WTI (Aug) $82.81 -57c, Brent (Sep) $86.24 -36c, Diff -$3.43 +21c.

USNG (Aug) $2.44 -4c, UKNG (Aug) 77.95p -0.55p, TTF (Aug) €33.3 +€0.04.

Oil price

Hurricane Beryl which has been the earliest ever to receive a category 5 nomination and is now very quickly barreling through the Caribbean and heading for Mexico. As a result the concern from the oil industry has lessened but at such an early stage of the season surely it’s only a matter of time before more mucky weather arrives. 

Elsewhere the US market closes at lunchtime today and most will take Friday off as well, so expect odd movements in markets, oil included. Added to that there is jobs data and the EIA inventory numbers, which following the API number which showed a 9.163m draw might be most interesting. 

 Touchstone Exploration

Touchstone yesterday announced that Primera Oil and Gas Limited, our wholly owned Trinidadian subsidiary, has entered into Exploration and Production (Public Petroleum Rights) Licences for the Cipero and Charuma blocks effective July 1, 2024.

The Cipero and Charuma blocks were awarded to POGL pursuant to the Trinidad and Tobago 2022 Onshore and Nearshore Competitive Bid Round. The Licences were fully executed by representatives from POGL, the Government of Trinidad and Tobago, the Trinidad and Tobago Ministry of Energy and Energy Industries (“MEEI”), and a subsidiary of the National Gas Company of Trinidad and Tobago (“NGC”).

POGL has an 80 percent operating working interest under each Licence, with NGC holding the remaining 20 percent working interest. Similar to the Company’s Ortoire licence, the Licences initially have a six-year term and may be extended by an additional 19 years for areas that have a MEEI approved commercial discovery.

Whilst this is important and highly beneficial to TXP it comes at a time that they are managing the takeover of Trinity, as such the decision making process as to portfolio selection is ongoing and will be easier to judge, and talk about on completion of the deal. 

I would imagine that the Cipero licence may be the most exciting opportunity but also feel that it might be 2025 when the company really gets its hands on the prospects. 

 

Summary of Licences

Block

Cipero

Charuma

 

 

 

Gross acreage

29,924

72,784

POGL operating working interest

80 percent

80 percent

NGC working interest

20 percent

20 percent

Minimum work commitments:(1)

Geological studies

Conduct five studies

Conduct five studies

Reprocess 2D seismic

426 kilometres

784 kilometres

Reprocess 3D seismic

n/a

61 square kilometres

Exploration drilling

Four wells

One well

Financial obligations over the six-year initial licence term(1)(2)

US$2.2 million

US$4.8 million

Notes:

(1)    Gross reserves are the Company’s working interest share before deduction of royalties.

(2)    Reserve additions exclude period production. See “Advisories: Oil and Gas Metrics”.

(3)    Based on the three Consultants’ average December 31, 2022 forecast prices and costs. See Forecast prices and costs.

 

Notes:

(1)   POGL is responsible for 100 percent of the exploration minimum work commitments and financial obligations over the initial six-year exploration term of the relevant licence.

(2)   Financial obligations are amounts payable pursuant to the applicable license, which include bonuses, lease payments and surface rental costs.

Serica Energy

Serica has announced that it has completed the first semi-annual redetermination under its reserve-based lending  facility. Reflecting the increased reserves, together with the programme of hedging recently implemented, the borrowing base has been increased from US$463 million up to the full amount of the committed facility of US$525 million.

Following this redetermination, and reflecting the previously reported cash and cash equivalents of £301.6 million and debt drawings of US$231.0 million (£182.0 million) as at 26 June 2024, Serica’s liquidity is now in excess of £500 million.

Martin Copeland, Chief Financial Officer of Serica, said:

“We are grateful for the support of our bank group in completing our first redetermination under the new RBL. Serica’s robust liquidity supports our ability to deliver on the two-pronged strategy of investing in our assets and executing on attractive M&A opportunities.”

Serica has completed its semi-annual redetermination, the first under the new RBL. At $525m the full facility is up from the previous $463m which the company attribute to increased reserves and as well as the recently implemented hedging programme. 

