WTI $66.85 +64c, Brent $69.46 +59c, Diff -$2.61 -5c, NG $2.96 -2c, UKNG (July) 60.51p -3.49p

Oil price

Another up day yesterday and with it up a few pennies this morning it looks like the week, and incidentally likely the month, will be around 3 1/2 bucks higher with the US leading the way. Further good economic data from over the pond includes the recent GDP news with the quarterly 1.6% growth and fall in jobless numbers both indicating that the economy may be running hot after all.

After many reminders from me, who can never have enough of the thought of a summer driving season, that Monday is Memorial Day and a holiday weekend when the spirit of adventure takes over. Indeed the AAA expects more than 37m trips of 50 miles or more to take place this weekend which is up 60% y/y when only 23m people made the trips last year. Indeed in New York State it has been announced that all 8 beaches are reopening tomorrow for the holiday and outdoors there is no need for a face covering.

Predator Oil & Gas

Predator has announced results for 2020, highlights as follows. Loss from operations of £1,689,521 (2019: Loss of £1,279,243), cash balance at period end of 2020 £1,325,75 (2019: £109,716) with restricted cash of USD1,500,000 (USD1,500,000 for the period ended 31 December 2019).

Placed 89,000,000 new ordinary shares of no par value in the Company at a placing price of 4 pence to raise £3.56 million (before expenses) and 22,438,842 new ordinary shares of no par value in the Company at a placing price of 2 pence to raise £0.448 million (before expenses).

Issued to Brokers 4,875,000 new ordinary shares of no par value in settlement of placing fees and issued warrants to subscribe for 4,450,000 new ordinary shares in the Company at an exercise price of 12p per share to brokers.

Issued 15,192,506 shares to repay £269,000 of the outstanding principal balance on the Arato Convertible Loan Note inclusive of 5% conversion fee for the amount of the Loan Note being converted and used some Placing funds for redemption in full of the outstanding principal balance on the Arato Convertible Loan Notes of £746,000 (£ nil for the period to 31 December 2020).

Perhaps more importantly, post the period End: Pilot CO2 EOR results at Inniss-Trinity would potentially allow the Company to reach, by cumulative monthly growth over 12 months, target plateau production in the AT-4 Block in the range 243 to 547 bopd, in alignment with pre-Pilot CO2 EOR model forecasts.

In Morocco, Guercif exploration well planning was targeting a well to be drilled in Q 2 2021.

The Warrant Instrument with Novum Securities Ltd dated 15 February 2019 granting the right to subscribe in cash for 2,000,000 ordinary shares exercisable at a price per share equal to the subscription price (12p per share)  was being amended to allow the exercise date of the warrants to be extended by one year.

The Warrant Instrument with Novum Securities Ltd and Optiva Securities Ltd dated 24 May 2018 granting the right to subscribe in cash for 2,231,248 and 160,714 ordinary shares  respectively exercisable at a price per share equal to the subscription price (2.8p per share)  was being amended to allow the exercise date of the warrants to be extended by one year.

The Warrant Instrument with Arato Global Opportunities pursuant to the Convertible Loan Note dated 15 February 2019 granting the right to subscribe in cash for 2,000,000 ordinary shares exercisable at a price per share equal to the subscription price (12p per share) has expired without the warrants being exercised.

In addition, Predator placed 17 million new ordinary shares of no-par value in the Company at a placing price of 10.5 pence each to raise £1,785,000 (before expenses).

As a result of insufficient headroom shares to enable the issue and admission of all of the 17,000,000 Placing Shares which are required to be issued pursuant to the Placing without the production of an FCA approved prospectus, 5,215,155 new ordinary shares were issued (up to its existing headroom) and a director, Paul Griffiths, made up the shortfall with a transfer of 11,784,845 existing shares held by him to Novum Securities.

When the Company has the ability to issue further shares it intends to issue 11,784,845 new Ordinary Shares to Paul Griffiths to restore the position that existed, in terms of his aggregate shareholding in the Company, had he not made the transfer of Ordinary Shares.

