WTI (Nov) $69.83 +$1.66, Brent (Dec) $73.56 +$2.10, Diff -$3.73 +44c.
USNG (Nov) $2.90 -3c, UKNG (Nov) 99.11p +3.31p, TTF (Nov) €39.3 +€1.01.
Oil price
Oil reacted very strongly to the news of the Iranian missile attacks on Israel yesterday and swung very sharply upwards by around five or more dollars which has been added to by another two bucks today. Opec+ Ministers are meeting as I write but let’s hope that they don’t try and continue with the easing of the December quotas.
The API stats last night showed a modest crude draw, a small increase in gasoline and a bigger draw in distillates as one might expect around now but may be slightly affected by the recent hurricane. Let’s see what the EIA numbers show…
Serica Energy
Serica has today confirmed that the B6 well on the Bittern field (SQZ: 64.6%), which commenced initial flowback to the Triton FPSO on 11 September, is now producing at a stable rate.
The well is producing oil and gas at a combined gross rate of around 8,000 boepd, a total of around 5,200 boepd net to Serica.
Drilling and completion activities on the Gannet GE-05 well (SQZ: 100%) have now concluded. Data collected during drilling have shown encouraging results, and production is expected to commence around the start of November. The COSL Innovator rig is now moving to drill the next well in the campaign, on the Guillemot NW field (SQZ: 10%).
Total Serica portfolio production is currently over 50,000 boepd, a level that if retained would result in the Company finishing 2024 in line with the updated guidance given at our half-year results on 10 September.
Good news from Serica today as the results from the B6 well on the Bittern field confirm success and that the well is flowing at a stable rate and has commenced flowback to the Triton FPSO and is producing oil and gas at a combined gross rate of around 8/- boepd which is around 5,200 boepd net to Serica. This is the first proof point regarding what the CEO, Chris Cox, had said so clearly at the half-year results – that Serica’s subsurface team is its secret weapon.
With drilling and completion activities on the Gannet GE-05 well concluded and data collection during drilling showing ‘encouraging results’, there could clearly be more to come. Production here is expected to start around the start of November and the rig is now moving to the Guillemot field to drill the next well in the campaign. While that one is just 10% equity for Serica, that leaves two more potentially meaningful wells to come in 2025 on the current campaign. The hope is that the Budget on 30 October will result in an environment where the subsurface team is then able to be put to work across the portfolio – there may be opportunities in other fields that could really drive the organic story.
With these completions, total production for Serica has risen to over 50/- boepd which is a meaningful rate and if retained will result in the company finishing 2024 in line with guidance updated at the recent interim results announcement.
As I said, good news from Serica as this added production is highly profitable given the additional costs, it works for the Triton FPSO and the hub and is part of the management policy of adding low cost production wherever possible. Serica stays in the Bucket List and is incredibly good value at these levels.
Borders & Southern
Borders & Southern has announced that it has raised £1.5 million, before expenses to advance the development of its 100% owned Darwin Gas Condensate discovery (the “Fundraising”). The Fundraising comprises a placing and a subscription by a majority of the Company’s directors.
The Fundraising will comprise the issue, in aggregate of 100,000,000 new ordinary shares in the Company at a price of 1.5 pence per new Ordinary Share. The Issue Price is an approximate 16.67 per cent. discount to the Company’s closing mid price of 1.8 pence on 1 October 2024.
Highlights of the Fundraising:
· £1.5 million raised through the placing of 69,666,666 ordinary shares (the “Placing Shares”) at the Issue Price (the “Placing”) and subscription of 30,333,334 ordinary shares (the “Subscription Shares” and together with the Placing Shares, the “Fundraise Shares”) at the Issue Price (the “Subscription”)
· The Fundraising received significant board support from a majority of the board with Harry Dobson (Chairman), Harry Baker (CEO), and non-executive directors Sean Guest and Will Hodson all participating and subscribing for a total of £505,000, demonstrating continued alignment with shareholders and commitment to, and belief in, the future success of the business
· The Company has engaged a new international advisor to assist in moving the Darwin project forward towards appraisal of the Darwin discovery and is encouraged thus far by progress on the recently relaunched farm-out process
Use of Proceeds
The proceeds of the Fundraising will be used to fund the Company’s Licence fees, Discovery Area fees, technical and commercial studies, general & administrative expenses and, more generally, to advance the Company’s Darwin project towards appraisal of the Darwin discovery.
Harry Baker, Chief Executive Officer of Borders & Southern, commented:
“We are seeking to bring in a partner to move Darwin forward by either testing Darwin East or drilling another target and, as previously stated, have engaged a new International advisor to assist in this process. The funds raised will assist the Company in progressing this. We are encouraged by progress on the recently relaunched farm-out process thus far and look forward to providing further updates in the coming months.
“We only raised one year’s overheads as we believe that the Company can make progress on the farm-out which would place it in a much stronger position in the future.
“We would also like to thank existing shareholders and new investors for their support in the Fundraising.”
This is a useful step for Borders & Southern as they take the next steps to moving Darwin forward and whilst this raise doesn’t get a hole in the ground it does make the required steps forward. Good to see the management putting their hands in the skyrocket, in particular the chairman who has more than led the board here.
I’ve added the link to the interview I did with Harry Baker recently so readers can see what they would be letting themselves in for, an exciting ride I would suggest.
