WTI (Nov)  $89.11 +$1.84, Brent (Dec) $94.57 +$2.12, Diff -$5.46 +28c, USNG (Nov) $6.74 +31c, UKNG (Nov) 266.0p -29p, TTF (Nov) €148.895 -€13.11

Oil price

Oil rose yesterday with a number of influences in both directions. The IEA were the last of the reporting agencies to deliver monthly cheer and its message was broadly similar to the others, cutting demand numbers for this quarter and next year. They also said that recent Opec cuts would cause oil prices to spike and potentially cause a global recession.

As for the EIA inventory stats you only had to note my comments yesterday when I said that the most important area would be distillates and diesel where I see a shortage building. The crude build of nearly 10m barrels was higher than the whisper but primarily due to a fall in exports and a bigger draw from the SPR.

Finally, the White House is getting aeriated about the Saudis and its potential cutback in supplies of oil into the market, ironically that came at the same that they cut their estimate for US domestic production for next year. It seems that it’s very important for other people to deliver oil to the world’s markets when they need it but not in my backyard….

Southern Energy Corp

 Southern has announced that its common shares of no par value in the capital of the Company  are now trading on the OTCQX® Best Market under the ticker symbol of SOUTF. Southern’s Common Shares will continue to trade on the TSX Venture Exchange under the symbol SOU, and on the AIM market of the London Stock Exchange under the symbol SOUC. 

OTCQX Graduation
Southern graduated to OTCQX from the Pink® Open Market. Investors based in the U.S. can find current financial disclosure and Real-Time Level 2 quotes for the Company on www.otcmarkets.com. For companies listed on a qualified international exchange, such as the TSXV and AIM, streamlined market standards enable them to utilize their home market reporting to make their information available in the U.S. To qualify for OTCQX, companies must meet high financial standards, follow best practice corporate governance and demonstrate compliance with applicable securities laws. JWTT Inc. acted as the Company’s OTCQX sponsor.

Conference Participation
The Company is also pleased to announce that Calvin Yau, Southern’s Chief Financial Officer, will be presenting at the Schachter “Catch The Energy” Conference at Mount Royal University in Calgary, Alberta on October 22, 2022.

Ian Atkinson, CEO and President of Southern Energy, commented:
“We are pleased to reach the milestone of trading on OTCQX, as this will make it easier for our U.S. investors to invest in Southern as we look to unlock shareholder value through our long-term development drilling program at Gwinville.”

This is a help for the overall marketability of Southern’s shares which have already done very well since the arrival in London. I have been very impressed indeed by this company and its management and the shares have already almost quadrupled since the lows but have been much higher. 

On the subject of management I am very much looking forward to meeting them again in person when they are in the UK next week. After that meeting I will adjust the model and issue a target price and this is another one very much aimed at the Bucket list as I think the next 18 months look very exciting indeed. 

Coro Energy

Coro has announced record third quarter revenues from its Italian portfolio, alongside Q3 production and gas sales and the expected re-establishment of production at Bezzecca.  

Quarterly production and revenues, including record revenue levels of above €2 million in Q3, are summarised in the table below:

Coro previously announced the review of various production enhancement initiatives to further increase gas sales from the Italian portfolio to maximise revenues from the assets at a time of supportive commodity prices. Following the successful procurement of long lead items and confirmation of UNMIG inspection dates, the Company is now looking to re-establish production at Bezzecca, at an expected rate of 15,000 scm/day, during November 2022. 

Production in the third quarter of 2022 reflects temporarily reduced levels from Sillaro since 11 September 2022 following the identification of sand clogging in a downhole valve. A coil tubing operation is currently under preparation, which is expected to resolve the issue.

Further to the announcement of the 24 August 2022, concerning the award of an option for the disposal of the Italian portfolio, the Company retains full ownership and cash flows from the Italian portfolio prior to the completion of the disposal. 

Further good news from Italy for Coro today despite some operational issues but with Bezzecca imminent the company will continue to benefit from their Italian portfolio whilst they still own it.

Echo Energy

Echo has announced that at the meeting of the holders of the Company’s Luxembourg listed EUR 20.0m 8.0% secured notes held earlier today, the proposals to restructure the Notes as announced on 5 September 2022 were duly passed by the requisite majority with  voting instructions representing EUR 10.5m of the Notes lodged by holders of the Notes, with 66.67 percent. of votes cast in favour.

The Proposals remain conditional upon the approval by the Company’s shareholders at a General Meeting to be held at 2:00 p.m. on 24 October 2022 at the offices of Fieldfisher LLP, 2 Swan Lane, London, EC4R 3TT and should approval be given, €15.0 million of existing debt principal, together with accrued interest thereon, will be converted into new ordinary shares in the Company at a 76.4 per cent. premium to the closing mid-market price per Ordinary Share on 12 October 2022:

• 50% of the outstanding principal amount of the Notes (an amount of €10.0 million), together with accrued interest thereon, will be converted into new Ordinary Shares at a price of 0.45 pence per Ordinary Share;
• Interest on remaining Notes reduced to 2% per annum on any interest accruing from 30 September 2022;
• Note maturity will be extended to 15 May 2032; and
• €5.0 million 8.0% secured convertible debt facility and remaining accrued interest will be converted in full into new Ordinary Shares at a price of 0.45 pence per Ordinary Share on the terms announced by the Company on 12 August 2022.

Directorate Change

Following the successful outcome at today’s Noteholder Meeting, Marco Fumagalli, Non-Executive Director, has informed the Company of his intention to step down from the Board on 13 January 2023.

Martin Hull, Echo’s Chief Executive Officer, commented:
“This is a very significant moment for Echo Energy. It marks the successful culmination of efforts over recent years to restructure the balance sheet and overcome the financial constraints that have been holding the company back. We are delighted to have progressed the process and are very grateful for the support of our noteholders, and of course shareholders.

The restructuring combined with our strategy to grow production in Santa Cruz and the ongoing delivery against these goals demonstrates the tangible progress Echo is making.  We will continue to focus on delivering on our operational and commercial goals and unlock Echo’s full potential.'”

James Parsons, Chairman, commented:
“Today is a red-letter day for the Company. We are delighted that the lenders have agreed to pass the proposals to restructure the bonds.

Marco has been instrumental to Echo’s progress for many years and has also played a key role recently in mustering noteholder support to the changes announced today.  We thank him for his contribution and wish him well as he moves onto other future endeavours.”

This is a necessary but good move for Echo, the balance sheet restructuring has been needed for ages and whilst it brings with it a significant element of dilution to a degree that comes with the territory. 

Expect the stepping up of  production, there are now no more excuses and Santa Cruz beckons so shareholders will be expecting some action and pdq. The good news is that organic growth is possible as at these economics the payout is good.

KeyFacts Energy Industry Directory: Malcy's Blog