WTI (Sep) $83.27 +7c, Brent (Oct) $88.98 +7c, Diff -$5.71 u/c.

USNG (Sep) $2.78 +1c, UKNG (Sep) 146.76p -1.88p, TTF (Sep) €59.605 -€0.94.

Oil price

Oil is off just under a dollar today as it seems like TACO is reappearing in the shape of a policy pivot being called ‘we are reverting to Economic squeeze of the entrenched Iran regime’, ie red button fever strikes again. 

The EIA inventory stats were even more extreme than the API but only in crude oil where a build of 17.423m exceeded the children’s best guesses of a draw, yes a draw, of 500/- barrels. Products both drew as expected as refinery runs at 96.2% fell by only 0.3% so the crude part of it were mainly technical.

And from yesterday I noted that the EIA reported that retail gasoline stayed above $4 per gallon which is up 15.1c up m/m and 88.8c up year on year.

Genel Energy

Genel notes DNO’s announcement this morning, consistent with our comments at our half year results, reporting that drilling activities recommenced in April and production at the Tawke field restated on 28 June and at the Peshkabir field on 11 July.

DNO also comments:

• With contribution from new wells and absent adverse security developments, DNO expects production at Tawke license to stabilize at around pre-shutdown levels.

• While DNO continues to seek access to export markets or export prices, the Company is currently selling its entitlement oil at prices in the mid-to-upper USD 30s per barrel.

Genel continues to seek access to export markets or export prices, which would more than double the free cash flow generation from the Tawke PSC.

This announcement really speaks for itself, investment in new wells means that production is expected to to stabilise at pre-shutdown levels and Genel is looking to access the export markets with its associated pricing benefits. 

These higher prices are preferable to the local market sales but come with associated concerns about payment terms and prices as well as the well known historic receivables generated which can accumulate significantly. 

Genel remain in a strong position with a robust balance sheet and continuing to have good cash flow which enables it to facilitate all of its current progress both organically and inorganically and I keep my target price of 100p which is very conservative. 

Serica Energy

Termination of Final Serica Offer for Pharos Energy plc 

On 7 August 2026, Pharos and Ratio Petroleum Energy LP (“Ratio”) announced that they had reached agreement on the terms of a recommended increased cash acquisition by Ratio of the entire issued and to be issued share capital of Pharos (the “Increased Ratio Offer”). The board of directors of Pharos (the “Pharos Board”) unanimously recommended that Pharos shareholders vote in favour of the resolutions to be proposed at the shareholder meetings to be held to approve the Increased Ratio Offer and also unanimously withdrew its recommendation of the cash offer for the entire issued and to be issued share capital of Pharos announced by Serica Energy plc (“Serica”) on 26 July 2026.

On 10 August 2026, Serica confirmed that its offer value of 32.6683 pence per Pharos share, comprising 28.6683 pence in cash and 4.0 pence in cash by way of a special dividend, was final and would not be increased (the “Final Serica Offer”).

The board of directors of Serica (the “Serica Board”) notes the announcement released today by Pharos (the “Pharos Announcement”) in connection with the Final Serica Offer. Serica confirms that it will not elect to implement its offer by way of a contractual offer.

Serica has confirmed to Pharos that it no longer wishes to proceed with the Final Serica Offer and the Pharos Board has provided its consent to the Panel on Takeovers and Mergers (the “Panel”) to release Serica from its obligations under Rule 2.7(b) and Rule 24.1 of the City Code on Takeovers and Mergers (the “Code”) to proceed with the Final Serica Offer.

As a result, the Serica Board confirms that it will no longer proceed with the Final Serica Offer. The Panel has confirmed to Pharos and Serica that:

(i) Serica is released from its obligation under Rule 2.7(b) and Rule 24.1 of the Code to proceed with the Final Serica Offer; and

(ii) Serica is subject to the restrictions set out in Rule 35.1 of the Code and is prohibited from, amongst other things, making any offer for Pharos without the consent of the Panel for a period of 12 months.

This is just a formality, nothing else.

Petro Matad

Petro Matad has provided the following operational update.

Highlights

·    The 2026 Oil Sales Agreement between Petro Matad and PetroChina for Block XX production has been implemented.

·    Pending the receipt of revenue for  2026 oil production to date, Petro Matad has rescheduled the planned 3D seismic survey and well intervention activity.

·      Five companies are currently active in the Company’s farm out data room.

·    SunSteppe Renewable Energy (SRE), the Company’s renewable energy joint venture, has in the last few months, secured exclusivity on three projects totalling 290 MW and intends to participate in a tender for another 100 MW project. Of the new projects, two are being fast-tracked by the Mongolian government and SRE has received approval of the Feasibility Studies and Licences to Construct for both.

