WTI (July) $74.34 +$1.43, Brent (July) $78.36 +$1.52, Diff -$4.02 +9c
USNG (June) $2.39 +5c, UKNG (June) 64.50p -3.74p, TTF (June) €26.805 -€2.97

Oil price – 3 strikes and you’re out…

Another genuine rise in the oil price this time mainly down to inventory stats which showed a huge draw in crude of 12,456m barrels and with a refinery run rate of 91.7% yet gasoline stocks fell by over 2m b’s. This might be acceptable if it wasn’t for the fact that gasoline stocks are well below the 5 year average and the driving season starts on Monday on which the AAA has predicted 6% more road trips will be taken compared with last year…

Secondly the weekend after the Memorial Day holiday Opec meets, Sunday June 4th, and whilst they have not suggested they will cut production again, the influential Saudi Oil Minister has warned against being short crude oil…

Thirdly a number of commentators, recently led by the IEA but including myself, have said that due to significant lack of investment the ability of the oil market to cope with the potentially resurgent Chinese economy and joined by the firing on all cylinders Indian economy. And you may not be protected by natural gas, I would suggest that the demand from all areas as we head to northern hemisphere winter could make last year look very small for a number of reasons, not least the weather which has come to the rescue in the last 9 months but cannot be relied upon.

Pharos Energy

Pharos has issued the following Trading and Operations update in advance of the Company’s annual general meeting (AGM) today at 14.00 BST. The information contained herein has not been audited and may be subject to further review and amendment.

Jann Brown, Chief Executive Officer, commented:
“Our 2023 work programme has started well with strong operational delivery across our repositioned portfolio, including an encouraging drill result at the CNV field in Vietnam and a commercial discovery at the first of two exploration wells in the North Beni Suef concession in Egypt.

“The active drilling programme in Egypt continues targeting a total of nine wells on El Fayum in 2023 and a second well on North Beni Suef. In Vietnam, we remain focused on extending the life of our assets and maturing exploration prospects. The Revised Field Development Plan for TGT has been submitted to the regulator to support drilling two development wells in 2024, and good progress is being made with the application for an extension of our licences at both TGT and CNV. We remain excited by the basin opening potential of Blocks 125 & 126 and the delivery of a new partner remains a priority for management, with discussions ongoing with a number of interested parties. 

“Our focus remains on operational delivery, sustainable cash generation and capital discipline to deliver regular shareholder returns, and we look forward to recommencing regular dividend payments this year alongside our ongoing share buyback programme.”

I like what I see going on at Pharos at the moment as success in both Egypt and Vietnam is reflected in the confidence in the management with careful capital returns to shareholders and a strong commitment to cutting costs and keeping them under control.

Going forward there is much to get excited about, both in Egypt and Vietnam there are high profile wells and the search for a partner in the latter looks interesting. Building from this new base has been a success for the team across the board so far and I see no reason to thing anything will change for the time being, things are set fair at Pharos. 

Operational Highlights

• Group working interest production for the four months to end of April 2023 was 6,805 boepd net. Group working interest 2023 production guidance of 6,050 – 7,500 boepd net remains unchanged from the Preliminary Results announcement on 22 March 2023:
• Vietnam production 5,477 boepd. Vietnam 2023 production guidance 4,700 – 5,700 boepd net
• Egypt production 1,328 bopd. Egypt 2023 production guidance 1,350 – 1,800 bopd net

In Vietnam:

• On Block 9-2 – CNV Field, well CNV-2PST1 was completed and put on stream. Initial production results are highly encouraging at c. 3,000 bopd (gross) compared to pre-drill estimates of c. 1,000 bopd (gross); the well is under close monitoring and will continue to be evaluated. The new lateral was drilled from an existing well, which significantly reduced the well cost and established the potential for additional low-cost drilling in the field
• TGT Revised Field Development Plan (RFDP) for two new wells has been submitted to the regulator for approval. Drilling expected to commence in Q2/Q3 2024
• Application for extensions to TGT & CNV licences. Discussions ongoing between partners and PVN on licence terms and work programme commitments for the extension period
• Application for an extension to the exploration phase of the Blocks 125 & 126 production sharing contract is with the Prime Minister’s office for approval
• Progressing work on rig availability and securing a farm-in partner with a number of interested parties, to drill the commitment well on Block 125
• In addition, an independent assessment by ERCE for Block 125 has commenced, evaluating prospect sizes with encouraging initial results. We look forward to update the market at the July Trading & Operations Update

