WTI (Dec) $88.91 -$2.88, Brent (Jan) $96.36 -$2.56, Diff -$6.45 +32c, USNG (Dec) $6.13 -81c, UKNG (Dec) 283.81p +9.05p, TTF €113.995 +€2.19

Oil price

Oil fell in the last couple of days following China announcing higher Covid stats and another plan to get to zero cases which with their poor vaccination data just won’t happen so we wait and see. The API inventory stats, after the close last night, showed a build in crude of 5.6m barrels, gasoline was up 2.6m and unsurprisingly distillates drew some 6.1m b’s.

The IEA have reduced their estimates for global demand increases next year, it is now +1.16m b/d cut from an earlier 1.48m but the figures are notoriously flaky.

Finally, the US Mid-Term elections yesterday with votes still being counted, are indicating a much better performance from the Democratic party and both the Senate and the House of Representatives are yet to be decided. It may be that the Senate race in Georgia comes down to a runoff on December 8th which shows how tight it is.

Ithaca Energy

Following the announcement made by Ithaca Energy on 25 October 2022 of its intention to float, Ithaca Energy today announces the successful pricing of its initial public offering at 250 pence per share. Based on the Offer Price, Ithaca Energy’s market capitalisation will be approximately £2.5 billion ($2.9 billion) at the commencement of conditional dealings on the main market of the London Stock Exchange.

Offer Highlights

• The Offer Price has been set at 250 pence per Ordinary Share.
• Ithaca Energy’s total market capitalisation at the commencement of conditional dealings on the main market of London Stock Exchange will be approximately £2.5 billion ($2.9 billion) based on the Offer Price.
• The Offer comprises 105,000,000 new Ordinary Shares being sold by the Company. This equates to a total offer size of £262.5 million ($303.6 million) and represents approximately 10.4 per cent of Ithaca Energy’s issued share capital on Admission. The Company will retain no net proceeds from the Offer, with all net proceeds ultimately being received by Delek Group Ltd.
• In addition, a further 15,000,000 Ordinary Shares in the Company are being made available by DKL Energy Limited, the Company’s immediate shareholder and an entity ultimately owned by Delek, pursuant to the over-allotment option, which, if exercised in full, would increase the number of shares in public hands to 120,000,000 Ordinary Shares in total and approximately 11.9 per cent of Ithaca Energy’s issued share capital.
• Immediately following Admission, the Company’s issued share capital will be 1,005,162,217 Ordinary Shares.
• The Prospectus, including full details of the Offer, will be submitted for approval with the FCA and is expected to be published later today.

Admission and Dealings

• Conditional dealings in the Ordinary Shares are expected to commence on the London Stock Exchange at 8:00 a.m. (London time) on 9 November 2022 under the ticker “ITH”. Investors should note that only those who applied for and were allocated Ordinary Shares in the Offer will be able to deal in the Ordinary Shares on a conditional basis.
• Admission to the premium listing segment of the Official List of the FCA and to trading on the Main Market for listed securities of the London Stock Exchange, and the commencement of unconditional dealings is expected to take place at 8.00 a.m. (London time) on 14 November 2022.

Gilad Myerson, Executive Chairman of Ithaca Energy said:
“I am delighted with the outcome of our IPO. We have received great support from a high-quality selection of institutional investors and I am excited to welcome them on board as we continue to create value in the public markets.

Ithaca Energy has undergone a transformation over the past three years to become one of the UK’s leading independent oil and gas companies and I am very excited for what lies ahead as we continue our journey in the public markets.”

The oil market was quite surprised when this float was announced as the portfolio does not stand up to international comparisons of size or quality at the price range announced. Accordingly, although the offer got away at 250p, the low end of the 250-310p range predicted, it fell on the market opening by some 7% to 232.4p. Until I have met with the management I won’t be formally covering the stock but even at these prices the shares look pretty expensive, more after a  meeting, otherwise leave well alone. 

Coro Energy

Coro has announced the resumption of production at the Bezzecca gas field in Italy.  The well demonstrated strong pressure support, giving good indications for production performance in line with previously announced expectations of c.15,000 scm/d.  Stabilized production rates will be provided following an initial period to allow the necessary time for gas processing parameters to be adjusted.

