WTI (June) $77.87 +50c, Brent (June) $81.66 +56c, Diff -$3.79 +6c
USNG (May) $2.23 -1c, UKNG (May) 96.09p -0.41p, TTF (May) €39.20 -€1.75

Oil price

Oil fell last week by a little under 5 bucks, the US economy is stalling and the Fed are circling, few mention that the central banks, in particular the Fed, the ECB and the BoE are almost entirely responsible for this mess. And that’s not 20/20 hindsight either, a few of us said it…

Touchstone Exploration Inc

Touchstone has announced that the initial Royston-1X production test of the least prospective section of the well confirmed the presence of light crude oil at non-commercial rates. Touchstone has an 80 percent operating working interest in the well, which is located on the Ortoire block onshore in the Republic of Trinidad and Tobago. Heritage Petroleum Company Limited holds the remaining 20 percent working interest.

The first of potentially five production tests of the Royston-1X well evaluated the lowest and least prospective section in the subthrust sheet of the Herrera Formation at depths between 11,102 and 11,168 feet. During testing, the well did not flow oil to surface. Swabbed volumes were analyzed by a third party confirming 40 degrees API gravity formation crude oil, representing the deepest oil encountered on the Ortoire block to date. This section of the formation appears to be a low permeability reservoir, and further testing will not be conducted.

Touchstone will continue testing operations with potentially four additional tests targeting an aggregate 384 gross feet, with a program to evaluate each identified sand interval independently. The next well test will target a gross interval of 70 feet in the middle portion of the subthrust sheet and will be performed with a service rig. Testing operations at this interval will commence once the drilling rig is moved to the Cascadura C location, which we anticipate occurring in late May when civil operations at the Cascadura C location are scheduled to complete.

Paul Baay, President and Chief Executive Officer, commented:
“We are encouraged that the initial test of the Royston-1X well successfully confirmed the presence of light oil in the subthrust sheet, validating our internal wireline log analysis. The test results and crude oil analysis have been crucial to establish the extent of the hydrocarbon column penetrated by the wellbore, providing valuable baseline information for evaluating the log data and defining future testing intervals.

The future production tests target uphole zones with a focus on productive capability and ultimate development potential. As each test will be performed independently, we expect a number of months of testing upon commencement of the second test. We will update the market when results become available.“

This Royston-1X well test has delivered oil in the lowest reservoir, as predicted and although it did not flow to the surface, the deeper end of the column was always going to be more of an information seeking exercise than anything else. 

With a further four more tests in shallower sand intervals and to be done with a service rig allowing the drilling rig to move to the Cascadura C location ready for drilling in late May. Touchstone shares are still amongst the most attractive in the sector, with the excitement at Cascadura yet to come I am supremely confident that TXP should be amongst the best in the market.

Union Jack Oil

Union Jack has noted that Europa Oil & Gas and Egdon Resources, as part of their Interim Reports, have today published commentary on various projects in which Union Jack hold economic interests.

Union Jack’s results for the year ended 31 December 2022 will be published on Monday 15 May 2023.

When the significant assets of companies in the same assets crossover, results days become important, Union Jack note today that both Egdon and Europa, partners in Wressle have produced results which are worth noting and  point to a fine set of results come May 15th which I am very much looking forward to. 

Europa Oil & Gas

Europa has announced its unaudited interim results for the six-month period ended 31 January 2023. 

Financial Performance

• Highest interim revenues recorded in Company's history as a result of continued excellent operational performance and a strong oil price
• Revenue £3.7 million (H1 2022: £2.2 million)
• Gross profit £1.5 million (H1 2022: £0.9 million)
• Pre-tax loss of £1.3 million (H1 2022: pre-tax profit £0.7 million) after exploration impairment charge of £1.7 million (H1 2022: impairment reversal £0.4 million)
• Net cash from operating activities £1.7 million (H1 2022: £0.9 million)
• Unrestricted cash balance at 31 January 2023: £5.1 million (31 July 2022: £1.4 million)

OPERATIONAL HIGHLIGHTS

Onshore UK - Wressle oilfield continues to exceed expectations, generating strong levels of revenues and production

