WTI (Feb) $72.56 +16c, Brent (Mar) $77.88 -41c, Diff -5.32 -57c.
USNG (Feb) $2.87 -3c, UKNG (Feb) 68.33p, -4.84p, TTF (Feb) €28.22 -€0.495

Oil price

Many influences on the oil price at the moment, not least the Red Sea where the aerial ‘ping pong’ continues, aside from existing difficulties with the US and its allies, with its missile attack on Pakistan, the Houthis from Yemen have now added that country to incoming bombing. 

Also, with the Dav-os charade still going on many Central Bankers, who consider the high spending jamboree to be home from home have been talking down interest rate cuts thus strengthening the dollar. Davos has a catch phrase which is ‘Davos asks the most official questions’ and the answer is ‘and rarely gets the right answers. What a scandal it is and even the politicians trying to get elected in the UK are out there on the expenses…

Kistos

Kistos, a joint venture partner in the Greater Laggan Area  and co-owner of the Shetland Gas Plant, notes the North Sea Transition Authority (NSTA) decision to grant development and production consent for the Victory Gas Field, operated by Shell UK Limited. This follows an environmental impact assessment by the Offshore Petroleum Regulator for Environment and Decommissioning.

The Victory Gas Field is situated approximately 29 miles northwest of the Shetland Islands and is estimated to contain a P50 recoverable resource of 179 billion cubic feet, equivalent to approximately 7 per cent of the UK’s annual natural gas consumption. The gas produced from Victory will be developed as a single subsea tie-back well to GLA infrastructure and transported to the Shetland Gas Plant. The field is expected to reach first gas in the middle of the decade and will see peak production levels of circa 150 million cubic feet of gas per day.

Production from the Victory field will significantly increase throughput at the Shetland Gas Plant, further extending the life of the Greater Laggan Area whilst reducing overall unit operating expenditure.

Kistos is pleased to update shareholders on the end of 2023 calendar year with cash and near-cash of approximately €275 million (including estimated tax receivables).

Andrew Austin, Executive Chairman of Kistos, commented:
“We are delighted by the confidence of Shell in sanctioning this project and the support of the British government. As partners in the Shetland Gas Plant, we are encouraged that the future of the installation is further underpinned by more hydrocarbons being produced through this quality infrastructure. Kistos will benefit, along with the other partners, through more parties sharing the infrastructure and reducing opex while extending the life of the facility.

“As an active exploration, development, and production participant in the Greater Laggan Area, we look forward to working alongside our partners to support this important development for the UKCS and the West of Shetland region.”

As Shell gets approval for Victory with its 179 Bcf of recoverable resource and 150 mmcf/d of gas production levels, which tie into the Greater Laggan Area infrastructure and hence generates tariff revenue for Kistos is clearly good news for the company. It also extends the life of the project and. its infrastructure and of course reduces operating costs so good news all round for the company.

Reabold Resources

Reabold Resources has announced that, further to its announcement on 5 December 2023, it has been informed that the final tranche of the payment from Shell U.K. Limited for the sale of the entire issued share capital of Corallian Energy Limited, as announced on 1 November 2022, will be distributed to former Corallian shareholders over the coming days, following receipt of Development and Production Consent for the Victory gas field from the North Sea Transition Authority on 17 January 2024. 

Reabold will receive £4.4 million for the final tranche, which follows the £8.3 million already received by the Company.  Reabold intends to use the proceeds received to advance the development of assets across its portfolio, as well as distributing excess cash to shareholders.

Reabold aims to replicate its success with the Victory project across the other key assets in its portfolio, most notably, West Newton and Colle Santo. Both assets are significant gas resources, which, like Victory, can make a meaningful contribution to improve energy security in Western Europe.  

Stephen Williams, Co-CEO of Reabold, said:
“We are pleased to see development approval granted for the Victory gas field, which triggers the final tranche of the payment from Shell to Corallian’s shareholders. This represents a significant moment in the delivery of the Reabold strategy to identify, fund and monetise under appreciated, but strategically important assets. We remain focussed on progressing other key projects in the Reabold portfolio in 2024 and realising further value to reward shareholders for their ongoing support of the Company.”

Back to Shell/Victory again, this time to Reabold Resources who are about to receive the final payment from Shell of $4.4m. This validates the Reabold model which is explained above but can only be proved on a red letter day like today when the completion of an investment happens by way of a final payout. 

This means that the remaining investments which are in the pipeline can receive vital cash injections which in due course will take each of them to the final stage and ultimate payout to the company and hence the shareholders. 

The money coming in today has always been earmarked for current projects, in particular those at West Newton and Colle Santo, where gas developments are moving ahead and will benefit from investment as they are at formative stages in their development and hopefully will reflect success achieved at Victory. 

Recent attempts to unsettle Reabold were not supported by most of the shareholders, despite being expensive and time consuming. Today for once and for all, the company can move ahead from this frustrating activity and kick on at these two key investments in the current portfolio. The shares should soon start to reflect the substantial value embedded in both West Newton and Colle Santo, the company is set fair and has much to prove. 

Coro Energy

Coro has announced the receipt of an in principle offer from a Vietnamese Bank for project debt finance and also updates on the exclusivity and indicative funding proposal from Capton Energy previously announced by the Company.

Following six months of negotiation and due diligence, HDBank of Vietnam has provided the Company with an in principle commitment letter to provide debt finance for its previously announced 50MW MOU with Mobile World Investment Corporation to install rooftop solar systems across their portfolio.  The non-binding commitment letter initially focuses on funding for the ten locations in the pilot stage and would cover 50% of the total capital required for these locations.  It would then be the intention to broaden any funding arrangement reached to the full scale 50MW roll out across all 900 project locations.

In addition, and further to the Company’s announcement of 3 August 2023 which notified the entry of a four month period of exclusivity with Capton Energy in respect of an indicative funding proposal, the Company now updates that, whilst exclusivity with Capton Energy has expired, detailed negotiations on transaction documents continue in respect of the potential sale by the Company of a stake in the Company’s revenue producing 3MW pilot project in Vietnam.  

Coro is making strong progress on its renewable strategy and here it concentrates on putting the funding for the company together. As this side of the business continues to flourish so in due course it will grow and dwarf Duyung as a meaningful part of the business.

KeyFacts Energy Industry Directory: Malcy's Blog