James Parsons, Coro’s Chairman, commented:
“I am delighted to announce that we have brought Bezzecca back into production which, together with the imminent resumption of Sillaro plus the current stable production from Casa Tiberi and Rapagnano, will increase cash flow generation from our Italian portfolio at an opportune time as spot gas prices escalate during the winter months.”

Good news from Coro today which will as Chairman James Parsons says, give substantial cash flow during the winter months, also he points out that the whole portfolio is now increasing.

I also add from yesterday the joint announcements from both Coro and EME who have 15% and 8.5% of Duyung, the RNS is the same with the exception of comments from EME’s Tom Kelly which is  a useful addition. Whilst at an early stage in terms of such things as a GSA there is a significant long term value to be patiently waited for. 

Empyrean Energy/Coro Energy

Empyrean has advised that the Indonesian Ministry of Energy and Mineral Resources has now approved the updated Plan of Development for the Mako Gas Project within the Duyung PSC. Details of the Updated Mako PoD were announced by the Company on 9 September 2022.

Highlights

• Indonesian Government has approved the Updated Mako PoD, representing an important milestone in the Mako Gas Project’s development.
• Updated Mako PoD based upon Contingent Duyung PSC Resources of 384 billion cubic feet gross within the Duyung PSC area which represents some 297 billion cubic feet net attributable* to 100% of the Duyung PSC Joint Venture.
• Indonesian government approval to export up to 100% of gas production to Singapore.
• The Operator is targeting production from the Mako Gas Project to commence in 2025 under the Updated Mako PoD at up to 120 million cubic feet of gas per day.
• Empyrean holds a 8.5% interest in the Duyung PSC in which the Mako Gas Project is located.
• Development of the Mako Gas Project will be in line with Indonesia’s stated objective of doubling domestic gas production by 2030.
• Importation of pipeline gas would provide secure and reliable energy to Singapore that is less carbon intensive than LNG.

The Updated Mako PoD amends an initial Mako Gas Project PoD approved in 2018 to reflect, inter alia, previously announced increases in Contingent Resources following a successful 2019 drilling campaign. The award of the revised POD represents a material event in progressing the Mako Gas Project and is a significant milestone on the critical path to developing this significant resource, which is currently the largest undeveloped gas field in South Natuna Sea.

The Updated Mako PoD is based on field Contingent Resources of 297 billion cubic feet (net attributable to 100% of the Duyung PSC Joint Venture) and a daily production of 120 MMscf/d, consistent with the GaffneyCline Associates competent persons report dated 26 August 2022, details of which were also announced by the Company on 9 September 2022.

At present, there is no infrastructure to transmit gas from the Mako field to domestic markets in Indonesia, and hence under the Updated Mako PoD the export of production to Singapore, which is already connected to the West Natuna Gas Transportation System, has been approved until and unless such evacuation routes to Indonesia are built, at which point up to 25% of production may be allocated for domestic sale. The existing underutilised gas pipeline to Singapore expedites the development of the Mako gas field from which gas is expected to be produced from 2025.

The Operator of the Duyung PSC is West Natuna Exploration Limited, a 100%-owned subsidiary of Conrad Asia Energy Ltd, who hold a 76.5% interest in the Duyung PSC. The remaining 15% interest in the Duyung PSC is held by Coro Energy plc.

*after deduction of 23% contractor take

Empyrean CEO, Tom Kelly, stated:
“This approval for the updated Plan of Development by the Indonesian Ministry of Energy and Mineral Resources is a major milestone on the pathway to developing this significant pipeline quality methane gas resource. It now allows the operator to re-focus resources on its stated objective of working with the Government of Indonesia to complete Gas Sales Agreement negotiations at the earliest opportunity.”

This is very good news for both Coro and Empyrean but shareholders shouldn’t get too excited too quickly, there is much to wait for, not least the GSA and infrastructure. 

KeyFacts Energy Industry Directory: Malcy's Blog