WTI $53.13 -18c, Brent $56.10 +2c, Diff -$2.97 +13c, NG $2.49 -5c, UKNG 58.0p +2.49p

Oil price

With the oil price coming off today it looks like it will end up as an even week but with the concerns over Covid reappearing in China resulting in temporary measures caution remains the watchword. The EIA inventory stats will be out later today reflecting the MLK day and the Inauguration.

Union Jack Oil/Reabold Resources

The operator has received a Screening Opinion from the East Riding of Yorkshire Council in response to the company’s screening request for the proposed West Newton A site extension. The proposed extension of the existing West Newton A (WNA) wellsite and associated work programme would provide for testing, appraisal and production from the two existing wells (WN-A1 and WN-A2) and the potential for drilling, testing, appraisal and production from up to six (6) new wells on the WNA site over a 25 year period.

The East Riding of Yorkshire Council’s Screening Opinion considers that the proposed development would not comprise EIA (Environmental Impact Assessment) development. The operator will be undertaking public consultation on the West Newton A site development plan over the coming months and ahead of the submission of any formal planning application.

Stephen Williams, Co-CEO of Reabold, commented:
“It is encouraging that activity continues behind the scenes at West Newton, with progress being made ahead of testing and eventual production on the licence. With each step taking West Newton closer to development and potentially unlocking further value, we look forward to keeping shareholders updated as the project progresses.”

The above is the formal wording of the operator (and RBD comment) therefore presumably verbatim so I am drawing a number of conclusions from it. Firstly the very fact that the partners are planning extension of the site to include ‘up to six new wells’ must indicate significant confidence in west Newton, and that’s before C and D. Secondly the fact that the wording says ‘not comprise EIA’ means that there will be no need for such a document before public consultation and formal planning application thus saving time. All in all with the testing of A and B imminent but with some degree of confidence and of course with C&D down the road but at an early stage, thoughts of value will be coming to mind.

What surprises me is why neither shares have risen this morning. Admittedly I have long been bullish about the prospects at WN and it is a modest announcement about extension and local process. Having said that, the next few weeks and months are laden with potential from the testing of A and B through hopefully announcements on possible development and in due course external interest, but let me not get carried away…

Pharos Energy

Pharos has announced that it has raised a total of $11.7m through a ‘significantly oversubscribed’ placing, subscription and Primary Bid retail interest at 19.25p, a 9.8% discount. I am led to believe that new shareholders include high quality institutions helped by experts Auctus, substantial retail with another feather in the cap for Primary Bid and of course directors.

Proceeds from the raise are to move forward in Egypt quickly and before the recent announcement of a farm-out. The use of this money should kick start the water injection programme and thus benefitting swiftly from the recent rise in the oil price. Having said that it wasn’t quite what I had expected, it does however mean that Pharos can get to work and deliver what could be a big operation in Egypt, last chance saloonsville….

Ed Story, Chief Executive of Pharos Energy plc, commented:
“We are delighted to have such strong support in this equity raising from the market, underpinned by our existing shareholders, management team and board.

“These funds will allow us to restart our investment in the water flood programme in the El Fayum oil fields in Egypt imminently as we progress our farm out process. We expect this to bring in the funding for the first phase of the full-scale development drilling programme (oil producers and water injectors), targeting material increases in production.”

Falcon Oil & Gas

Another announcement from FOG whereby they state that gas composition data confirms Kyalla as a liquids rich gas play. As announced on 19 January 2021, longer term measures will be put in place to flow back sufficient hydraulic fracture stimulation water to allow the Kyalla 117 to flow continually without assistance. This work is expected to commence at the start of the dry season in Q2 2021 and if successful will allow an extended production test (“EPT”) of between 60 and 90 days to commence.

Philip O’Quigley (CEO of Falcon) commented:
“The initial gas composition data are very encouraging providing a strong indication for the liquids rich gas play in the Kyalla formation. We will update the market when operations recommence at Kyalla 117 at the beginning of the dry season in Q2 2021.”

KeyFacts Energy Industry Directory: Malcy's Blog