WTI (Dec) $87.91 +$2.59, Brent (Dec) $95.69 +$2.17, Diff -$7.78 -42c, USNG (Nov) $5.60 -1c, UKNG (Dec) 329.24p +5.24p, TTF (Dec) €131.445 +€2.22

Oil price

Oil rallied as the IEA announced that ‘the oil system is very fragile’ and that shortages might happen. Whilst the EIA inventory stats showed a build in crude, that was overshadowed by a big rise in exports of crude and products.

Jadestone Energy

Jadestone has announces that the Company has mutually agreed with OMV New Zealand Limited, a subsidiary of OMV, to terminate the sale and purchase agreement to acquire an operated 69% interest in the Maari Project, offshore New Zealand.

As reported in its 2022 Half-Year results statement on 20 September 2022, following legislative changes to New Zealand’s upstream regulatory framework at the end of 2021, Jadestone has been continually engaged with OMV New Zealand and the New Zealand Government to seek clarity on the processes, terms and associated timeline required to complete the Maari transaction. Due to a lack of progress on regulatory approval, and resultant uncertainty over the timing of this approval for the transfer of interest and operatorship of the Maari Project, Jadestone and OMV have now reluctantly reached a decision to terminate the transaction.

Paul Blakeley, President and CEO commented:
“Whilst disappointing, we have been signalling that the lack of progress on Maari was an increasing concern and today, almost twelve months after the new legislation came into effect, there is still little to no clarity on what is required from Jadestone to receive the necessary government approval to complete the acquisition. Nearly three years after the acquisition was first announced, and with an upcoming license expiry in 2027, this leaves insufficient time to confidently invest in the asset and therefore, despite our best efforts, it is now time to move on. When balanced against the growing number of alternative inorganic growth opportunities elsewhere in the wider Asia-Pacific region, Jadestone cannot continue to spend time and resources on the Maari process, and we are firm in the belief that this decision is in the best interests of the Company.

At a time when energy security is at a premium, and with the pathway to a lower carbon economy becoming more complex, the IEA has highlighted the importance of new investment into currently producing oil and gas fields to ensure maximum recovery of discovered resources.  The Maari Project represented an excellent example of this approach, where we had identified several significant investment opportunities as a result of large in-place reserves and a low recovery factor.  Unfortunately, the asset is now unlikely to see the type and scale of inward investment that had been planned by Jadestone. My thanks go to our team in New Zealand, who have worked tirelessly on the acquisition, transition planning and strategy for extending the life of the asset.

Elsewhere, Jadestone is making good progress on a number of fronts with several potential near-term positive catalysts. We now have a clearer path towards completing the repairs on the Montara Venture FPSO and we will provide a more detailed update on this soon. The Stag infill drilling programme is progressing well, with the first well now at the completion stage and the second well soon to reach the reservoir interval. The Akatara gas development remains on track and the Vietnam gas sales discussions with the end-user are making progress. The completion of the North West Shelf oil acquisition from BP is still expected this quarter, as is the acquisition of the remaining 10% interest in the Lemang PSC.  Finally, there are a number of inorganic opportunities across the Asia-Pacific region which are under evaluation. Overall, the outlook for Jadestone remains positive and we are excited for the future.”

In recent months Jadestone could be forgiven for thinking that things just weren’t going its way, the Montara FPSO leak has taken longer than expected to repair and is still down and now the company has somewhat reluctantly walked away from the Maari acquisition. In recent months it has been increasingly obvious that with little or no interest in closing this deal from the New Zealand Government it was becoming a waste of time and money.

Overall this is a shame as the basin contains this and other potential transactional opportunities and with low recovery factors and large reserves it could have been a lower carbon model for future hydrocarbon extraction. But the company has many M&A opportunities and need to move on.

Elsewhere the company are planning a detailed Montara presentation shortly and other recent acquisitions scheduled for completion will add to the potential upside for Jadestone. The shares have nearly halved as a result of these two setbacks but with so much in the pipeline that we know about, let alone other deals that we don’t, I am convinced that the worst of the fall is over and the shares are exceptional value. 

Hunting

Hunting has today issued a Q3 2022 trading update.

Highlights

• Continued strong momentum across all operating segments.
• Strengthening Group EBITDA in Q3 2022.
• $438 million sales order book as at 30 September 2022.
• $187 million of liquidity including cash and bank of $37 million and $150 million lending facility.
• Outlook continues to improve with the acceleration of activity across the global oil and gas industry.

Trading Statement
Trading in Q3 2022 has been strong as momentum within the global oil and gas industry continues to accelerate. Group EBITDA in the quarter was ahead of Q2 2022, with a year-to-date EBITDA of c.$36 million being recorded, with all operating segments and product lines seeing improved performance as clients commit to new projects.

At 30 September 2022, the Group’s order book was $438 million, which provides confidence that sales momentum will remain robust for the remainder of the year and well into 2023.

Hunting Titan continues to see strong sales in its core market of North America, along with increased international market opportunities, particularly in South America. With the continuing migration of clients to new technology, gross margins in this segment are projected to improve across the remainder of the year and into 2023, with sales of perforating systems and instrumentation product groups being particularly strong in the year-to-date.

Within the North America segment, sales momentum within the Premium Connections and Accessories Manufacturing businesses saw strong increases as clients continue domestic and international project development. The performance of the segment’s Subsea, Trenchless and Specialty businesses has remained in line with management’s expectations. The Advanced Manufacturing group continues to see improving results, however some supply chain issues remain, particularly in the area of microchip supply. Management believe that this latter issue is unwinding, with the performance of these businesses forecast to improve throughout the remainder of the year and into 2023.