• Total production net to Europa averaged 268 bopd during the H1 period, a 29% increase on H1 last year
• Wressle net production to Europa increased 55% from 134 bopd to 207 bopd as the field performed better than expected
• Wressle now the second most productive onshore UK oilfield
• The well continues to produce under natural flow with zero water cut and remains highly cash generative
• A new seismic interpretation and mapping exercise across the Wressle field has highlighted a potentially significant increase in resources from the Ashover Grit and the results of the analysis are now being incorporated into the field development plan. The intention is that the next development well will be drilled from the existing Wressle site and planning and permitting work for the well is ongoing. The well will be drilled at the earliest opportunity, subject to receipt of regulatory approval
• Ongoing work to utilise the associated gas being produced from Wressle which is expected to lead to further increases in oil production during H2 2023
• An independent technical report has been commissioned which will incorporate the new field interpretation, historical production performance data and the field development plan. The report is expected to be completed during June 2023

Offshore Ireland - Low risk / high reward infrastructure-led exploration in the proven Slyne Basin gas play

• The FEL 4/19 licence extension was granted by the Irish Government, extending the initial phase to January 2024
• Licence FEL 4/19 contains the Inishkea gas exploration prospect, estimated by ERCE, a third-party reserves auditor to hold 1.5 tcf of recoverable gas
• A farm-out process has begun which is expected to conclude by year end 2023, with the aim of bringing in a partner to assist with the drilling of the prospect
• Given the security of supply issues that Ireland faces, the Board believes that it is in the interest of Ireland that this prospect is drilled as soon as reasonably possible, especially as local existing infrastructure would make any development a low carbon intensity project

Offshore UK
Progress continues with the development of the Serenity oil discovery in the Central North Sea alongside our partner i3 Energy
Despite drilling an appraisal well in October 2022 that failed to encounter hydrocarbons, the partners believe that Serenity offers a commercially viable development opportunity with a number of potential development scenarios available given local infrastructure
A future development could result in approximately 1,000 bopd net to Europa's 25% interest

Morocco
The extension to the Initial Period of the Inezgane Licence offshore Morocco announced on 21 October 2020 came to an end in November 2022, and Europa decided not to progress to the First Extension Period

ESG

• Initiated ESG review focused on integrating the ESG principles adopted by Europa into the Company's planning and wider strategy
• Europa contributes to the Wressle Community Fund, which has been operating since early 2022 and provides funds to meet the needs of local charities and community groups. The Company and its Wressle JV partners make an annual contribution of £100,000 to the fund

Post Period

• In March 2023, the Company announced that Simon Oddie was stepping down as CEO, with Will Holland moving from his role as CFO to replace him with immediate effect
• The operator of Wressle announced that gross revenues from the field since August 2021 had reached US$35.0 million by late March 2023, representing approximately US$10.5 million net to Europa
• On 3 April 2023 Alastair Stuart, a petroleum engineer with over 30 years of experience, was appointed Chief Operating Officer and an Executive Director of the Company. Mr Stuart has been a consultant at Europa since 2012 and more recently has been intimately involved in the development of the Wressle Field
• In order to ensure that the finance function within Europa is suitably resourced, the Company has increased its existing mandate with Clifton Financial Solutions Limited. Clifton already provides accounting services to Europa and from April 2023 will also provide administrative services that would typically fall under the remit of a CFO

Will Holland, CEO of Europa, said :
"I am pleased to report my first set of interim results as CEO showing record operational numbers which resulted in Europa continuing to be in a strong financial position. These numbers were all generated whilst Simon Oddie was CEO and are a testament to the excellent job that he has done at Europa since 2018.

The Wressle oilfield's continued excellent performance has underpinned our significant growth in revenues during the period, and a number of projects are underway to enable increased oil production and gas monetisation from the field. The first phase of the gas utilisation project was completed in January 2023, whereby three microturbines were connected to provide site power which have resulted in a c. 10% increase in oil production. The second stage is the installation of a gas engine to generate 1.4 MW of electricity into a local private power network.

In addition to building on our corporate ESG framework, the cornerstone of our long-term commitment to the global energy transition, we initiated a farm-out process for our Irish offshore licence FEL 4/19. Within the licence is the extensive Inishkea gas prospect containing an estimated 1.5 tcf of gas, and we recognise the significant potential of FEL 4/19 to help alleviate Ireland's energy security concerns by providing the nation with a dependable source of gas produced with low carbon emissions.

Europa remains a highly cash generative business, and our robust financial foundations will enable us to continue to work towards optimising our existing assets in the second half of the year, whilst we also pursue potential UK offshore and onshore opportunities to add to our well-balanced portfolio and deliver further value for shareholders."

