WTI (Nov) $89.23 +41c, Brent (Dec) $90.92 +21c, Diff -$1.69 -20c
USNG (Nov) $2.95 +11c, UKNG (Nov) 95.0p -1.56p, TTF (Nov) €37.485 +€0.71

Oil price

As the Opec meeting starts today the Saudis have announced that their voluntary cut of 1m b/d will remain in place and all the way through to the end of the year. The result has been a fall in the oil price today, not maybe an expected response but the strength of the dollar continues an employment data has suggested that the Fed may have to raise rates by more than recently expected.

And of course the US is hardly a blueprint for political excellence, markets are jittery after the split Republican party defenestrated the 3rd most important person in the land as Kevin McCarthy was publicly the victim of a self-destructing party…

Europa Oil & Gas/i3 Energy

i3 Energy has announced the following update regarding Serenity.

Europa Oil & Gas also noted the announcement made today by i3 Energy regarding the Serenity oil discovery in the Outer Moray Firth area of the North Sea, in which Europa holds a 25% interest.                                                               

i3 Energy is aware that the licence for the Tain discovery (previously held by RSRUK and Rockrose Energy) recently lapsed and that the Tain acreage is therefore unlicenced and available to be re-licenced in the future.

We have been working for some time to advance a solution for the Blake / Tain / Serenity area but this has made little progress whist the previous Tain licensees were unable to approve additional investment. With the acreage now unlicenced, additional options for the area may now come available and i3 and its partner in the Serenity field, Europa Oil and Gas are commencing discussions with the NSTA and other interested parties to explore the remaining potential of the wider area.

This looks like it may actually be the step forward that i3 and EOG need in order to finally make something of the Blake/Serenity/Tain area after a period of inconclusive talks with RSRUK following their departure from the North Sea.

The fact that i3 and EOG are able to commence discussions with the NSTA as well as other interested parties mean that they should be optimistic about making progress with regard to ‘the potential of the wider area. As someone who had some reservations about Serenity in the past I am pleased that a potential solution to the problem looks now very much on the current radar screen. 

United Oil & Gas

United Oil & Gas has provided an update on the conditional sale of the UK Central North Sea Licence P2519 containing the Maria discovery in Block 15/18 to Quattro Energy Limited a UK North Sea focused company which is being acquired by Jesmond Capital Limited to form an enlarged entity to be listed on the TSXV.

On 8 August 2023 the Company announced that as all the conditions under the asset purchase agreement  for the conditional sale of its UK Central North Sea Licence P2519 had not been met by the expiry of the long stop date on 31 July 2023 the parties had agreed an extension of the long stop date in the APA to 30 September 2023. Further to that announcement, United confirms that the funding condition under the APA have not been met by the expiry of the long stop date on 30 September 2023.

Following the receipt by United from Quattro of an update on its funding process and a formal request to extend the long stop date, the parties have agreed an extension of the long stop date in the APA to 27 October 2023. It was also agreed that a further extension may be required for all conditions precedent to be met to allow completion of the sale, namely regulatory approvals, to enable the transfer of funds to United, and the Licence assignment to Quattro, with such extension to be automatically granted on the satisfaction of the Quattro funding condition being met by 27 October 2023.

Brian Larkin, Chief Executive Officer commented:
“We remain confident that our Licence is highly prospective, particularly following the recent support given to drilling in the North Sea by the UK Government and Regulators. It is clear that the North Sea remains a strategic asset for both the UK and Europe to bolster energy security, and that investment into the area continues to be strong.”

You wouldn’t expect any hint at all at this stage from UOG as to whether or not Quattro are going to complete the funding and to exercise the purchase of P2519, only time will tell, the next few weeks will determine whether or not they go back to square one. 

Star Energy

Star Energy has announced its Croatian subsidiary* has been issued with two highly prospective geothermal licences by the Croatian Hydrocarbon Agency, as part of the current licencing round announced on 28 December 2022.

The two licences, each with an initial five year exploration term, Sječe and Pčelić, are located in the Drava depression geological region (the southwestern area of the Pannonian basin), the same region in which its recently acquired Ernestinovo licence is located. The licence commitments are to drill four and three wells respectively, however given the density of existing data on the licences, it is expected that only the first well on each licence will be an exploration/appraisal well.

Sječe Licence
A 32km² licence, located in north-eastern Croatia within the Drava Depression of the Pannonian basin the licence has 356km of 2D seismic, c.20km² of 3D seismic data.  Nine exploration wells have been drilled and up to three different hot water reservoirs identified.

Initial appraisal demonstrates that a 15-25MWe (one million watts of electric capacity) powerplant is feasible, with an attractive NPV and IRR in the high teens.

Pčelić Licence
A 32km² licence, located in northern Croatia within the Drava Depression of the Pannonian basin, the licence has 262km of 2D seismic and two exploration wells drilled. Measured temperatures at the bottom of the two exploration wells were 196⁰ C (Pče-1) and 207⁰ C (Pče-1AL).

Initial appraisal demonstrates that a 20-30MWe powerplant is feasible with similar NPV and IRR as Sječe.

The Croatian Minister of Economy and Sustainable Development , Davor Filipović commented:
“Activating geothermal potential is a significant step towards increasing energy production on Croatian soil. In addition to increasing the security of our state by increasing our own energy production from renewable, clean sources, activating geothermal potential brings a number of benefits to the economy. Geothermal potential is becoming a resource that will play a significant role in creating energy independence and sufficiency of the Republic of Croatia.“

Commenting, CEO Chris Hopkinson, said:
“We are very pleased to be have been issued these two highly prospective licences.  Now with a portfolio of three licences, including Ernestinovo, we have demonstrated that our Croatian Joint Venture is well positioned to be a key player in delivering Geothermal Energy in Croatia in line with the local Government’s targets.  We have already commenced with preparing the site for our first well re-entry on Ernestinovo and look forward to commencing work on these two licences.”

Star has rolled the dice and is forsaking the UK hydrocarbon industry for geothermal energy in this case in Croatia. Whilst one can hardly blame them for abandoning a fiscally unreliable regime for a change in direction but it does mean that the jury is still out on geothermal energy which makes this is a long term call. 

* Star Energy’s Croatian geothermal interests are within a 51% owned joint venture company, A14 Energy.

KeyFacts Energy Industry Directory: Malcy's Blog