WTI (Jan) $80.95 +91c, Brent (Jan) $88.36 +91c, Diff -$7.41 n/c, USNG (Dec) $6.77 n/c, UKNG (Dec) 300.0p +31.73p, TTF (Dec) €131.5 +€15.4

Oil price

A decent rally for crude yesterday, insane rumours that Opec+ were to raise quotas were given air by CNBC yesterday but after a full set of KSA, Kuwait, UAE, Algeria and Iraq also dissed the rumour.

The OECD trimmed forecasts for world growth but said to worldwide recession is expected at the moment. The API reported a bigger than expected draw in crude inventories of 4.2m barrels, gasoline drew 400/- and distillates added 1.1m b’s.

Trade will slow down rapidly later today as traders go home early for Thanksgiving tomorrow and Black Friday after that, books are being trimmed already…

Jadestone Energy

Jadestone has announced the completion of the acquisition of the remaining 10% interest in the Lemang production sharing contract onshore Indonesia. As a result, Jadestone’s interest (pre local government back-in rights) in the Lemang PSC has increased to 100%.

The 10% interest has been acquired through the execution of a Settlement and Transfer Agreement between Jadestone and PT Hexindo Gemilang Jaya (“Hexindo”).  In return for the transfer of Hexindo’s 10% stake, Jadestone has released Hexindo from unpaid amounts relating to Hexindo’s interest in the Lemang PSC and has paid a consideration of $500,000 (inclusive of transfer taxes, which Jadestone will remit directly to the Indonesian government).

The Lemang PSC contains the Akatara gas field development, which reached final investment decision in June 2022. The field has been independently estimated to contain 18.7 mmboe of gross 2C resource, and is being developed to displace coal in local gas-fired power generation, as well as condensate sales and LPG for local residential use. Production remains on track for the first half of 2024.  Once onstream, the Akatara development will broaden Jadestone’s production base, as well as increase the proportion of gas in the production mix, thereby reducing the Company’s greenhouse gas emissions intensity.

Paul Blakeley, President and CEO commented:
“We have acquired Hexindo’s interest for US$0.26/boe of 2C resource, compared to the original acquisition cost of US$0.70/boe in 2020 – a very attractive bolt-on deal for Jadestone, particularly given the significant commercial and development progress since the initial acquisition was announced. Activity at the Akatara gas development project is progressing well and we remain on track to deliver this key organic growth project for Jadestone in the first half of 2024.”

A great add-on deal for Jadestone, all we need now is more of the same please…

Deltic Energy

Deltic has announced that Shell UK Ltd, the Operator of Licence P2252, has confirmed that the Maersk Resilient rig has been safely installed on the Pensacola location and that drilling operations have now commenced.

Deltic has a 30% working interest in Licence P2252 which is located in the emerging Zechstein Reef play fairway in the Southern North Sea. Deltic estimates the Pensacola natural gas prospect to contain gross P50 Prospective Resources of 309 BCF.

The drilling operations are expected to last between 60 and 90 days and the well has been planned to be plugged and abandoned at the completion of operations.  Deltic will update the market upon completion of operations.

Graham Swindells, Chief Executive of Deltic Energy, commented:
“We are excited to have commenced the well operations of our first exploration well on the Pensacola gas prospect. Pensacola is a high impact, potentially play opening prospect and represents what we hope will be the first of many wells as the Company continues to implement its strategy to identify opportunities and discover gas to support the UK’s energy needs.”

We are about to find out if the long wait has been worth all the hard work, if this well comes in then Deltic will justify not only the doubling in the share price this year but then some, if not….. 60-90 days makes D Day between January and February, let’s hope it won’t be the Valentine’s Day Massacre…

Europa Oil & Gas

Europa has announced that the extension to the Initial Period of the Inezgane Licence offshore Morocco announced on 21 October 2020 has now come to an end and Europa has decided not to progress to the First Extension Period. Europa is in the final stages of completing all its obligations for Inezgane and expects to complete the final relinquishment report shortly. Once this final obligation has been satisfied the bank guarantee of US$315,000 will be released and repaid to Europa, following which the Company will have no further interests associated with Inezgane.  

Simon Oddie, CEO of Europa, said:
“It has been a difficult decision not to progress to the First Extension Period as Inezgane offers significant exploration potential. However, progressing to the next stage would have required Europa to commit to drilling an exploration well, which we could not justify without obtaining another partner. We have been working tirelessly with advisors to secure a farm-in partner but the market appetite for offshore deep water oil exploration is currently very low and we have ultimately been unsuccessful. During the Initial Period, the technical team identified multiple exploration prospects and as such we believe that Inezgane has significant potential and I would like to thank the Office National des Hydrocarbures et des Mines (“ONHYM”), the Moroccan hydrocarbons and mines regulatory body, for the opportunity to work in the region and wish them success in the future.

Europa is committed to creating shareholder value by building a balanced portfolio of exploration, appraisal and production assets in the UK and Atlantic Ireland. Our balanced portfolio of assets at various stages of the development cycle, including production and appraisal, ensures that Europa remains well-placed to deliver affordable energy. We will continue to explore potential development and exploration opportunities to expand our portfolio wherever they become available, provided that these can be acquired and developed on acceptable commercial terms and within the transition context. We have a healthy balance sheet on which to execute on our stated strategy.”

A no-brainer, not a chance that this expensive project could be carried on without rich partners. At least there are still some things left in the portfolio. Following the huge loss of value at Serenity and the ditching of Morocco it’s beginning to look like EOG will be back to being a decent UK onshore play with some FEL 4/19 in the Irish Atlantic Margin for any longer term upside. 

The shares have lost two thirds of their value this year and two potentially big projects have either gone or lost most of the upside. I’m scheduled for a meeting with the company soon, I hope that this will provide some clues as to what the plans are for the portfolio.

Prospex Energy

Prospex has provided an update on the development activity on the Podere Gallina Licence located onshore in the Po Valley region of northern Italy, in which lies the Selva gas field within the Selva Malvezzi Production Concession. Po Valley Energy Limited released an update on the ASX overnight on 23 November 2022. Prospex holds a 37% working interest in the Podere Gallina licence with the Operator holding the remaining 63%.

Highlights

• Final approval to commence development activity received on 21 November 2022
• Works to prepare the tie-in to the SNAM gas grid network commenced on 19 November 2021
• Gas plant construction work and pipeline installation work is to commence 28 November 2022
• Podere Maiar remains on track for first gas in early Q2 2023
• Final stage of production concession application for Prospex submitted
• Po Valley, the operator, in dialogue with off-take partners for the sale of gas from Podere Maiar

Mark Routh, Prospex’s CEO, commented:
“We are extremely pleased that Po Valley has confirmed that final permissions have been granted to start the development works on site and that Podere Maiar remains on schedule and on budget to achieve first gas early in the second quarter of 2023. Initial conversations with gas off-take partners for the sale of gas have commenced, which we have decided to sell jointly with the Operator Po Valley under a joint marketing agreement, which we believe will optimise the value of our gas sales and provide better value for our shareholders.

“In addition, the submission of our final application to the Ministry of the Environment and Energy Security to be approved as a gas producer took place on 21 November 2022. We believe that next year will be a transformational year for Prospex as we become a producer of gas in Italy as well as in Spain and very much look forward to keeping shareholders updated on our progress.”

This is further good news for Prospex who are already cracking on with the development and they are on schedule for first gas early 2Q 2023. The discussions with regard to the gas off-take seem sensible enough and ticks boxes for me.

All in all no reason to halt the continued run in the shares which are doing very well right now.

KeyFacts Energy Industry Directory: Malcy's Blog