In Egypt:

• The first commitment exploration well in North Beni Suef concession (NBS-1X) was declared a commercial discovery after encountering multiple pay zones in Abu Roash G Formation. The well stabilised production test rate pre-frac is 470 bopd (gross)
• Acquisition of c.110 km2 of additional 3D seismic at NBS is ongoing and the second commitment exploration well is expected to be drilled in Q3
• Two development wells were drilled on the El Fayum Concession and completed in Q1 before the rig was dispatched to NBS to drill NBS-1X. The rig is now back in El Fayum and drilling the third of nine wells in a multi-well development programme
• Two commitment exploration wells in the El Fayum Concession expected to be drilled in Q2/Q3

Financial Highlights

• Group revenue for January to April 2023 was $49m and there were no realised hedging profits/losses
• Cash balances as at 30 April 2023 of c. $44m, net debt of c. $29m
• Egypt receivable position stands at $29m (Dec 2022: $24m). The continuing volatility of the macro-economic environment in Egypt and further devaluation of EGP against the US dollar since year end means that it remains preferable to hold USD denominated receivables
• Forecast cash capex for the Group for the full year remains unchanged at c. $23m, with continuing benefit of IPR carry over Egyptian assets

Corporate Highlights

• Continuation of $3m share buyback programme announced in January
• Final dividend for the 2022 financial year of 1p per share to be proposed to shareholders at the AGM and, subject to their approval, expected to be paid on 12 July 2023
• Net Zero roadmap to be published in H2 2023
• A Trading & Operations update will be published on 20 July 2023, ahead of the Company’s Interim Results announcement in September  

Hurricane Energy

Hurricane has provided an update on the Acquisition by Prax, to be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act, as first announced on 16 March 2023.

On 4 May 2023, Hurricane announced that the Scheme had been approved by the requisite majority of Scheme Shareholders at the Court Meeting held on that date and that the Special Resolutions relating to the implementation of the Scheme and the Special Dividends had been approved by the requisite majority of Hurricane Shareholders at the General Meeting also held on that date.

On 24 May 2023, Hurricane announced that the NSIA Condition had been satisfied. Prax has now received written confirmation from the North Sea Transition Authority, the UK oil and gas industry regulator, stating that it is not minded to exercise its powers under the relevant model clauses incorporated in any onshore or offshore production licence currently held by Hurricane to revoke the Licence or seek further changes of control of Hurricane following the Scheme becoming Effective. Prax has therefore confirmed that the NSTA Condition has now been satisfied.

Next steps and timetable
The Scheme remains subject to certain other conditions, including sanction by the Court at the Court Sanction Hearing scheduled for 7 June 2023 and the delivery of a copy of the Court Order to the Registrar of Companies.  Subject to the Scheme receiving the sanction of the Court, the delivery of a copy of the Court Order to the Registrar of Companies and the satisfaction (or, where applicable, the waiver) of the other Conditions set out in Part III of the Scheme Document, the Scheme is expected to become effective on 8 June 2023.  The expected timetable of principal events for the implementation of the Scheme remains as set out in the announcement of 24 May 2023.  If any change to the key dates and/or times in that timetable are made, Hurricane will give notice of this change by issuing an announcement through a Regulatory Information Service and such announcement will be made available on Hurricane’s website at www.hurricaneenergy.com/investors/formal-sale-process.

Off to court then on June 7th where shareholders will remember being kept alive by the Judge who ruled against the NED’s who tried to wipe them out. The fact that on what is National Chocolate Ice Cream Day, a wonderful company which had the opportunity to be a British Champion in the North Sea can be effectively sold for less than a choc ice, is a shame and a scandal that certain people who should know better presided over. You know who you are…

KeyFacts Energy Industry Directory: Malcy's Blog