WTI $39.15  +$1.49, Brent $41.23 +$1.52, Diff -$2.08 +3c, NG $3.05 -1c

Oil price

Another good day as markets went risk off, whoever the President is the downside is limited, certainly that’s how things are looking especially if it is a Biden Presidency and a Republican Senate.

The EIA stats were inconsistent due to hurricane activity, the huge draw of 8m barrels was all in the Gulf Coast and in products gasoline was a build of 1.5m and distillate a draw of 1.6m, draw what you can from that.

Attis Oil/Helium One

Aim listed Attis Oil and Gas Limited has announced it is to merge with Helium One Treasury Ltd, a wholly owned subsidiary of Helium One Global Limited. The agreement, subject to certain conditions as set out below, sets out the commercial terms of a proposed merger by way of an amalgamation under BVI law.

Helium One is a private company focused on exploration and development of the Rukwa Helium Project in Tanzania and the amalgamation represents what the Attis Directors believe to be ‘a potentially transformational and value enhancing transaction for Attis Shareholders’, giving them the opportunity to participate as investors in a globally unique, large-scale, high-grade, primary helium project. No reverse takeover here then…

The merger values Attis at c.£1.76m and Helium One at £6m, some £2.84 per each He1  share and each Attis shareholder is to be issued 1 Helium One share for every 236 Attis shares. The plan is to target admission of Helium One to AIM on or around 3 December 2020 subject to minimum fundraise of £5m.

Scirocco Energy

Unsurprisingly Scirocco has commented on the Helium One announcement given that it holds 21,297,388 shares in Helium One, which following completion of the transaction and based on the minimum raise of £5 million by Helium One, is expected to represent c. 4.6 per cent. of the enlarged entity’s share capital, and equates to a holding value of c. £605,000. Scirocco also holds 1 million share options in Helium One, with a strike price of US$0.035 (c. 2.70 pence) (noting that the transaction price per share is 2.84 pence), which the Board will monitor and manage with the objective of optimising value for Scirocco.

Scirocco is not putting more money in but, assuming completion, will have a material interest in a listed company with major catalysts on the horizon, in addition it has has enough exposure and sees more value in other investors validating the story and funding He1 through to drilling.

The valuation haircut reflects the challenges of the market but performance of other listed helium companies around the world gives confidence that the valuation gap can be closed and surpassed in the success case. In addition it provides another firm leg to SCIR story with plenty of exciting news flow expected through 2021 with this and Ruvuma now in train.

As I see it it is a positive development that provides liquidity for SCIR to exit the stock at the appropriate time – but every intention of riding this train through to the drilling catalysts. In addition, regarding the options – it is positively noted that SCIR have the option – but not the obligation to subscribe at this price which clearly has value.

So SCIR will hold and manage this option whilst watching progress. This way they can retain cash now but still benefit from the ability to subscribe at a historically low price at a later date against positive momentum.  At $35k it is modest but does demonstrate SCIR’s philosophy of capital discipline – ie why spend it now if they don’t need to.

Deltic Energy

Deltic announce that Shell has reiterated its commitment to drilling the Pensacola well and that the company has been granted an extension (for COVID reasons) in order to complete seismic data analysis, by which date the Contingent Well Commitment becomes a Firm Well Commitment, until 31 March 2021. A drilling decision will now be made after that and the well remains scheduled to be drilled in Q4 2021.

Graham Swindells, Chief Executive of Deltic Energy, commented:
“I am very happy to report Shell’s continued commitment to explore for gas with us at the high impact Pensacola Prospect and that the well remains on track to be drilled in 2021. The additional time granted will allow final work to be completed to ensure we get the best placed, best designed well to test this prospect – our work has only increased our excitement for a North Sea play that is proven in many parts of Europe. Despite the challenging times, the rigorous technical work means Pensacola has moved into well design and planning, while at the same time we have recently been provisionally awarded a series of new licences including the drill-ready Cadence Prospect in order to continue executing our strategy of building a ‘conveyer belt’ of North Sea exploration opportunities.”

KeyFacts Energy Industry Directory: Malcy's Blog