This is a very pleasing set of results and the new CEO as well as the outgoing one should be very pleased with the state of the business. The numbers, which were up with best expectations despite the impairment charge for leaving Morocco, were the best ever. 

Onshore the UK, EOG has benefited from the best in class Wressle field which continues to deliver and also has considerable upside when the drilling programme starts again in the next few months, subject to environmental and planning permits.

Offshore Ireland, recent comments by the Taoiseach, Leo Varadkar in Parliament recently indicated that the Inishkea licence may be tied in with the Corrib field and could supply as much as 70% of Ireland’s gas demand. Given that the gas here is of very low carbon intensity it could end up being a no-brainer and a huge opportunity for EOG. 

At Serenity it seems that whilst it may not stand up as a single field development there is a good chance that paired with Tain, the adjacent field owned by Repsol and Sinopec and discussions are taking place on this front.  Europa is well managed with a strong executive and Non-Executive team as well as being financially strong enough to cover most commitments in the current portfolio. Accordingly I think the company is well worth a new look with a fresh perspective on its attractive and rewarding opportunities. 

I had the opportunity to interview the new Europa CEO Will Holland this morning and the link is here:

Core Finance CEO interview: William Holland, Europa Oil & Gas

Egdon Resources

Egdon has announced its unaudited results for the six months ended 31 January 2023. 

Operational and Corporate

• Production for the Period was up by 27% to 46,465 barrels of oil equivalent equating to a rate of 253 boe per day, ahead of guidance of 225-245 boepd (H1 2022: 36,714 boe and 200 boepd)
• The Wressle oil field continued to be the standout asset for Egdon, producing at an average rate of 689 barrels of oil per day during the Period.  Total field production from Wressle to 31 January 2023 stood at 357,838 barrels of oil with no water production.
• The North Kelsey Planning appeal documentation was submitted on 8 August 2022.  This will be heard via a Public Hearing on 14 June 2023
• During 2022, the moratorium on hydraulic fracturing for shale gas was lifted (8 September 2022) and then reinstated (27 October 2022)
• A hearing was held on 11 October 2022 in relation to the Biscathorpe planning appeal and we continue to await the Planning Inspector’s decision
• Licence P2304 was relinquished as planned in November 2022
• In December 2022 Egdon announced the acquisition of Aurora Production (UK) Limited, a private company with interests in PL090 (Waddock Cross) and PEDL070 (Avington).  The effective date of the transaction is 30 September 2022 and the consideration is the grant of a Net Profit Interest capped at the cash balance of £0.288 million which provides for outstanding abandonment liabilities. This transaction completed post period end on 1 March 2023.

Financial Performance

• Unaudited revenue for the Interim Period was up 46% to £3.725 million (H1 2022: £2.551 million)
• Earnings before interest, tax, depreciation, amortisation, asset impairments, impairment reversals and write-downs were £2.105 million (H1 2022: £1.410 million).
• Overall profit for the Period after a tax charge of £0.741 million (H1 2022: £Nil) was £0.435 million (H1 2022: £1.222 million)
• As at 31 January 2023, the Company had cash and cash equivalents of £5.524 million (H1 2022: £2.084 million) and net current assets of £6.593 million (H1 2022: £1.165 million, which includes debt of £1.007 million and £0.417 million deferred consideration for Wressle)
• The Company had no borrowings as at 31 January 2023 (H1 2022: £1.007 million)

Subsequent Events

• On 6 February 2023 Egdon entered into a Farmout Option Agreement with York Energy (UK) Holdings Limited relating to Licence PL081 in North Yorkshire. Under the terms of the Agreement, Egdon has a period of six months from 3 February 2023 to elect to farm into the Licence which contains the Weaverthorpe Prospect. Egdon’s initial evaluation indicates an estimated Mean prospective gas resource of 58 billion cubic feet.
• On 1 March 2023 Egdon completed the acquisition of Aurora Production (UK) Limited which has subsequently been renamed Egdon Resources (Aurora) Limited.  The effective date of this transaction is 30 September 2022.
• On 19 April 2023 Egdon relinquished P1929 which contained the Resolution gas discovery and which was fully impaired in the 31 July 2022 accounts.

Outlook

• Post-Period end production and revenues have continued to be strong, despite reduced commodity prices, with February and March unaudited revenues of £0.632 million and £0.521 million respectively.
• Production guidance for the full financial year is increased to 240-250 boepd, up from 225-245 boepd.

