WTI (Nov) $91.13 -$1.51, Brent (Dec) $96.19 -$1.73, Diff -$ 5.06 -22c, USNG (Nov) $6.43 -31c, UKNG (Nov) 300.0p +30.0p, TTF (Nov) €160.0 +€9.49

Oil price

Oil fell yesterday and has fallen further this morning, just as mentioned yesterday and before, it is down to China where Covid cases have risen again and economic data disappointed. So recessionary worries which are the down side on the oil price win short term, are winning, not for long I suspect.

Total workers in France have rejected the latest wage offer from the company which has led to shortages of gasoline at fuel stations across the country. While this problem is specific to Total  I expect further shortages of oil products across Europe caused by an overall shortage of imported petrol, diesel and other distillates.

Kistos

Further to the publication on 10 May 2022 of the Notice of Annual General Meeting, and the passing of all the required Resolutions at the Annual General Meeting of the Company on 9 June 2022, the Company announces that the final hearing in the Court process to convert its Euro 14,734,000 merger reserve into a distributable reserve is expected to be held on 11 October 2022.

As described in the Notice, an issue of bonus shares, each having a nominal value to be determined as at the date of the Bonus Issue, shall occur on the evening of 10 October 2022. Accordingly, the record time for the bonus issue shall be 6.00 p.m. on 10 October 2022. The nominal value of each Capital Reduction Share shall be determined as described in the Notice.

One Capital Reduction Share shall be issued for each ordinary share of 10p in issue as at the Record Time. In addition, and as described in the Notice, the Capital Reduction Shares will not be admitted to trading on AIM or to trading on any regulated market. No share certificates will be issued in respect of the Capital Reduction Shares. The Capital Reduction Shares will have extremely limited rights. In particular, the Capital Reduction Shares will carry no rights to vote, no rights to participate in the profits of the Company and no rights to participate in the Company’s assets save on a winding-up. The Capital Reduction Shares will be transferable, but it is not expected that any market in them will develop and it is anticipated that the Court will confirm their cancellation at the Court Hearing on the day immediately after the date on which they have been issued.

The Company will announce the outcome of the Court Hearing on 12 October 2022. Full details of the Capital Reduction are set out in the notice of AGM which was sent to Shareholders. The notice of AGM is also available for inspection on the Kistos website, https://kistosplc.com/.

This is a very important day for Kistos and its band of shareholders, assuming success in court today the directors will be able to consider a dividend, something synonymous with this company and its long term strategy. 

Touchstone Exploration- A red letter day…

Touchstone has announced that the Coho facility has safely delivered first natural gas, representing the first onshore natural gas project to come onstream in Trinidad and Tobago in over twenty years. The Coho area is located in the Ortoire block, where Touchstone has an 80 percent operating working interest and Heritage Petroleum Company Limited holds the remaining 20 percent working interest.

On September 26, 2022, the Coho facility was approved by the Certified Verification Agent with the Trinidad and Tobago Ministry of Energy and Energy Industries promptly authorizing facility commissioning. On September 27, 2022, we commenced commissioning and achieved commercial deliveries on October 10, 2022, with a field estimated sustained gross production rate of approximately 10.5 million cubic feet per day (approximately 8.4 million cubic feet per day net).

We will continue to monitor the Coho-1 well in an effort to optimize production. In conjunction with initial production, we have sold the 2.7-kilometre, 6-inch gathering line tying in our Coho facility to the Baraka natural gas facility to The National Gas Company of Trinidad and Tobago Limited. Natural gas production from the Coho facility will be sold to NGC pursuant to a natural gas sales agreement executed in December 2020.

Paul Baay, President and Chief Executive Officer, commented:
“This is very exciting for the Company, as Coho production represents the first stage of diversifying our product mix in Trinidad. The Coho facility is capable of 24 million cubic feet of gross natural gas per day, giving us the ability to potentially add incremental production volumes through a combination of additional drilling and well optimization. I would also like to recognize the collective contributions of our team in making this project a success. Being the first onshore gas project in over twenty years, we have learnt from the process, which we expect will provide a strong foundation for continuous improvement as we proceed with our larger Cascadura project.”

This is indeed a most exciting time for Touchstone as Coho provides first gas and ongoing substantial revenues. But there is much more to come and investors should be aware that today is just the beginning.

Expect the completion before long of the Cascadura production facility which will dwarf Coho but that is not all in the portfolio, there is much more to come. The management have said to me in the past that they are building a company, not something done in five minutes and I can see that happening here. 

Add all the potential upside including exploration and development drilling at Coho, Cascadura and Royston which includes one very deep opportunity and you may see over 20 wells drilled in the next couple of years or so. Add to that the possibility of success at the Trinidad 2022 Onshore bid round where TXP will be represented cannot be ruled out. 

I have heard Touchstone as being described as being a potential stock of the year for 2023, and with all this activity which includes a massive upwards shift in revenue from Cascadura and the positive nature of future cash flows I see significant upside which you never know might even yield returning money to shareholders one way or another. 

Touchstone has a good and highly experienced management which I expect to deliver for shareholders big time, this is an exciting time for the company and the portfolio will transform the prospects for it over the next few months. 

Scirocco Energy

Scirocco has announced an amendment to, and repayment schedule for, the investment facility with Prolific Basins LLC, a U.S.-based investor.

Utilising available cash resources, strengthened by the first cash instalment received from ARA Petroleum Tanzania Limited under the loan agreement associated with Ruvuma disposal agreement (details on which have been previously announced), Scirocco has agreed to pay, in the coming days, $200,000 to part settle the outstanding balance of the Prolific Facility, with the remaining balance of $245,000 to be paid in five equal monthly instalments of $49,000 each over the months of November 2022 to March 2023 inclusive. Provided that the Company complies with this repayment schedule, Prolific has also agreed not to request share issuances under the Facility.

Tom Reynolds, Scirocco Energy CEO commented
“We are pleased to have amended the terms of the facility to enable the full settlement of the Facility without issuing further Scirocco shares. This amendment also enables the Company to retain cash flexibility in the short term.  The Facility served as a vital source of capital to retain the Company’s interest in Ruvuma through the sales process, and now that the Company has a clear line of sight to completion of the divestment of that interest we are accelerating the final settlement.

Scirocco is pleased to have Prolific’s continued support during a challenging time in the global markets, Prolific’s investment served as an important bridge in Scirocco’s cash flow requirements, and Prolific has acted as a supportive and responsible corporate citizen during its tenure as an investor in Scirocco.

Following receipt of the first funds associated with the APT loan agreement, Scirocco is in a significantly more secure financial position, which enables the Company to pay down this facility.  Crucially, as we pursue completion with APT, the Company is no longer exposed to cash calls associated with Ruvuma providing clarity on the use of funds and the ability to pursue further investment in EAG and other platforms which meet the Company’s investment criteria. “

This is a wise move by Scirocco management who are restructuring the finances ready for a post Ruvuma outlook, most important however is that this has removed potential future share issuances linked to the facility. 

Jadestone Energy

Jadestone has announced that the Company has entered into an agreement with its panel of insurers. The agreement provides that Jadestone will receive US$17.2 million of cash proceeds from the settlement of an insurance claim in respect of a well workover which took place in 2021. It is expected that the funds will be received during Q4 2022.

Nothing much to report here but a modest piece of good news for a change, the money will come in handy as current revenues are down. 

KeyFacts Energy Industry Directory: Malcy's Blog