The EMEA operating segment continues to see improving results, supported by the Tubacex contract for Brazil, which is being completed in the Group’s Netherlands and Aberdeen facilities. The segment’s Norway and Saudi Arabia businesses reported sales improvement throughout the quarter as international activity levels return to growth. 

The Asia Pacific operating segment saw an improvement in sales during Q3 2022 after a challenging H1 2022. The segment begun work on the CNOOC contract that was awarded in August, which will contribute to sales and profitability in 2023.

The Group’s balance sheet remains strong, with net assets as at 30 September 2022 of c.$849 million. As indicated at the Group’s 2022 Half Year Results, investment in working capital to meet secured orders has increased in the quarter, and includes the inventory requirements for the CNOOC contract. Cash and bank was $37 million as at 30 September 2022, with a further reduction anticipated by management as raw material purchases continues in the quarter to support this important order. In addition, the 2022 interim dividend of 4.5 cents per share will be paid on Friday 28 October 2022, which will absorb a further c.$7.2 million. Capital expenditure for the full year is anticipated to be c.$20 million. Management anticipate that working capital will return to more normal levels in 2023.

In summary, the Board remains comfortable with current market expectations as sales momentum and profitability continue to increase, with the outlook for 2023 remaining particularly positive.

Re-organisation of Executive Committee and Formation of New Operating Segment
The Group announces that Rick Bradley, Hunting’s Chief Operating Officer, will be retiring from Hunting in November 2022 and will therefore step down from the Executive Committee on 30 November 2022. The Board wish to thank Rick for his service to the Group, which has included leading the Hunting Titan operating segment from its acquisition in 2011 up to 2017, prior to his appointment to his current role.

Given the Group’s enhanced position within the global subsea technologies market, following the acquisition of RTI Energy Systems in 2019 and Enpro Subsea in 2020, a new operating segment will be formed on 1 January 2023. The Subsea Technologies operating segment will comprise the National Coupling, RTI and Enpro businesses and will be led by Dane Tipton, Managing Director, who will report to Jim Johnson, Chief Executive. Mr Tipton will join the Hunting Executive Committee on 1 November 2022.

Jim Johnson, Chief Executive of Hunting, commented:
“The Group continues to report a strengthening financial performance, which now extends into 2023. With energy security now the top of every political agenda, the outlook for the oil and gas industry remains strong, with market analysts forecasting continued investment growth in the medium term. In addition, given the macro-economic and geopolitical shifts seen in the quarter, management is also of the belief that the global oil and gas industry will particularly benefit from these pressures which continue to build as affordable, secure energy continues to be in demand by western economies, placing Hunting in an excellent position going forward.

“Management is pleased with the improving performance of each business within the Group, which has been a result of the significant cost cutting and restructuring completed since 2020, coupled with the strong return to growth of our core markets. With the continued success of our Subsea Technologies business group, I am looking forward to highlighting the value of our technology and service offering in this growth segment of the market under Dane’s strong leadership and vision.

“Overall Hunting is well placed to grow strongly within the current market environment and with a compelling, diversified product offering across all areas of the global oil and gas market, the Group remains well placed to deliver robust growth in the medium term.”

Hunting is in a very strong position, something that I have been confident about for many months. The share price had a very strong run in 1H 2022 and more than doubled to 350p at which time there appeared a credibility gap between some analysts and the company. The massaging down by the company of expectations saw the shares lose some 25% of the value in days and since then the recovery has continued.

This excellent update is exhibiting serious growth in its order book, a very strong balance sheet and  cash to facilitate significant further growth. I expect the shares to reflect increases in earnings forecasts and therefore expect a return to 350p and then some as oilfield service companies like hunting make hay. 

Wildcat Petroleum

Wildcat Petroleum plc (LSE: WCAT), a company targeting investment opportunities in business and assets within the upstream sector of the petroleum industry, is pleased to announce that, further to the announcement made on 3 October 2022, Waterford Finance and Investment Ltd  has completed its subscription of 10,000,000 new ordinary shares.

Mandhir Singh, Chairman of Wildcat, commented:
“It is a great coup for Wildcat to secure the backing of an oil sector heavyweight such as Waterford. The Company hopes to gain further backing from other industry leaders.”

Wildcat then announced the placing of 18,040,000 new ordinary shares at a price of 1.25p raising £225,500, net £211,970. The new ordinary shares will rank pari passu with the Company’s existing issued ordinary shares. The Company intends to allot and issue these new ordinary shares under its existing authorities on a non pre-emptive basis.

The Company will be making its application to admit the new ordinary shares to the Official List of the FCA and to trading on the Main Market (Standard List) of the LSE. Admission is expected to occur on 1 November 2022.

Conditional on Admission, the Company’s issued ordinary share capital will be 2,428,040,000 ordinary shares, which may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA’s Disclosure Guidance and Transparency Rules.

Mandhir Singh, Chairman of Wildcat, commented: 
“The company is delighted to have raised additional funds to strengthen the balance sheet in difficult market conditions.”

I havent started covering Wildcat but it is just interesting to note that this ‘blockchain technology’ company has raised a little money to run itself while it looks for acquisitions in Africa. This will be easier now that Michael Kroupeev has put his head above the parapet as a financial backer of the business and as The Sunday Times revealed, an advisor…

KeyFacts Energy Industry Directory: Malcy's Blog