Paul Griffiths, Predator’s CEO, said:
“During the period, despite the unique challenges presented by the  impact of the COVID-19 pandemic, we reached an important milestone in successfully executing and operating the Inniss-Trinity pilot C02 EOR project in Trinidad to demonstrate the potential for reducing C02 emissions by facilitating cost-effective C02 storage in producing reservoirs. The focus on gas onshore Morocco to reduce an over-reliance on more carbon intensive fuels and the planning of offshore LNG solutions for Ireland to address security of energy supply and to provide greater transparency on sources of gas relative to co-mingled imported gas is consistent with our emphasis now firmly on ESG and demonstrating energy sustainability. We are pleased to be able to demonstrate practical and pragmatic options for the Energy Transition which have a role in helping to ameliorate the effects of climate change but also in maintaining a fair, equitable and just social responsibility.

We have eliminated debt, strengthened our balance sheet and further developed our in-country relationships to execute our business strategies and create materiality by aligning with key stakeholders in the energy sectors. With this solid platform we are well-positioned to move forward in 2021 to increase operational activity beginning with the MOU-1 well in northern Morocco, which potentially could lead to the establishment of a new potential gas basin straddling the Maghreb gas pipeline to Europe.”

Last year was a busy one for PRD as it continued to develop the Inniss-Trinity project, prepared to drill in Morocco and even planned for the onshore solutions in Ireland for energy supply in that country. For a company with a market cap of c. £38m the opportunities for shareholders are potentially huge, as if any, let alone all of these prospects were to come to fruition it would be enormously rewarding. 

San Leon

San Leon announce that operator Decklar has updated the market on the operations at Oza-1 well re-entry at the Oza oil field in Nigeria.

‘Decklar continues to make considerable progress on the Oza-1 well re-entry with the camp and all associated infrastructure fully installed and operational. The major components of the drilling rig equipment are being transported to the field this week and it is anticipated the rig will be completely moved, installed and rigged-up within two weeks. Decklar will then commence the Oza-1 well re-entry operational activities including the initial work of pulling out the existing tubing, running a cement bond log and cased hole reservoir logs.

The re-entry activities will then include the testing of three oil bearing zones (L2.2, L2.4 and L2.6) independently and then it is anticipated that a final dual-tubing string completion will be installed and the L2.2 and L2.6 zones placed into production upon successful testing. The drilling rig is expected to then be skidded on the same drill pad as Oza-1 to a new drilling slot and a horizontal development well will be drilled in the L2.4 zone and placed on production.

The Oza-1 well and new horizontal development well are anticipated to generate significant production levels and cash flow in an abbreviated time frame due to the already existing infrastructure in place. The Oza development is anticipated to then continue with one or two more re-entries on existing wells and additional development drilling program with a potential of eight to ten wells being drilled for the full field development. Additional early production and central processing facilities will be added as required to accommodate additional production levels from field development activities’.

The Oza Oil Field has significant export and production capacity through processing facilities and infrastructure already in place and operational, which will allow for the immediate export and sale of crude oil from the Oza-1 well.

As previously announced, the Oza Oil Field was formerly operated by Shell Petroleum Development Company of Nigeria Ltd. The field has three wells and one side track drilled between 1959 and 1974. During the period when Shell was the operator, there were two periods of extended production testing from the Oza-1, -2 & -4 wells. The field was however never tied into an export facility, nor was it fully developed by Shell and put into commercial production.

In 2003, the Oza Oil Field was awarded to Millenium Oil and Gas Company Limited (“Millenium”) having won the field during the 2003 Marginal Fields Licensing Round. Since Millenium’s acquisition of the Oza Oil Field, approximately US$50 million has been spent on infrastructure in support of a restart of production including an export pipeline to tie the Oza Oil Field production into the Trans Niger Pipeline (TNP) which goes to the Bonny Export Terminal, a lease automatic custody transfer (LACT) unit fiscal metering system, infield flow-lines, manifolds, and related production facilities.

The Risk Service Agreement (“RSA”) that Decklar and Millenium entered provides Decklar the majority share of production and associated cash flow from the Oza Oil Field in exchange for funding and technical assistance to restart commercial production and full field development; the RSA terms include a preferential return of Decklar’s costs plus a share of cash flow thereafter. In exchange, Decklar is entitled to priority recovery of its capital from 80% of distributable funds. After achieving cost recovery, Decklar’s profit share is based on a sliding scale starting at 80% and declining to 40% once cumulative production exceeds 10 million bbls.

Decklar is also pleased to announce that it continues to make good progress on evaluations and negotiations for additional proven undeveloped oil and gas fields in Nigeria that have significant reserves and near-term production potential.”

KeyFacts Energy Industry Directory: Malcy's Blog