Serica is in a strong position and all credit to Dave Latin and others for ‘losing his patience’ as described in a recent article in which he defended the North Sea and UKCS industry against the political and fiscal upheaval planned by the Labour party, 

With the new management team now together and Serica clearly in a very strong financial position, it may be that the powerful balance sheet and accumulated firepower will be used to invest but that it will be forced to do this outside of the UK which is a shame. 

Jadestone Energy

Jadestone has announced that Bert-Jaap Dijkstra, Executive Director and Chief Financial Officer, has decided to leave the Company in order to pursue other career opportunities and repatriate back to the Netherlands to rejoin his family. Mr Dijkstra will remain in his post during the publication of the Company’s 2024 Half-Year Results and the scheduled September 2024 redetermination of the Company’s reserve-based lending facility.

The Company will immediately commence a search for his replacement.

Bert-Jaap Dijkstra, Chief Financial Officer of Jadestone commented:

“The positive outcome from the recent RBL redetermination again demonstrates the confidence that our banks have in the Jadestone management team and business model, helping to support the growth and diversification strategy. It has been a pleasure to work with the entrepreneurial Jadestone team and its external stakeholders, notably the banks, and I would like to thank the team and the Board for a very rewarding experience.”

Adel Chaouch, Chairman of Jadestone commented:

“On behalf of the Board of Directors, I would like to thank Bert-Jaap for his efforts at Jadestone and his commitment to ensuring a smooth transition. We wish him well on his return to the Netherlands and in his future endeavours.” 

It doesn’t seem very long ago that the CFO was appointed so having to find a new one will be time-consuming, the geographical nature of the position adds a little difficulty but it shouldn’t be the most difficult post to fill working in one of the best teams in the industry. 

Challenger Energy Group

On June 20th, 2024, ANCAP and Searcher, PGS, CGG and Spectrum Geo Inc (TGS) signed 4 Multiclient Agreements to carry out a non-exclusive acquisition of a minimum of 5.000 and up to a maximum between 40.000 and 45.000 full fold km2 of 3D seismic data in the offshore of Uruguay, at entire cost and risk assumed by the 4 service companies mentioned above.

It is important to point out that these agreements are non-exclusive, all the risks and costs of the data acquisition are taken by the service company, at no cost to ANCAP. Additionally, the signing of this type of agreement grants the contractor the right to carry out the work Program, but not the obligation. The service company will carry out the 3D seismic survey only if pre-financing is assured, or if the service company is willing to carry it out at its own financial risk.

The 4 acquisition Program proposals will add 3D seismic information in areas not previously covered. 3D seismic data are essential to identify and delineate stratigraphic prospects (channels, turbidites or pinchouts) that correspond to most of the exploratory situations of interest in Uruguay´s offshore. This also applies for carbonate prospects, in which the lithology, internal stratigraphy and degree of diagenesis of the bodies is essential to evaluate their competence as a reservoir. Finally, they are also important for potential source rocks characterization, which, in the case of Uruguay´s offshore, are events of Cretaceous age or older, and, therefore, are located at great depths. For the types of prospects and source rock indicated, modern and high-quality data are required, and with significant penetration into the sedimentary fill (up to 10 or 12 km) to be able to make specific analyzes such as the amplitude, its behavior with respect to the offset. (AVO or AVA), characterization through seismic attributes, etc.

These new products, which will be of excellent quality, given the proven experience of the 4 service companies counterpart, will contribute to the reduction of the exploratory risk, increasing as a result, the probability of finding hydrocarbons in Uruguay´s offshore. In addition, ANCAP will benefit from leading market service companies promoting the Program in their product´s portfolio as well as the exploratory opportunities in Uruguay.

It is worth noting this announcement by the Uruguayan Ministry which shows that everything is gearing up for a seismic programme at the end of this year and early 2025. As I reported recently when the Chairman of CEG bought shares in the market, showing a substantial vote of confidence and I agree that the shares are unaccountably low with huge upside.