-top and site study based on pipeline capacities of 100, 300 and 500 million cf/day.

Rig requirements

The Company has been very frustrated during 2024 in regard to scheduling drilling activities in a timely manner in line with its business development strategy for locating additional gas resources in its Guercif  licence area.

As a result the Company has started the process of sourcing a rig with related well services from overseas to bring to Morocco to enable it to have the flexibility under its sole control and discretion to progress a potential Titanosaurus step-out drilling campaign and further appraisal drilling of gas targets within and adjacent to the Moulouya structure. 

Financing

The Company is fully financed for all its near-term operations.

Following the results of the Sandjet rigless testing and the first two well workovers in Trinidad designed to re-establish oil production, the Company will re-assess its funding needs for the next 12 months.

Trinidad

·    The Sale and Purchase Agreement (“SPA”) has been executed between T-Rex Resources Trinidad Limited (“T-Rex”), a wholly owned subsidiary of Predator Oil & Gas Holdings Plc, and  the current third-party Trinidad partner for the assignment of a 16.2% interest in the Cory Moruga “E” Block. The assignment is subject to the Ministry of Energy and Energy Industries regulatory consent.

·    Site clearance for the first well workover will start shortly. Quotes for a workover rig and perforating services have been received and are currently being reviewed. Contracts will be awarded shortly.

·    Jacobin-1 will be re-entered first. Zones within a gross interval of 2,500 feet have been selected for perforating.  A number of these zones are potentially at virgin reservoir pressure, which if confirmed may support higher than anticipated initial flow rates.

·    Snowcap-1 will be the next well in the planned workover programme.

Interpreted legacy well and production test data are in agreement with potential recoverable oil estimates. There is a strong expectation that production can be restored at former levels following remedial downhole work.

Ireland

·    The Company has received correspondence from the Department of the Environment, Climate and Communication Geoscience Regulation Office (“DECC GSRO”) in respect of its applications for successor authorisations for Licensing Options 16/26 and 16/30.

·    GSRO acknowledged that the Company had met the technical assessment criteria for Licensing Option 16/26 and offered the opportunity for the Company to submit additional material to complete the assessment of financial capability.

·    The Company has elected to focus on a potential award of a successor authorisation for Licensing Option 16/26 (“Corrib South”) as the Company is very confident that it can demonstrate that it has the financial capability to satisfy the Corrib South work programme and has accordingly communicated supporting financial information to the GSRO.

·    Gross unrisked P10 gas in place of 303 BCF net to the Company’s 50% interest with a 44% chance of success (Tracs International Competent Person’s Report August 2023).

·    Option to acquire additional 50% interest prior to concluding a farmout transaction.

·    Lastly, we have agreed in principle, farm-in terms on Licencing Option 16/26, the company has expressed a desire to farm into any successor authorisation for Licensing Option 16/26 that is eventually awarded to Predator

The Corrib South structure, located just 18 kms from the Corrib gas field, was formerly held by Shell as a “Reserved Area” during the development of the Corrib gas field.

The Corrib South structure is potentially of an optimum size to prolong the life of the Corrib gas filed infrastructure if gas is successfully discovered in the future. Furthermore it may provide gas and hydrogen storage options to enhance security of energy supply.

The Company is now cautiously optimistic that an award of the Corrib South successor authorisation is potentially achievable in 2024.

Financial – Public Relations

The Company is pleased to announce the appointment of Capital Markets Communications Limited (“Camarco”) for public relations.

The rapid development of the Company over the past 12 months has taken it to the next stage of business development where greater emphasis can now be placed on developing the Predator story to a wider international audience.

Paul Griffiths, Executive Chairman of Predator, commented:

We have made significant progress over the last few months developing our portfolio of projects.

Whilst we understand that there is an expectation for instant results and updates, we operate in a complex business sector within a framework of robust regulatory and environmental procedures established by governments. Our priority is to ensure that are attractive portfolio of assets is optimally developed within our financial capabilities, without taking on burdensome debt, and in accordance with all government regulations.

We are now at a critical stage in seeking to establish an uplift in the value of all of our assets and this must be achieved in a cautious manner to ensure maximum potential to monetise when the time is right and the de-risking of scalable value is complete.

The public markets rarely give value to medium and longer term business development plans, however systematically proving up oil and gas resources provides the mechanism for extracting value from other entities within the upstream and downstream natural resources sector, that understand the value of gas in particular to support the Energy Transition and the potential for commodity trading in what is still a very attractive global market for energy supply and security. 

The management team has focus and a clear strategy for business development and will continue along that path until our assets reach a stage where near-term production start-up can be  delivered as a catalyst for monetisation.

The Company’s Titanosaurus project represents a good example of why our industry still attracts investors. The potential multiple returns on investment on successfully drilling and flowing gas from the Titanosaurus structure  are difficult to match in any other industry. A favourable fiscal regime, proximity to infrastructure with significant under-utilised capacity, low development costs and a tangible contribution to the energy transition combine to enhance the immediate opportunity that Titanosaurus presents”.  

This is a long and detailed analysis of where Predator is and where it’s going, in addition Chairman Paul Griffiths carries strong views particularly about how markets value companies like his. But if he’s right and the Titanosaurus project is as potentially valuable as he says then stand by for ‘monetisation’…..

Jadestone Energy

Jadestone has provided the following update on the Akatara gas development project onshore Indonesia.

The Akatara Gas Processing Facility is nearing the key milestone of mechanical completion, where all components and systems of the Facility will have been constructed, installed and tested.

The project focus is now on the final commissioning of the plant ahead of introducing wellhead gas.  The project remains on schedule for gas into the Facility in approximately two weeks time and for commercial gas, LPG and condensate sales following shortly thereafter.

The workover campaign on the five existing Akatara wells which will provide gas to the Facility has been successfully completed, flowing at an aggregate rate of 54 mmscf/d, significantly in excess of the c.25 mmscf/d of raw feed gas required under the gas sales agreement. In addition, the 17km pipeline which will deliver gas into the regional gas trunkline has been successfully tested and is now ready to receive Akatara gas.

Approximately 7.7 million manhours have been worked on the Akatara project without a lost-time incident.

Paul Blakeley, President and CEO commented:

“There has been a huge amount of effort and commitment across the business to ensure that the Akatara project remains on schedule, and working closely with our main contractor, we are on the threshold of the key milestone of mechanical completion of the Facility. Whilst seeking to maintain the very impressive safety performance to date, the team are now focused on the remaining commissioning activities ahead of introducing first gas into the Facility this month and delivering sales gas volumes.”

Jadestone has given us a tasty morsel of what is imminent at Akatara, it may actually be even better when first gas comes on stream later this month so let’s wait and see.