The key operational focus for the remainder of 2023 will be:

• Maintaining and enhancing the impressive production performance at Wressle whilst progressing both the gas monetisation and further development drilling as priorities.
• To add reserves, production and revenues through the drill-bit across our exploration and development/re-development projects.
• To progress the Company’s energy transition strategy through geothermal, energy storage, hydrogen and renewable generation projects.

Commenting on the results, Philip Stephens, Chairman of Egdon said;
“This has been another period of impressive operational and financial performance for the Company.  Egdon’s flagship asset, Wressle, continues to perform strongly, generating positive cash flow and with plans being progressed for its further development.

We were pleased to further enhance the business through the acquisition of Aurora and the addition of an option on a material gas prospect at Weaverthorpe.

The outlook for the remainder of the year looks positive with expected continued strong revenue generation from Wressle alongside numerous value catalysts in the planned work programme. 

We look forward to updating on progress through the second half of the year.”

Along with others, Egdon has done very well with its excellent Wressle project and with a number of opportunities to be drilled on the acreage later this year or early 2024 (Environmental permits and planning applications going according to plan) there is much upside. 

In addition there are Biscathorpe and North Kelsey in the wings and a  number to follow so whilst there may be little drilling until 4Q of this year there is much to look forward to when the drill bit turns.

Hurricane Energy

Further to the announcement on 16 March 2023 by Hurricane that it has reached agreement with Prax Exploration & Production PLC on the terms of a recommended acquisition of the entire issued and to be issued ordinary share capital of Hurricane by Prax, the Company notes the announcement today by Prax that the financial terms of the Acquisition will not be increased.

Hurricane notes also that leading independent proxy advisory firms have recommended that Shareholders vote in favour of the Acquisition.

No Increase Statement
Prax considers the financial terms of the Acquisition to be full and fair. The financial terms of the Acquisition are therefore final and will not be increased, save that Prax reserves the right to revise the financial terms of the Acquisition where: (i) there is an announcement of a firm intention to make an offer for Hurricane by any third party; or (ii) the Panel otherwise provides its consent.

Under Rule 32.2 of the Code, the mix or the composition of the Acquisition, including the Firm Proceeds, the Supplementary Dividend and the Deferred Consideration Units may not be altered in any way.

If, on or prior to the Effective Date, any dividend, distribution, or other return of value, other than the Special Dividends, is declared, made, or paid or becomes payable by Hurricane, Prax will be required to reduce the Cash Consideration payable under the terms of the Acquisition for the Hurricane Shares by an amount equal to the aggregate amount of such dividend, distribution or other return of value.

Under Rule 35.1 of the Code, if the Acquisition lapses, except with the consent of the Panel, Prax will not be able to make an offer for Hurricane for at least 12 months.

Leading Independent Proxy Advisory Firms Recommendation.
The Board of Hurricane notes that Institutional Shareholder Services  and Glass, Lewis & Co.  have both issued supportive FOR recommendations, advising their institutional shareholder subscribers to vote IN FAVOUR of the resolutions necessary to approve the Scheme at the Court Meeting and General Meeting.

ISS and Glass Lewis are leading independent, third-party proxy advisory firms which provide proxy voting recommendations to pension funds, investment managers, mutual funds, and other institutional shareholders.

Supplementary Dividend Update
As of 23 April 2023, at least 495,000 barrels of oil are currently available for lifting in the FPSO, and the next lifting is scheduled for later in April. As significant delays to the lifting are only likely caused by either weather or other extreme circumstances the Hurricane Directors believe that it is highly probable that the full £37.2 million will become payable under the Acquisition, either via the Supplementary Dividend or via the DCUs.

In accordance with the requirements of the Companies Act, to enable the payment of dividends, Hurricane has prepared and delivered to the Registrar of Companies unaudited interim accounts of the Company made up to 31 March 2023. The interim accounts and other information relating to the Acquisition are available on the Company’s website

https://www.hurricaneenergy.com/investors/formal-sale-process

Antony Maris, Chief Executive Officer of Hurricane, commented:
“Hurricane’s Board continues to believe that the terms of the offer are fair and reasonable. We are very pleased to note the recently announced endorsements of the recommended acquisition by leading corporate governance advisors, ISS and Glass Lewis, which are in line with the irrevocable commitments of support from the Company’s two largest Shareholders. This proposed transaction is in the best interests of our shareholders and we look forward to updating shareholders on the progress of the recommended acquisition in due course.”

 It looks like game over after all this time, I’m not looking forward to writing the obituary nor when Prax starts to rev the beast up…