Director Participation and Related Party Transaction
Certain directors of the Company participated in the Fundraise, details of which are outlined below:
Name | Position | Number of Fundraise Shares subscribed for | Shareholding following Admission | Percentage of enlarged share capital |
Harry Dobson | Non-Executive Chairman | 28,000,000 | 109,372,000 | 13.2% |
Harry Baker | Chief Executive Officer | 3,333,333 | 3,333,333 | 0.4% |
Sean Guest | Non-Executive Director | 1,666,667 | 1,666,667 | 0.2% |
Will Hodson | Non-Executive Director | 666,667 | 666,667 | 0.08% |
The participation of Harry Dobson, Harry Baker, Will Hodson and Sean Guest in the Fundraise are related party transactions for the purposes of AIM Rule 13 of the AIM Rules for Companies due to them being directors of the Company, and in the case of Harry Dobson, also a substantial shareholder. The Director of the Company independent of Mr Dobson, Mr Baker, Mr Hodson and Mr Guest, being Peter Fleming, considers, having consulted with SP Angel Corporate Finance LLP, the Company’s Nominated Adviser, that the terms of the Director’s participation in the Fundraise are fair and reasonable in so far as the Company’s shareholders are concerned.
The participation of Alan Brimacombe, a substantial shareholder in the Company, in the Fundraise is also a related party transaction for the purpose of AIM Rule 13 of the AIM Rules for Companies. The Directors of the Company independent of the Fundraise, being Peter Fleming, considers, having consulted with SP Angel Corporate Finance LLP, the Company’s Nominated Adviser, that the terms of Alan Brimacombe’s participation in the Fundraise are fair and reasonable in so far as the Company’s shareholders are concerned.
Admissions and Total Voting Rights
Application has been made for admission of the Fundraise Shares to trading on AIM (“Admission”) and it is expected that Admission will occur on or around 8 October 2024. The Fundraise Shares will rank pari passu with the existing Ordinary Shares of 1 pence each in the capital of the Company.
Following Admission, the total issued share capital of the Company will consist of 830,814,456 Ordinary Shares each with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of voting rights in the Company will be 830,814,456 and this is the figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure Guidance and Transparency Rules.
Broker Warrants
In connection with the Fundraising, the Company has granted 1,326,666 broker warrants to SP Angel Corporate Finance LLP, exercisable at the Issue Price for a period of three years.
Core Finance CEO Interview: Harry Baker of Borders & Southern
Prospex Energy
Prospex has announced that initial drilling of the Viura-1B development well in northern Spain has delivered better than expected preliminary results, successfully reaching the reservoir and prompting the decision to appraise a deeper section of the well. This deeper appraisal has the potential to significantly increase revenues and create further value at a fraction of the cost compared to drilling a standalone well. The Well is being drilled by HEYCO Energy Iberia S.L. and is one of three wells targeted for drilling at the producing Viura gas field, which has estimated gross remaining reserves of 90 Bcf (2.5 Bcm), of which 6.5 Bcf (0.18 Bcm) is net to Prospex as Prospex owns 7.2365% of the Viura field through its 7.5% ownership of HEI.
Overview
· Drilling of the Viura 1B well commenced on 22 June 2024.
· The Well encountered the main Utrillas-A reservoir unit 50 metres high to prognosis and encountered the top reservoir indicating good quality reservoir rock which was also confirmed by the logging while drilling tools.
· There have been significant gas shows throughout the drilling and coring of the main reservoir target.
· The Well will be connected to the existing gas processing facilities on site, thus generating revenues immediately, with production income expected by the end of October or early November.
· Based on these positive results, HEI and its investors have unanimously approved deepening the well to appraise the deeper sections of the reservoir, including the so far undrilled Utrillas-B formation below Utrillas-A.
· An extra 200-300 metres will be drilled to appraise the Utrillas-B formation.
· Prospex is fully participating and has paid its 15% share of the costs to deepen the well as well as, in a success case scenario, to test and complete this exploratory section.
Mark Routh, the CEO of Prospex, commented:
“I am extremely pleased to be announcing the successful results from the Viura-1B development well, which were better than expected and have subsequently prompted the decision to drill deeper into the reservoir providing us with the opportunity to create further value. Prospex’s participation in this project was recommended by our technical team and accordingly they deserve credit for this initial success.
“Likewise, the operator deserves a huge degree of praise for delivering an extremely successful well and close to the original budget. The Viura field contains gas at high pressure and high temperature, so this well could have been extremely challenging to deliver with a total depth of 4,100m MD and a maximum deviation of 45 degrees. HEYCO Energy has utilised its significant experience and expertise to deliver a safe and competent development well, which will be connected to the existing gas processing facilities on site, thus generating revenues immediately. Production income is expected by the end of October or early November.
“Deepening the well to appraise the hitherto undrilled Utrillas-B formation unit is a unique opportunity to add significant value at a fraction of the cost of a standalone well. By drilling ahead now the operator delivers for €1 million, or €2.5 million in the success case, an exploration well which would otherwise have cost over €25 million as a standalone well. Given the significant upside potential of this formation, it is too good an opportunity to miss.
“I look forward to updating shareholders with further results from the drilling as we have firm data to share.”
These do look like good results from the well and CEO Mark Routh is enthusiastic about prospects and well he should be, with the potential to deepen the well very cheaply it has the hallmarks of a better than expected result.
So the only things that are needed are the absent flow rate and of course the result of the drilling to the Utrillas-B formation which should add the cherry to the top of the cake.
And finally…
Last night in the CL league the Gooners beat PSG 2-0 and the Noisy Neighbours beat Slovan Bratislava 0-4, I will gloss over the Celtic result..
Tonight Villa host Bayern and Bologna are at fortress Anfield.
Leave A Comment