Oil Sales Agreement

Despite having approved the 2026 Oil Sales Agreement in June, PetroChina further delayed its implementation whilst internal discussions between its Mongolian and head offices continued. Confirmation has now been received that all the issues are resolved and the c. 48,000 barrel inventory of Block XX production in tanks at the Block XIX facilities will now be exported for sale. Invoices will be processed in September and PetroChina’s Ulaanbaatar office has indicated that it will try and expedite payment ahead of the contractual terms, given its long delay in implementing the agreement.

2026 operations

Preparations and permitting for blockwide acquisition of 3D seismic have been completed but, until 2026 oil sales revenue is received, Petro Matad continues to manage its cash resources very carefully and therefore the planned 3D seismic survey has been rescheduled. Well work at Heron-2 and Gobi Bear-1 has also been rescheduled. This is deemed prudent from a financial management perspective. At the same time, the Company’s renewable energy joint venture has two new projects under fast-track development that have the potential to reach ready-to-build (RTB) status and value crystallisation events in short order.

Farmout

Five companies are currently active in the Petro Matad data room reviewing the potential of Blocks XX and VII. The interest is from Asian, and particularly Chinese, companies and has been heightened by the disruption to world markets and oil supply to Asia that have resulted from events in the Gulf. Consummation of a deal during the year remains the Company’s goal.

Renewable Energy

SRE has secured development rights to three utility-scale renewable energy projects with a combined capacity of 290 MW, significantly expanding its portfolio in Mongolia.

The three new projects are:

Ø     Ulaanbaatar 90 MW Solar Powered Battery Energy Storage System Project, where SRE leads the consortium selected after a competitive tender to develop the project under a public-private partnership. The project will provide renewable energy powered battery storage to strengthen the reliability and sustainability of the capital’s electricity supply. Having won the tender, the SRE consortium expects to start negotiations shortly and will target RTB status on this project in 2027.

Ø     Dundgobi and Uvurkhangai 100MW each Solar Powered Battery Energy Storage System Projects. These projects are being fast-tracked by the government with an RTB deadline before end 2026. Proof of the government’s intentions has been demonstrated in that SRE’s Feasibility Studies for both projects have already been approved as have the Licences to Construct. Negotiations on the power purchase agreements have started with target completion in Q3 this year. SRE is in discussion with large international investors who are keen to partner on these projects.

Ø    The Company is also preparing to join a consortium led by a world-leading renewable energy investor to prequalify for bidding on a 100 MW wind power project that is being managed by the International Finance Corporation.

With projects totalling c. 600 MW of capacity in its exclusively held portfolio and with the government supporting rapid development, SRE is well placed to crystallise value from the Mongolian renewables sector. The Company plans to make a presentation on Mongolian renewables and SRE’s ambitions on the Investor Meet Company platform during Q3 2026.

 Mike Buck, CEO of Petro Matad, said:

“We finally have an agreed and now implemented 2026 Oil Sales Agreement after seven months of effort and delay. We expect this to be honoured in full through to year end by which time we are already pushing to have an approved agreement for 2027 in hand and ready to implement.

Cash management has been a primary focus for the Company through the year and continues to be so. The rescheduling of in-field operations until revenue is received is prudent and we also need to make sure that we meet the government’s year-end deadline for RTB status on our two new fast-track 100 MW renewable energy projects.

Shareholders’ continued patience during the unfathomably long delay in getting the 2026 Oil Sales Agreement implemented is much appreciated“.

An operating update today from Petro Matad, the key thing that shareholders have been waiting for is that the final implementation of the 2026 Oil Sales Agreement has been done after the deal was agreed and whilst no payment has yet been made, invoicing should commence next month and payments expected soon after that.

And the fact that no payment has yet been made does affect the operational side of the business which has temporarily stalled ‘until revenue is received’  which is indeed a prudent call but means that activity at Gobi Bear-1 and Heron-2 are in abeyance and the 3D seismic work has been put back. Until when obviously depends on payment received for which there is no guidance, yet…

As for the farm-out process, it carries on with five companies ‘currently active in the data room reviewing the potential of Blocks XX and VII’ and we are guided that interest is from Asian, particularly Chinese companies.

Finally on renewables, the company has some very significant but also long term potential and to me it will have to wait quite a long time given other pressures in the company. But the good news is that the management are promising a deep dive presentation on the renewables assets in an Investor Meet presentation in 3Q 2026.

And finally…

So the much vaunted eclipse of the sun came and went, rather like the Emperors new clothes as it seemed like a damp squib were I was…

And the LA Lakers have been sold, again, only a year since it last changed hands. A consortium led by Bob Iger, he of House of Mouse fame has paid $12.5bn to Mark Walter who bought it for only $10bn so recently.